Resolved: The United States federal government should prioritize reducing the federal debt over promoting economic growth.

Resolved: The United States federal government should prioritize reducing the federal debt over promoting economic growth.

Resolved: The United States federal government should prioritize reducing the federal debt over promoting economic growth.

Defense Cuts Bad Disadvantage 

Introduction

The January Public Forum resolution presents a quandary because the issue the resolution aims to answer – should the federal government spend money to limit its total federal debt or should it spend money to stimulate the economy – is not in any way obvious to anyone who reads this resolution, because that’s simply not what is stated.

Instead, the question the resolution directly asks is whether or not the federal government should reduce its federal debt over promoting economic growth.

To illustrate the difference, let me outline three different debates.

Debate I – What the Resolution Explicitly Says

Pro – Contention I – Need to reduce the federal debt because a growing federal debt means higher interest payments that will force reductions in military spending. Military spending cuts undermine military readiness. Military readiness good.   Contention II – Economic growth is bad – it destroys the environment.

Con – Contention II – Reducing the federal debt is bad because it sill stave off military cuts. Military cuts good. Contention II – Need to spend as much money as possible to stimulate the economy because economic growth is good. (insert reasons)

Debate 2 — An interpretation of the resolution

Pro – Contention I – Current federal debt levels are high ($21 trillion) and we need to reduce them to protect against long-term military decline . Contention II – Reducing the federal debt increases growth.

Con – Contention I – Should reduce the federal debt and promote economic growth (perhaps through reduced regulation). Basically, don’t prioritize.

Debate 3 – What the Resolution Intended

Pro – Contention I – Current federal debt levels are high ($21 trillion) and we need to reduce them to protect against long-term military decline . Contention II – Reducing the federal debate reduces growth.

Con –One Contention — Need to spend as much money as possible to stimulate the economy because economic growth is good (insert reasons).

With the substantial amount of recent evidence that indicates we will soon fall into a recession, this argument becomes stronger.

The debates I judged at Blake (which used the January topic) followed this more conventional path (Debate 3), though at least one of the briefing books focused the debates more on Debate 3.

Key Resolution Terminology

The federal debt is the total amount of money the federal government, meaning the government in Washington, DC/the national government, owes to all of its lenders. These lenders include domestic and international lenders (we owe money, for example, to investment funds in China and Saudi Arabia).

The total debt is in contrast to the deficit, which is the annual/yearly difference between total revenues and expenses. Last year, expenses exceeded revenue by close to $800 billion and next year expenses are projected to exceed revenues by $1 trillion.

Economic growth an increase in the amount of goods and services produced per head of the population over a period of time, capacity of the economy to produce that, increase in productivity.

Prioritize means to say that one thing is more important than the other. So, the Pro is saying that debt reduction has to be prioritized over increasing economic growth. Con teams can say the two should be treated equally.

Additional Terminology

In addition to understanding the key terms of the resolution, debaters should also understand the following terms –

Borrowing Costs.  The cost of borrowing money – fees, interest

Keynesian economics. The idea that the government can avoid downturns caused by inevitable changes in the business cycle (low demand, high demand/inflation) with government stimulus

Stimulus spending. An economic stimulus is the use of monetary or fiscal policy changes to kickstart growth during a recession. Governments can accomplish this by using tactics such as lowering interest rates, increasing government spending.

The Economic Stimulus Act of 2008 (Pub.L. 110–185, 122 Stat. 613, enacted February 13, 2008) was an Act of Congress providing for several kinds of economic stimuli intended to boost the United States economy in 2008 and to avert a recession, or ameliorate economic conditions.

Interest .The cost of borrowing $.  If I borrow $100 and you charge me 2%, the interest paid is 2%

Essential Background

Since the US has frequently borrowed money to cover its bills, questions related to the national debt (and frequent annual deficit) have been debated for years.

Since 2008, when the US (and the world) experienced the Great Recession, however, both the annual deficits and the total debt have grown substantially.

