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Republicans Still Confused on Economics; Millennials Pick Public Investment over Debt

I'm having fun reading the Harstad Strategic Research survey of Millennial voters in the context of the points made by our Republican Senate candidates in last night's debate. A viewer asked the candidates how they respond to Nobel Prize-winning economist Paul Krugman's contention that we don't need to worry so much about the national debt, that we can carry the current debt load with normal economic growth. Mike Rounds said Paul Krugman needs to go back to school. Rhoden, Ravnsborg and Nelson joined Rounds in folksy assertions of kitchen-table economics. We can't spend money we don't have, they all intoned... although a majority of American households (69%) spend money they don't have on houses, cars, and other items. (Quick show of hands: how many of you GOP candidates are paying mortgages?)

If we really want to talk kitchen-table economics, consider that median household income in 2011 was $50,502. Median household debt was $70,000. The median ratio of debt to income in 2011 was 1.39.

Meanwhile, the national debt in FY2013 was $16.7 trillion. The national GDP in 2013 was $15.7 trillion. The national ratio of debt to income in 2013 was 1.06.

In other words, Uncle Sam is carrying less debt proportionate to income than most families are carrying in mortgages and car payments. If we ran our federal budget like the median household, we could plunk $5 trillion in stimulus into the economy tomorrow and reach the same debt-income ratio as Mom and Pop.

In further kitchen-table inconsistency, Jason Ravnsborg says we have to lower our debt by cutting taxes. Once again, pass the bacon and the household budget: when we see debt or other expenses increasing in our family budget, we never say, "Gee, we should address this problem by making less money." We generally look for ways to take in more money. So is Ravnsborg telling us that government budgets really don't work like household budgets? Or is he just confused?

The Millennials surveyed by HSR are less worried about the difference between macroeconomics and microeconomics and more worried about just solving problems. Consider their take on raising taxes. 54% of the age 18-to-33 respondents said they favor raising taxes "to pay for priorities like education, health care, and fixing roads, bridges and other infrastructure." But only 42% said they favor raising taxes "to pay down the national debt."

Just like most Americans, Millennials think avoiding debt is less important than taking care of basic needs. Their responses on tax increases suggest that they understand that debt is a normal and manageable part of American life, in government and at the kitchen table.


  1. Jerry 2014.05.16

    It is impossible to run a country without debt. You cannot sell a bond without incurring debt, this is as old as economics itself, without that debt, your entire infrastructure would collapse. I agree with you Cory, these jokers, whatever they are, are not your grandfathers republican party. They are absolutely clueless about how business operates. The bad part is they are proud of their ignorance as well.

  2. owen reitzel 2014.05.16

    I think they know Jerry. They're hoping the people don't figure it out. What they said sounds good but isn't realty.
    What i don't get are the people who are voting for Rounds. He has told multiple lies and keeps telling them. Do we want someone who lies in the Senate?

  3. Liberty Dick 2014.05.16

    So why would our credit rating be suffering if the current debt load wasn't a bad thing?

  4. Ryan Casey 2014.05.16

    Liberty Dick, you're making a classic spurious correlation between two things that may or may not be related, but that doesn't automatically mean one thing is causing the other. First, to the degree our credit rating is suffering, let's understand what that means. In 2011, during the first debt limit standoff between Tea Party Republicans in the House and President Obama, S&P decided to downgrade the U.S. credit rating from AAA to AA+. This downgrade was due to the political dysfunction that had demonstrated an increased risk of default on debt payments, not the debt itself. Meanwhile, the other two major credit rating agencies, Moody's and Fitch, have the U.S. remaining at AAA.

    So when you assert that our current national debt is somehow causing our credit rating downgrade from S&P, you are mistaken.

  5. Liberty Dick 2014.05.16

    I know my credit rating is correlated to my outstanding debt... just sayin'

    The debt limit standoff shouldn't have had anything to do with our credit rating. We have plenty of money to continue to pay the interest on the debt. Aren't we are constitutionally obligated to pay that first? In my opinion the standoff was more political theater (from both sides) rather than real substance.

  6. Les 2014.05.16

    """", we could plunk $5 trillion in stimulus into the economy tomorrow and reach the same debt-income ratio as Mom and Pop.""""
    That 5Tril wouldn't cover the interest on unfunded future obligations, Cory. Our commercial banks alone, prob the largest five, carry 90+% of the booked deriv's and when it comes to saving the world, our little ol GDP won't do squat.

  7. Cranky Old Dude 2014.05.16

    Yes, it is possible to carry that kind of debt but the nagging question is: how far can you carry it? At some point you may have to offer higher interest to keep other people buying that debt. When interest rates go up, the cost of servicing the debt goes up too. Eventually, you may reach a tipping point where the cost of that debt service eats up the majority of available revenue. What is the exit strategy from tens of trillions of debt?
    The usual ploy is the devaluation of the currency, enabling the debt to "paid" off with essentially worthless inflated money. Hey, it worked for the Weimar Republic!

  8. Jerry 2014.05.16

    So you answered your own question there cranky old dude, life is funny sometimes. Then you go off in republican never never land about "may reach" and "can" and who knows what else. As your screen name would imply, you have old in it, so it makes sense to me that you were around in the 90's, not so long ago. In the 90's, the debt was basically retired and it was done without disregarding the Treaty of Versailles.

  9. Les 2014.05.16

    Is that the 1890's Jer? The 1990's had a little more to do with the sucking sounds coming from the Oval Office as the Clinton machine sucked social security out for as you say.."""the debt was basically retired"""". Lots of gray area in your statement Jer.

