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on the topic of Resolved: The United States federal government should prioritize reducing the federal debt over promoting economic growth. A professionally made brief sold to debaters to help them prep....

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Resolved: The United States federal government should prioritize reducing the federal debt over promoting economic growth. January 2019 PF Brief*

*Published by Victory Briefs, PO Box 803338 #40503, Chicago, IL 60680-3338. Edited by Lawrence Zhou. Wrien by Isabel Coleman, Marina Leventis, Megan Munce, and Laurenn Vives. Evidence cut by Abraham Fraifeld and Krithika Shamanna. For customer support, please email [email protected] or call 330.333.2283.

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Contents 1

Topic Analysis by Marina Leventis

4

1.1 1.2

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Background Information . . . . . . . . . . . . . . . . . . . . . . . . . . . .

4 6

1.3

Affirmative - Fiscal Conservatism View . . . . . . . . . . . . . . . . . . . 1.3.1 Timeframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

8 8

1.3.2 Spending Cuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Negative - Keynesian View . . . . . . . . . . . . . . . . . . . . . . . . . . 1.4.1 Timeframe . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

10 12 12

1.4.2 1.4.3

Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Social Programs and Tax Hikes . . . . . . . . . . . . . . . . . . . .

13 15

Final Remarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

16

1.4

1.5 2

Topic Analysis by Isabel Coleman

17

2.1

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17

2.1.1 2.1.2

Prioritize . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Federal Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

17 18

2.1.3 Economic Growth . . . . . . . . . . . . . . . . . . . . . . . . . . . Framing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

18 18

2.2.1 2.2.2

Background on the Federal Debt . . . . . . . . . . . . . . . . . . . Background on Promoting Economic Growth . . . . . . . . . . .

19 21

Example Con Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . Example Pro Arguments . . . . . . . . . . . . . . . . . . . . . . . . . . . .

23 24

2.2

2.3 2.4 3

Topic Analysis by Megan Munce

25

3.1 3.2

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . The Resolution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

25 25

3.3

Affirmative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.1 Federal Debt is Bad . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.3.2 Current Economic Growth is Fine . . . . . . . . . . . . . . . . . .

29 29 30

2

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Contents

4

5

6

3.4

Negative . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3.4.1 Economic Growth is Beer . . . . . . . . . . . . . . . . . . . . . . 3.4.2 Federal Debt is Good . . . . . . . . . . . . . . . . . . . . . . . . . .

32 32 33

3.5

Takeaways . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

34

Topic Analysis by Laurenn Vives

35

4.1 4.2

Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Pro . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

35 39

4.3 4.4

Con . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

41 42

Pro Cards

43

5.1 5.2

Extra Stimulus Not Key . . . . . . . . . . . . . . . . . . . . . . . . . . . . Corruption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

43 49

5.3 5.4 5.5

Military Spending Bad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Energy Subsidies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Long Term Cuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

52 61 62

5.6 5.7

Reduced Private Investment . . . . . . . . . . . . . . . . . . . . . . . . . . Taxes Good . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

66 70

5.8 5.9

Inequality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . National Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

72 76

5.10 Risk of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5.11 China . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

78 81

5.12 AT: Trump Tax Cut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

83

Con Cards

85

6.1

Growth Good . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

85

6.2 6.3

Slow Growth Bad . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 99 AT: Spending Cuts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 100

6.4 6.5 6.6

Tax Cuts Good . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107 AT: Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111 AT: Recessions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 119

6.7 6.8

No Debt Impact . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 122 AT: China can use Debt as Leverage . . . . . . . . . . . . . . . . . . . . . 124

6.9

Debt Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 126

3

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1 Topic Analysis by Marina Leventis Marina Leventis debated for Colleyville Heritage HS from 2013-2017 and is in her second year of coaching for Cypress Woods. Marina aained 8 career bids and was tied as the bid leader for her senior year, consistently ranking in the top 10 teams for that season. Marina was a semifinalist at the 2017 Tournament of Champions as well as the champion of the 2017 TFA State Tournament and the Blake Round Robin. She also reached late out rounds in tournaments such as Emory, Blake, Harvard, and the Glenbrooks, winning a top 10 speaker award at nearly every tournament she aended. Currently, Marina is a sophomore at Southern Methodist University majoring in Finance and minoring in Public Policy and International Affairs.