In 2000, the federal government had a surplus of $236 billion and the national debt was less than $6 trillion, according to the Treasury Department. Since then, the current debt has increased to total of $22 trillion and last year’s deficit was close to $800 billion.

And the issue continues to attract even more and more attention because the Trump administration has both increased annual federal spending and significantly reduced taxes.

Reducing the Federal Debt

It is important to note that the resolution doesn’t specific how the federal debt would be reduced, and since PF debaters cannot read plans, this presents a bit of a quandary.

Imagine all of the ways that debate could be reduced –

  • Increasing taxes
  • Cutting social spending
  • Cutting military spending
  • Cutting entitlement spending (Social Security, Medicare, etc) [Note: This overlaps with (b)
  • Some combination of all or a few of the above

All of these approaches have plusses and minuses, and would be net beneficial (or net undesirable) in different ways relative to economic growth, but a preferred lack of specificity in Public Forum makes the debates difficult to have.

Moving Forward With Debate 3

Since the majority of debates will likely focus on Debate 3, I will shift the bulk of this essay to that debate.

Economic Arguments in Favor of Reducing the Debt

There are a number of reasons that reducing the debt could boost economic growth.

First, high debt levels mean that the government is sucking up more of the amount of money that is “out there” to borrow. Since lenders prefer to lend to the US government, as the lenders know that the government will always pay the debt, this essentially (its complicated) reduces the amount of money that is available for consumers to borrow. As the amount of money decreases, interest rates (the prices banks charge for borrowing money) rise. [Another article]. The higher the cost of borrowing money, the more expensive items like cars (for consumers) and large equipment (for businesses) becomes. As a result, higher interest rates tend to suppress economic growth.

And higher interest rates increase the costs of paying down the deficit, creating a vicious cycle of debt, high rates, and growing debt. Interest rate payments are currently about to skyrocket.

Second, high debt levels make it less practical for the government to borrow more money to stimulate the economy in the event of another economic downturn. If a stimulus is needed in bad times, we better pay down the debt to make it more feasible.

Third, high debt levels may force the government to cut back on federal spending in certain areas. If the government cuts back in these areas, it will reduce the amount of money it is spending and the amount of economic activity.

Fourth, borrowing money from abroad (some of the money the US government borrows is from abroad) means the US is paying interest to foreign banks, benefitting other countries economically. This could weaken the competitive position of the US vis-à-vis other countries.

Some government programs (infrastructure spending, health care) may have considerable positive impacts on the economy, magnifying the link.

All of these arguments are supercharged because the debt to GDP ratio (the amount of debt relative to the economy’s gross domestic product (GDP) is so high. Some say the deficit will eventually become twice the size of the economy.  This high ratio threatens growth over the long-term. Second article.

And since economic growth is currently high, it may be a good idea to focus on reducing the deficit now.

Of course, the resolution doesn’t just ask the question of whether or not the debt should be reduced, it also asks the question of whether or not that should be prioritized over promoting economic growth, which in the case of the interpretation of the resolution under “Debate 3” means whether or not money should be spent to stimulate the economy.

Note: It is not clear whether or not the Con is advocating for increased spending or simply advocating for current levels of spending, but the resolution is generally suggesting that the Con defend high spending levels, at least for stimulus purposes.

There are a number of reasons the Pro will argue that such a “stimulus” strategy fails.

First, Pro teams can argue that current rates of economic growth are strong and that a stimulus is not needed now to boost the economy. There is obviously a growth good/bad debate that the Pro will need to win, but it is winnable.

Second, Pro teams can argue that stimulating an already strong economy will promote inflation – upward pressure on the price of goods and services – and that inflation will lead to slower economic growth because high prices for goods and services will make them unaffordable.  These inflationary effects can also trigger unemployment. And even if employment increases, inflation offsets the increased employment by reducing the value of goods.

