FROM TIME | JULY 19, 2011
On Friday, I posted a piece on the U.S. debt and how we are creating a false crisis given current interest rates and our ability to manage that. Judging from the responses, you would have thought I was penning a piece in defense of eugenics. OK, the online world is not known for its sobriety, but the heated reaction to my post is typical of the current debate about debt.
The hysteria that debt now generates is not just annoying noise. It has real ramifications and sharply limits out ability to have a measured, balanced and sober debate about debt, its proper level and what is or isn’t smart economic policy.
To some extent, debt has always aroused passion. The animus has a long and deep history in our collective memory. “Never a borrower nor a lender be.” That admonition spoken by the unctuous Polonius in Shakespeare’s Hamlet sums up the age-old prohibition against debt, and speaks to a current still alive in the West that debt is sordid and corrupts both the one who loans and the one who borrows. In the United States, Benjamin Franklin writing as Poor Richard described debt as the worst “vice.” According to Franklin, debt not only weakens moral character but also deprives men and nations of their liberty and freedom because of the power it gives to creditors.
Furthermore, Americans have had a litany of issues over the years that have sent otherwise temperate people into a tizzy. Slavery in the 1850s, the right of women to vote in the early 20th century, Prohibition in the 1920s, Communism in the 1950s, the civil rights struggle in the 1960s – all were characterized by similar levels of emotion and heat. In the Senate chamber itself, Representative Preston Brooks of South Carolina nearly beat Senator Charles Sumner of Massachusetts to death with a walking cane in 1856 after Sumner made a speech that Brooks believed humiliated his family. Washington is no stranger to unreasonable and even violent emotions.
But while hostility toward debt may be part of a long legacy, and while it is important to recognize that tendency in ourselves, our collective inability to tone down the rhetoric and take a deep breath imperils our economic security as never before. When we were a creditor (which was most of the 20th century), animus toward debt had little effect on national economic policy. Now that we are a debtor nation, our debts and what we use them for are intimately tied to national security and prosperity. We owe various foreign creditors – China most of all — and how we manage our debt will directly impact our future ability to attract needed capital and thrive going forward.
Failing to have a coherent policy and debate about debt therefore imperils our economic well being as never before. The Tea Party speaks of debt as a sign of America’s decline, and the result is that any who question that logic can be accused of hastening it. If debt is viewed as an unmitigated bad thing, then no one in his right mind could defend debt as a useful tool.
In fact, discussing debt today is like those arguments about the Arab-Israeli conflict that divided friends and family when I was growing up. The emotions were so high that disagreement registered as betrayal. Acknowledging the validity of other perspectives was seen as not just stupidity but moral failing. There was no real discussion, just set positions articulated with increasing anger and rage, ultimately descending into name-calling, shattered feelings and estrangement.
So while debt today joins a long and dishonorable lineage of lightning rods, that doesn’t make our inability to construct public policy any less troubling. Vituperation may serve our blood-instinct but not our polity. We may muddle through the current morass, but there are few signs that we are prepared to address our problems constructively. That, and not the looming debt ceiling, is the real crisis, one steeped in our past but no less troubling for our future.