Passing on Public Debt

The views expressed are those of the author and do not necessarily reflect the views of ASPA as an organization.

By Dwight Vick
May 23, 2022

I teach Economics and U.S. Government to undergraduates and high school seniors. They ask many questions, “Why is _____ so high?” For many students, the missing word is “Xbox,” “Nike shoes,” “the latest iPhone” or “the latest Samsung phone.”  For other students, the missing word is “college,” “gasoline,” or “food.”  Over the next 16 weeks, we covered supply and demand, prices, minimum wage and monetary policy, business practices and union activities, executive appointments and legislative approval of FED governors, the impact of global economies and international policies, public investments into economic development programs and compared laissez-faire, Keynesian and supply-side economics. 

At the end of the semester, some students repeated the same questions. Other students asked more advanced questions, “Why isn’t the President doing more?”, “Why does Ukraine matter? I didn’t even know the country existed before Russia invaded them?”, “Will the national debt cause tax increases that take money from my current and future earnings?” and/or “Why should I care? I just want more money to…” Some want the latest shoe fashion. Some simply roll their eyes and chat with their friends. Three asked me what I did with my “government check” because everyone they knew received one. Others want, just for one month, to be able to choose both food and rent and not one over the other. For all of them, the national debt is both abstract and real.

The growing national debt is a controversial domestic policy. Political and economic history shows that public investment in us during uncertain times pays for itself. But are the costs worth the investment? As their instructor, I ponder if passing our current debt onto our future wage earners is worth the financial burden they will carry.

What are those costs? The holistic costs of the COVID-19 Pandemic impact us all. The Russo-Ukrainian War and the economic and social upheaval in Mexico and Central America shows our global economic intradependence. We find ourselves competing in a future world that we cannot define, yet know it is as real as the empty stomachs and hope-filled hearts of several students I have the privilege of teaching. It makes many want to return to a simpler time, to isolate and build protective walls. During times like these, I, like my students, yearn for those days.

But then I remember the benefits. John Quincy Adams proposed ideas that, while lampooned in 1824, led to the building of the Erie Canal, modern museums like the Smithsonian Institute and a semi-nationalized educational system. FDR’s New Deal may not have entirely ended the Great Depression, but the program has relieved many starving Americans and saved our democratic, capitalist society. Eisenhower’s investment into a national interstate system created travel and transportation systems that helped us achieve higher levels of greatness almost as much as Kennedy’s and LBJ’s civil rights and anti-poverty programs. Even Reagan’s tax cuts, which led to the highest debt in our nation’s history 40 years ago, made some personal sense. His decision required us to look not just to our government for answers but ourselves.

These decisions came with a price. All public policy decisions do. And we must not forget that the short-term debt caused by investment, whether it be in shoes or infrastructure, stimulates our economy by providing jobs, increasing educational opportunities and prepares us for future jobs we have yet to envision.

Will I, along with my students, have to pay back this debt? Yes, of course. But our government still works to manage both the costs and investments. The Treasury Department will have to raise the yield on newly issued treasury securities. Corporations will have to raise prices to serve their debt obligations. The cost of borrowing money will increase. If we do not manage our debt, our influence both at home and abroad will wane. We will have to tighten our belts.  But the short-term pains will foster long-term growth and prosperity.

As a citizenry, we will continue to work. We will foster both our individualism and democratic collectiveness to invest in our future, thereby increasing our own viability and that of our communities, states and nation. 

I am certain we will survive. My students may not have believed they would survive my class but they did and wish they had spent their time buying shoes, playing Fortnight or watching TikTok videos rather than studying economic and government processes. But I am certain that their investment in their education, and their feet, hand-to-eye coordination, full bellies and a roof over their heads will strengthen them, their families, their communities and our nation during these trying times.

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Author: Dwight Vick, Ph.D. is a 28-year-long ASPA member. An adjunct professor, he owns D.A.V.E – Dwight A. Vick Enterprises, a consulting and grant writing business.

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