The national debt has now surpassed $28 trillion, and Republican politicians have begun ringing alarm bells in the halls of Congress on the heels of spending bills unveiled by President Joe Biden. But according to John Oliver (and leading economists), the national debt issue is not quite as simple as cutting spending or facing a catastrophic Greece-like economic collapse.
On Sunday’s episode of “Last Week Tonight,” Oliver attempted to explain issues around the national debt, specifically “how valid concerns about it are, and how we should think about it moving forward.”
Early on, Oliver dispelled the myth that Republicans or Democrats in particular tend to raise or lower the debt. While Republicans have largely saved their dire warnings about the debt while Democrat presidents are in office, the debt has risen under Presidents Ronald Reagan, George W. Bush, Barack Obama, and Donald Trump, and was reduced under Presidents George H.W. Bush and Bill Clinton.
“But even if you put all of that bad-faith hypocrisy aside, we are still left with the key question: How much debt is too much?” Oliver said. “And the interesting answer to that is: Nobody really knows.”
Oliver then showed old news footage of Fox News reports suggesting that the national debt surpassing the country’s GDP would lead to widespread riots and economic meltdown. When the U.S. reached that milestone last summer, interest rates did not skyrocket. Instead, they continued the downward trend they’ve shown over the last 20 years.
“This has made many economists start changing the way that they think about debt, thinking that — very basically — so long as our economy grows at a rate greater than the interest that we’re paying on our debt, we can come out ahead,” Oliver said.
As Oliver put it, economists have now changed their line of questions around the national debt with interest rates remaining at historic lows: “Most economists actually agree that with interest rates at historic lows, the question shouldn’t really be ‘How much debt are we taking on?’ as much as: What is the value of what we are getting for it in return?”
In that vein, Oliver opined that there is “good debt” that can spur economic growth and improve quality of life, and there’s “bad debt,” like tax cuts for billionaires.
“No one credible is saying that deficits don’t matter or that we should borrow as if the sky is the limit,” Oliver said. “What they are saying is the debate shouldn’t be about whether debt is good or bad, it should be about whether the investments that we are making are worth it or not.”
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