Also, increasing demand in the economy creates more demand for more workers, and some companies then hire workers from other companies. This not only means that there is not a net increase in employment, but it also means that wage pressure increases, increasing costs to businesses and depressing economic activity.

Moreover, when growth increases, the Federal Reserve (the “Fed”) will raise interest rates (they do this by raising rates on interbank borrowing) in attempt to slow economic growth.

[Note: See above for a discussion as to why increasing interest rates is bad]Third, there is evidence that the government ends up making poor choices as to where to invest its money, undermining potential economic gains from stimulus approaches.

Fourth, lowering the debt frees up capital to borrow (see above), increasing the amount of money in the economy, effectively stimulating the economy. Some argue that a stimulus will not work in the future unless debt is reduced, essentially making reducing debt a prerequisite to an effective stimulus.

Fifth, any gains are offset by the increased debt.

Economic Arguments in Favor of a Stimulus

There are a number of economic arguments in favor of stimulus spending.

First, stimulus spending increases employment, resulting in many returns to the economy. The results in across the board increases in aggregate demand.

This was empirically proven under the Roosevelt administration.

Prioritizing economic growth over deficit reduction can also mean prioritizing tax cuts (as the Trump administration did). Tax cuts can stimulate economic growth by putting more money in peoples’ pockets to spend, by increasing the amount of money that businesses have to invest, and by reducing business’ need to borrow money.

Of course, Con teams will need to respond to Pro arguments that the debt hurts the economy.

First, Con teams can argue that declining interest rates make debt sustainable.

Second, the economy can sustain such deficits and deficits do not increase interest rates.

And there is evidence that rising interest rates do not hurt the economy.   This is also generally true of deficits.

Despite deficit increases, interest rates have generally not risen.

Many articles [#1, #2, #3, #4, #5] argue that rising debt will not harm the economy.

There is also strong evidence that rising debt levels do not undermine economic activity.

Panos argues that high debt levels do not undermine emerging market economies.

Reducing federal spending could also trigger a contraction in economic activity, as a result of the government pumping less money into the economy.

One author even argues that we should never pay down the national debt.

In contrast, there is evidence that reducing the deficit will trigger quantifiable increases in economic growth.

Decisive Arguments

Debates over debt reduction vs. stimulus can get very muddled, so I think it is critical that each side have some decisive arguments they can use to tip the debate in their favor.

Decisive Pro Arguments

I don’t think that any of these arguments is necessarily better than the others, so you may wish to use one or more, depending on the totality of arguments that you are going to make.

Prerequisite. Some argue that a stimulus will not work in the future unless debt is reduced, essentially making reducing debt a prerequisite to an effective stimulus.

Scope. Others argue that the magnitude of a large deficit impacts so many sectors of the economy that it is the overriding economic concern.

Uniqueness. Current rates of growth are high, so we don’t need to stimulate the economy more. Also, current debt levels are so high that we need to take action to reduce them.

Short-term vs. long-term. Even if a stimulus can increase economic growth in the short-term, higher debt levels will generate sustained, long-term negative economic pressure over many years (perhaps decades).

Action now critical. Eventually we will have to act to pay off the debt. The longer we wait, the more the debt will grow and the more it will cost us to pay it off.

Also, the debt to GDP ratio (see above) is approaching dangerous levels.

Social prioritization. First, high debt levels mean programs for the poor (welfare, education spending) are most likely to be cut. Second, high debt levels raise global interest rates, raising the cost of borrowing for developing countries and creating poverty traps. As is argued on many topics, policy-makers should arguably prioritize the interests of the poor.

Decisive Con Arguments

Uniqueness. The economy is going to enter into a recession in the near future,, meaning the only way to prevent it is to increase growth.

Reducing the deficit will deflate the economy. The resolution doesn’t ask whether or not we should keep the current debt levels, but whether or not we should reduce it. Reducing it means reducing federal spending, which will cause a contraction in the economy, potentially pushing us into an economic downturn, if we aren’t already going to experience one.

