Who cares about the debt?

Apparently, almost everyone. Jennifer Rubin links to a poll by the group Public Notice (a non-partisan organization who supports fiscal responsibility and “criticize[s] both parties for engaging in irresponsible spending”) which suggests that in their findings

  • 88% of those polled believed the national debt has impacted personal or family financial situations; and
  • 58% of those polled believed the national debt has had a major impact on their family’s personal financial situation.

Despite Rubin’s attempt to use the study to justify why the national debt should continue to be a central campaign issue down the home stretch of the election, I’d like to focus on a different angle. It may be the case that such a high number of individuals feel the national debt directly impacts them and their finances, which to Rubin’s point, would explain her insistence on hammering home themes of fiscal responsibility from the campaigns. But this misses one point: Why do individuals feel this way?

The poll’s question is somewhat misleading (or at least, what I assume is the poll question, since the full study isn’t disclosed on the Public Choice website). A growing debt may have serious future economic consequences for the federal government, but unless you are currently holding a government bond and are unconvinced that the federal government will be able to repay you at a future date, how does this growing debt affect you directly? My impression is that the majority of individuals see the growing debt as an issue impacting them personally primarily through other economic issues (“I think government spending is too high, and I don’t like government spending, so in my rage over the debt, I’ll be supporting cuts in government spending.” or “The rich are getting too many tax breaks, so addressing the debt by raising taxes on the 1% is worthwhile!”). Many individuals see it as a moral stance, such as “Government should tighten its belt!” Or, some individuals’ concern for the future gets translated into “impact[ing] my personal financial situation,” which isn’t really the same as impacting my future generations’ financial situation.

More to the point, how does the national debt actually affect a family’s current financial situation directly? This question is only semi-rhetorical. Really – how does it?

My intuition suggests that people over-estimate the exact impacts of the national debt on their day-to-day lives. With every scary statistic from a conservative pundit – like “If we were to have to pay the debt back right now, each American would owe $6000!” – individuals start to get worried they might actually have to pay that money back directly (not just highly unlikely but impossible under current law). Here, media hype and moral insistence might be driving the bus.

Listen. I do not support “runaway spending” and acknowledge the potential long run economics consequences of persistent and growing debt. But not long ago, we were running budget surpluses and eating away at this debt – and it can happen again. So why are so many individuals freaking out about it?

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