Vice President Joe Biden met with congressional negotiators last Thursday to discuss ways to curb the federal deficit and permit new borrowing after August 2, the day the U.S. government is expected to reach its $14.3 trillion borrowing limit. Democrats want to curb the federal deficit by pushing for new taxes and eliminating many tax loopholes, while Republicans have called for steep spending reductions but no new taxes.
To discuss the ongoing debate over how to curb the federal deficit, Democracy Now! recently spoke with Sally Kohn, author of a May 24 USA Today op-ed titled Don’t Believe the Hype About U.S. Debt.
JUAN GONZALEZ: Vice President Joe Biden met with congressional negotiators last Thursday to discuss ways to curb the federal deficit and permit new borrowing after August 2nd, the day the U.S. government is expected to reach its $14.3 trillion borrowing limit. Democrats are pushing for new taxes and the elimination of many tax loopholes to be part of any deficit reduction deal, while Republicans want to see steep spending reductions but no new taxes.
AMY GOODMAN: We’re joined by Sally Kohn. She’s a community organizer, a political commentator, founder and chief education officer of Movement Vision Lab. And she wrote an op-ed piece, a very interesting op-ed piece, in USA Today called "Don’t Believe the Hype about U.S. Debt."
Well, what do you say about the debt?
SALLY KOHN: You know, this is the time when we should be worrying about other things than public spending. I mean, the fact of the matter is that corporations are sitting on record levels of capital. They’re not spending it. There’s new news out that, if anything, they’re not spending it on jobs; they’re spending it on new, you know, manufacturing equipment. So the problem is, in this situation, like it or not, government is the spender of last resort. And the irony with all this, when everybody says, "Well, government should be tightening its belt, so is everyone else," you know, we let corporations—we actually encourage corporations in this country to borrow and carry debt ratios sometimes three, sometimes four, 14, 50 times higher than government.
AMY GOODMAN: Give us examples.
SALLY KOHN: You know, Boeing, IBM, JPMorgan. JPMorgan has a debt-to-income ratio of 50 to one. The United States government? One to one. So, why is it that debt is good for private corporations, for successful private corporations, so they can invest in the future of their business, but not good for the government, especially at a time of anemic tax receipts, because we’ve cut taxes, among other things, and because the economy is sluggish? Why shouldn’t we use government to invest in the future of our nation and the future of our citizenry?
JUAN GONZALEZ: And the argument of the Republicans, that the deficits have gotten too high, now is the time to cut spending?
SALLY KOHN: You know, look, two things. First of all, long term? You know, this is a short-term and a long-term conversation. Long term, you’ve got to do something about the debt. But the way to fix it is not to start cutting spending now that would grow and recover the economy. What we have to do—again, like it or not—is borrow money, use government as the spender of last resort, and invest in the economy, so that we grow it, so that in the future we’ve reduced the debt. But the other issue here is that, look, you know, this is a long-term ideological agenda, and they’re using the deficit as a fig leaf to push through cuts on government that they have always wanted to get through. That’s why 70 percent of the Republican budget isn’t going to actually cutting the deficit; it’s just going to more tax cuts for the rich.
AMY GOODMAN: Well, I mean, the line most commonly used is you’ve got to treat the government’s budget like any family treats their own budget, and at the end of every month you have to balance the budget.
SALLY KOHN: Yeah, and that’s stupid. And frankly, I blame the Democrats just as much for buying into that line, including Barack Obama. You know, first of all, lots of families carry mortgages. I mean, mortgages is a form of strategic debt, long-term debt, where you are borrowing more money than you’re earning each year in order to make a long-term investment in the health of your family, right? People send their kids to college. They do so with loans. I mean, that’s a good thing. We don’t consider that to be stupid or wasteful. We consider it good.
JUAN GONZALEZ: Those who buy a car to get to work do it.
SALLY KOHN: But again, the sort of other analogy is everybody says, "Well, you know, government should be run more like business." Well, you know, we can debate the merits of that, but if you’re going to make that analogy, then why shouldn’t government be able to borrow at a fraction of the ratio that we encourage private companies to.
JUAN GONZALEZ: Well, Republican House Majority Leader Eric Cantor spoke to reporters last week after meeting with Vice President Joe Biden about the debt.
MAJORITY LEADER ERIC CANTOR: The news economically on the jobs front over the last several days I think underscore the importance of this meeting that we just came out of. And there’s a commitment for next week engaging once again a robust series of meetings to see if we can achieve a result. We believe that much of the problem surrounding the lack of job creation and growth in this country has to do with the fact that there isn’t a credible plan to manage down the debt and deficit of this country. That’s what we’re trying to produce here, and we had a much substantive discussion today, and I look forward to more next week.
JUAN GONZALEZ: You response?
SALLY KOHN: You know, again, if they really cared so much about the deficit, then 70 percent of the Republican budget plan would be going—would not be going to give further tax breaks to the rich and corporations that already are paying the lowest tax rates in the last century. So, it’s an excuse. They’re sort of trying to scare the American public into thinking that debt and deficit is this horrible thing and is actually the cause of our problems, where in fact it’s the only thing that has the potential to bring us back from the edge.
AMY GOODMAN: This is White House Press Secretary Jay Carney addressing the debt question during a press briefing last week.
PRESS SECRETARY JAY CARNEY: I think it makes clear the case that we’ve been making, that there is no alternative here to raising the debt ceiling. This is not about additional spending. This is about honoring the obligations that the United States government has made. And the consequences of not raising the debt ceiling, as some of these rating agencies have suggested, would be severe.
AMY GOODMAN: Sally Kohn?
SALLY KOHN: You know, I’ve gone on record as calling this "ideological terrorism." This is the Republicans literally holding hostage the future of our country, the future of our citizenry, next generations, by threatening to blow up the American economy, just to make some political point. It’s offensive. It’s ridiculous. It’s bad politics. It’s unpatriotic. You know, look, at the very least, we can all agree that you have to pay the obligations of our country, maintain our economic standing and solvency, and then have a conversation about, you know, the ideological ins and outs of slashing versus raising taxes. But come on. Don’t ruin the economy just to prove a point.
JUAN GONZALEZ: But yet, you don’t have the Obama administration making a clear distinction and saying, yes, we do need to sharply increase the spending to do the infrastructure—recruit people to do the infrastructure work, do a Great Depression-type jobs program to lift the country out of its situation.
SALLY KOHN: Yeah, and shame on them. You know, and I think, look, Barack Obama has about a year to get back on the bully pulpit and start explaining to the American public why government spending is critical at the moment, why government is the spender of last resort, why government is needed to kickstart the anemic economy. You know, he made the mistake, I think, initially, of a stimulus bill that was too small and that was trying to please everyone. He had the illusion that he could get the Republicans, who have become more staunch in this category, who literally want to destroy government. They’re on record as wanting to drown it to—wanting to shrink it to the size where they can drown it in a bathtub. You can’t negotiate with that. But he tried to create a stimulus bill that would make them happy, and in so doing, created a stimulus bill that, yes, had some positive effect but wasn’t remotely large enough to prevent now some of the slip we’re seeing. You know, so he has to get back and explain to people why what he’s done has worked, and hopefully do more aggressive action, not worry about the political fallout, and instead worry about the future of our nation.