The Opinion Pages | OP-ED COLUMNIST
The Making of an Ignoramus
Keep supporting the moron pubs
Paul Krugman MAY 9, 2016
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The Making of an Ignoramus
Keep supporting the moron pubs
Paul Krugman MAY 9, 2016
Continue reading the main storyShare This Page
- like a failing casino: he could, he asserted, āmake a dealā with creditors that would reduce the debt burden if his outlandish promises of economic growth donāt work out.
The reaction from everyone who knows anything about finance or economics was a mix of amazed horror and horrified amazement. One does not casually suggest throwing away Americaās carefully cultivated reputation as the worldās most scrupulous debtor ā a reputation that dates all the way back to Alexander Hamilton.
The Trump solution would, among other things, deprive the world economy of its most crucial safe asset, U.S. debt, at a time when safe assets are already in short supply.
Of course, we can be sure that Mr. Trump knows none of this, and nobody in his entourage is likely to tell him. But before we simply ridicule him ā or, actually, at the same time that weāre ridiculing him ā letās ask where his bad ideas really come from.
First of all, Mr. Trump obviously believes that America could easily find itself facing a debt crisis. But why? After all, investors, who are willing to lend to America at incredibly low interest rates, are evidently not worried by our debt. And thereās good reason for their calmness: federal interest payments are only 1.3 percent of G.D.P., or 6 percent of total outlays.
These numbers mean both that the burden of the debt is fairly small and that even complete repudiation of that debt would have only a minor impact on the governmentās cash flow.
So why is Mr. Trump even talking about this subject? Well, one possible answer is that lots of supposedly serious people have been hyping the alleged threat posed by federal debt for years. For example, Paul Ryan, the speaker of the House, has warned repeatedly about a ālooming debt crisis.āIndeed, until not long ago the whole Beltway elite seemed to be in the grip of BowlesSimpsonism, with its assertion that debt was the greatest threat facing the nation.
A lot of this debt hysteria was really about trying to bully us into cutting Social Security and Medicare, which is why so many self-proclaimed fiscal hawks were also eager to cut taxes on the rich. But Mr. Trump apparently wasnāt in on that particular con, and takes the phony debt scare seriously. Sad!
Still, even if he misunderstands the fiscal situation, how can he imagine that it would be O.K. for America to default? One answer is that heās extrapolating from his own business career, in which he has done very well by running up debts, then walking away from them.
But itās also true that much of the Republican Party shares his insouciance about default. Remember, the partyās congressional wing deliberately set about extracting concessions from President Obama, using the threat of gratuitous default via a refusal to raise the debt ceiling.
And quite a few Republican lawmakers defended that strategy of extortionby arguing that default wouldnāt be that bad, that even with its access to funds cut off the U.S. government could āprioritizeā payments, and that the financial disruption would be no big deal.
Given that history, itās not too hard to understand why candidate Trump thinks not paying debts in full makes sense.
The important thing to realize, then, is that when Mr. Trump talks nonsense, heās usually just offering a bombastic version of a position thatās widespread in his party. In fact, itās remarkable how many ridiculous Trumpisms were previously espoused by Mitt Romney in 2012, from his claim that the true unemployment rate vastly exceeds official figures to his claim that he can bring prosperity by starting a trade war with China.
None of this should be taken as an excuse for Mr. Trump. He really is frighteningly uninformed; worse, he doesnāt appear to know what he doesnāt know. The point, instead, is that his blithe lack of knowledge largely follows from the know-nothing attitudes of the party he now leads.
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Oh, and just for the record: No, itās not the same on the other side of the aisle. You may dislike Hillary Clinton, you may disagree sharply with her policies, but she and the people around her do know their facts. Nobody has a monopoly on wisdom, but in this election, one party has largely cornered the market in raw ignorance.