  10. Jerry 2014.05.16

    No Les, no more. I have wanted to say that for some time. Thanks for the opportunity. As you probably know, the 1890's suffered some severe financial panics even though it was called the gay nineties. I am speaking ot the late 1990's when the Democrat in the White House at the time, President Bill Clinton, help to steer the economy to a time of unprecedented closeness to eliminating the national debt completely. The problem was the fear of doing just that. Here is an interesting report that shows really why we have a national debt in the first place and why it is necessary.

    So you are correct in a sense of my statement being a little gray. I will stand on the fact that debt is necessary and that a balanced budget would be the end of this country's economic life period. The world buys our debt through bonds as an example, because they know it is a safe investment, no thanks to ignorant republican lawmakers, especially our NOem.

  11. Les 2014.05.16

    You hit on my tombstone, Jer, "Here lies Les, he's no Les no more".
    With our system we screw the world economies with our inflation causing the rate race to the financial bottom or the wars you love to hate started to keep the petro dollars US. Are we the safest or do the orders to buy come from the Federal Reserve?
    My reference to the 1890's came from you saying old guy screen name makes sense if he remembers the nineties. My kids at 30 and 34 both remember Clinton and the nineties.

  12. Jerry 2014.05.16

    Good message Les, true words. Capitalism equates screwing, as there is always a looser in capitalism. The trick always is to make it the other guy. We are good at it, damn good at it in fact, but there are others out there that are just as good and most definitely know how the game is played. In those places of players, the only way to hedge your bet is in US Treasuries. Safe and secure and backed by the US taxpayer. The Fed is all smoke and mirrors, the heart and soul of the whole thing is you and me and the rest on this blog to name a few, we are the guarantees. We get security out of the game and so do they, so it is a mutual back scratch. Now imagine if we had a gold standard that we were trying to run an economy on that limited source. That did not even work in the 1890's and before when we had some serious financial panics. Anyway, debt is good and it makes the system work and keeps it that way, but it is sensitive to political stupidity of the likes we saw earlier with the shutdowns and the rest of the anti business and anti growth. If a bozohead like Rounds gets the nod, it will make our world just that much tougher.

  13. DM 2014.05.16

    The question was obviously from the left and a very stupid question at best. Someone asked how many of the candidates are still paying on their homes and are in debt. I can tell you that Larry Rhoden, for one, does not owe a dime on his home. He walks the walk.

  14. caheidelberger Post author | 2014.05.17

    DM: So Larry bought his home with cash up front? Same with his land? All of his ranch equipment?

  15. larry kurtz 2014.05.17

    Curious how much Rhoden got from FSA and Rancher's Relief.

  16. Les 2014.05.17

    6.43 relief for Rhoden, is the word coming out of the Blue Line Diner, Lar. Of course that may be bull.

  17. Nick Nemec 2014.05.17

    By using the equity I had in my farm I was able to obtain a mortgage on additional farm land and expand my operation. Going into debt was the best business decision I ever made. Neighbors who were less willing to go into debt are now less financially secure than I am because I was willing to take on reasonable debt and they weren't.

  18. Roger Cornelius 2014.05.17


    If I recall correctly Cory reported sometime back that Rhoden was the recipient of about $40,000 in farm welfare.

  19. larry kurtz 2014.05.17

    Thanks, Roger. More curious about the blizzard settlement that welfare ranchers got after they let livestock die under their watch.

  20. Deb Geelsdottir 2014.05.17

    Les! What are you doing at the Blue Line? And how are the folks in Newell? I really need to get back there for a visit. There are lots of good folks there.

  21. Les 2014.05.17

    The Blue Line is abut as good a place as there is to get the facts. It sure would be interesting to get Lar in the room with a few of those ranchers and let him explain why the livestock died on their watch. I'm a hills species most of the time Deb, not hard to get to or through Newell..
    If I recall correctly Roger, I heard you got around 250,000 welfare.

  22. larry kurtz 2014.05.17

    The Blue Line was a big client 25 years ago: it smelled like shit most of the time like the Belle Fourche Livestock Exchange and The Rancher in St. Onge did on Fridays.

    Hardly surprising Les would hang out there.

  23. Deb Geelsdottir 2014.05.17

    For a farm girl like me, the Blue Line smelled like farm and ranch country. Did you ever go to the weekly sheep sales in Newell? Once when I was there someone sold a goat and her two babies. Baby goats are very small, soft and adorable.

    In my opinion, some people had their politics wrong in Newell, :-P , but they are still good people. I like 'em.

  24. Les 2014.05.17

    Big client and manure. Why doesn't that surprise me, Lar.
    Newell is a commuter town so it doesn't seem to have an overt political angst. Outside of town it swings right as you may remember, Deb.
    Baby goats are cute. They are called kids and like our kids they can grow up and get a bit nasty.

  25. Les 2014.05.18

    Obviously not a great clone if that is the attempt Lar. Cory would know and I've lived here over sixty years not forty.

  26. lesliengland 2014.05.20

    poopey pukey pissey? got it. but Clinton sucking social security?

    Q: During the Clinton administration was the federal budget balanced? Was the federal deficit erased?

    A: Yes to both questions, whether you count Social Security or not.

    did newell get it's land titles free and clear north of the belle fourche? maybe they ranch on others' land so cows dying after the big blow is not such a slander. at least hills residents sleep soundly, after all they got a post-treaty "agreement". $51.3 Billion of homestake gold alone plus interest should be added to the fearful debt the GOP stands its platform on.

  27. Deb Geelsdottir 2014.05.20

    Leslie, I don't know anything about Newell land titles. What's that about?

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