Increasing growth will reduce the deficit. Increasing economic growth increases tax revenues, lowering the debt, though others argue this does not occur.

Short-term vs. long term. If the Con can win that there will be an economic downturn now, they can win that it is important to stimulate the economy in the short-term to provide a foundation to prevent a long-term economic decline.

No short-term worries. Since the deficit increases and decreases in cycles, there is no particular need to worry about particular debate levels, even if they are high now.

Social prioritization. Reducing the debt likely means cuts to social programs that are important to the poor.

Of course, teams could also argue that social programs actually hurt the poor.

Or one could argue that economic growth increases inequality, as most of the economic gains are captured by individuals at the top.

Both ways. Did you ever hear the expression, “You can’t have your cake and eat it, too?” Well, in this case you can. Since economic growth increases tax revenues, prioritizing such growth enables individuals to have their cake and eat it, too.

And without growth, there is no way to effectively reduce the debt to GDP ratio.

All of these “decisive” arguments can be extending as “voting issues” or can be used to weigh arguments in Summary and Final Focus. Of course, if you want to use them in the later speeches, you should set them up in the constructive speeches.

And since the resolution is comparative, arguably your speech should only have comparative arguments. General arguments about the Pros and Cons of each doesn’t establish any comparison.

Moving Forward With Debate 1

The second most common type of debate you will have is over the question of the benefits of reducing the debt outweigh the benefits of economic growth (yes, what the resolution says J). Unlike Debate 3, however, the Pro will offer non-growth reasons for reducing the debt and argue economic growth is bad

What are some non-growth reasons for reducing the debt?

Military spending. High debt levels could eventually (Trump and Congress just increased military spending by $100 billion) make it impossible to sustain current military spending levels, threatening global leadership.   High oversees borrowing (the US borrows from China and Saudi Arabia, for example) could increase the strength of their currencies relative to the Dollar, further threatening US leadership.

High debt levels also give China leverage over the US, which it could exploit in a crisis. Such leverage threatens US national security.

Dangerous levels of debt leverage also increase transition war risks.

Heath care. High debt levels undermine government spending on health care and threaten private investment in health care.

The reason that high debt levels threatens these programs as that as the debt increases the interest paid on the debt increases. As the interest payments increase, less money is available to spend on other programs.

What are some reasons economic growth is bad?

These will be tackled in more detail in a future essay, but here are some reasons economic growth is bad

  • Spreads disease.
  • Enables militarization and war
  • Increases resource consumption, hurting the environment
  • Increases energy use, causing climate change

Defensively, there is good evidence that rising debt levels do not threaten national security and that China would not weaponize because it would hurt its own economy.

There is also evidence that health insurance does not improve health outcomes.   Second source

And if the federal government cuts education spending, the states can fill in. .

In terms of impact turns, there is good evidence that high debt levels actually reduce war risks by making conflict unaffordable.

Kyu Young Lee 17. The University of Iowa. 2017. Political Clout of Government Bondholders: How Government Bondholders Expect and Affect States’ Conflictual Behaviors. The University of Iowa.

Matthew DiGiuseppe 15. University of Mississippi. 07/2015. “The Fiscal Autonomy of Deciders: Creditworthiness and Conflict Initiation.” Foreign Policy Analysis, vol. 11, no. 3, pp. 317–338.

Patrick E. Shea 16. University of Houston. 05/26/2016. “Borrowing Trouble: Sovereign Credit, Military Regimes, and Conflict.” International Interactions, vol. 42, no. 3, pp. 401–428.

Paul Krugman argues that debt is likely to stop risky financial behavior that could cause an economic crash.

Benefits of economic growth include disease prevention, reducing war risks, and slowing climate change.

Moving Forward With Debate 3

The only difference between Debate 3 and the other two debates is that Debate 3 argues that the two goals should be treated equally. Since we have thoroughly reviewed the arguments on both sides, I think you can figure out that debate.

 

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