1.1 Introduction January is a competitive month and usually, in my experience, has a fun and interesting topic; teams with greater topic knowledge will have the advantage. Likewise, this resolution is an interesting one and is very relevant. The key in this resolution is winning the prioritization debate, which can be done in a number of ways beyond arguing the good and bad of debt reduction and economic growth. However, in order to unlock this key nuance in the resolution, teams need to have a foundation for what reducing the federal debt and promoting economic growth mean and how they are typically achieved. Understanding what debt reduction and economic growth are and how they can be stimulated will be important in effectively debating this topic. This knowledge will enable teams to explain both the “why” and “how” questions behind prioritization. Be wary of geing too detailed in the “how” element of this question. Without reasonable proof, the federal government would logically follow your version of “how,” you run the risk of sounding like you are running a plan. Do be thorough, but the best course of action is to learn how debt reduction or economic growth would actually manifest. You can look to past US administrations for examples, as well as research any statements from the

4

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1 Topic Analysis by Marina Leventis current administration to bolster your rationale. However, before this is done, become familiar with what debt reduction and economic growth mean. Kimberly Amadeo of the Balance¹ summarizes succinctly what economic growth can look like and when it is used, as well as its consequences in terms of debt: “Governments want to increase growth because it increases tax revenue. Growth allows businesses to hire workers, increasing their income. When people feel prosperous, they reward political leaders by re-electing them. The government stimulates growth with expansive fiscal policy. It either spends more, cuts taxes, or both. Since politicians want to get re-elected, they use expansive fiscal policy to stimulate the economy. But expansive fiscal policy is addictive. If the government keeps spending more and taxing less, it leads to deficit spending. It works for a while, but eventually leads to higher debt levels. In time, as the debt-to-GDP ratio approaches 100 percent, it slows economic growth. Foreign investors stop investing funds in a country with a high debt ratio. They worry they won’t get repaid or that the money will be worth less. Governments should then be careful with expansive fiscal policy. They should only use it when the economy is in contraction or recession. When the economy is growing, its leaders should cut back spending and raise taxes. This conservative fiscal policy ensures that the economic growth will remain sustainable. A nation’s central bank can also spur growth with monetary policy. It can increase the money supply by lower interest rates. Banks make loans for auto, school, and homes less expensive. They also reduce credit card interest rates. All of these boost consumer spending and economic growth.” Another critical element of this topic is that the question of the resolution is centered around reducing the federal debt, not deficit spending. This is an important distinction as a lot of evidence will center around the deficit alone; affirmatives should be wary of this. However, affirmatives can also argue that reducing deficit spending is a mechanism by which the US can prioritize reducing the debt. This would add a layer of clarity to how affirmatives could achieve solvency. Negatives should also contextualize ¹Amadeo, Kimberly. “How Economic Growth Benefits You.” The Balance, Dotdash, 6 Nov. 2018, www.thebalance.com/what-is-economic-growth-3306014.

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1 Topic Analysis by Marina Leventis what economic growth means. Growth can be ambiguous, and it is difficult to understand what concepts like GDP or GNP growth actually means. Overall, teams should do research to understand different measures of growth and debt reduction in order to effectively debate this resolution. Economics knowledge will be an advantage, but with some effective use of Google, understanding the basics is easily aainable. For teams with expansive economics knowledge, be careful about constructing your arguments. Many judges will not have this kind of background, and geing too specific could be a detriment. Focus on being simple, but also correct.

1.2 Background Information In order to best understand the growing debt crisis in the United States, it is critical to have a foundation in knowing how we’ve goen to this point. High levels of government spending in the US took hold following the Great Depression. While the Stock Market Crash of 1929 was a primary factor in the depression, the destruction of consumer confidence, underconsumption, bank failures, a shrinkage of the money supply, and a shortage of jobs were all key components of the suffering felt by Americans in this era. Franklin Delano Roosevelt was tasked with something that was nearly impossible: reversing the recession. At the time, declining national income was too pressing of an issue for the welfare of America’s people to let the market run its course. Thus, FDR adopted a form of economics now called “Keynesianism,” which essentially relies on increased government spending to stimulate the economy. This is a key example of prioritizing economic growth, but also demonstrates the seed that was planted that grew into the current federal debt problem. Keynesianism is a popular discipline in economics, and it will be critical in explaining economic growth. Brian Domitrovic of Forbes² does a good job of explaining this concept: “The central idea of Keynesianism, the namesake doctrine of British economist John Maynard Keynes, as set out in his magnum opus The General Theory (1936) is that the market, left alone, leads to sub-optimal outcomes. This happens because of a mechanism Keynes called the”liquidity trap.” If you let the market run, wealth will be unevenly held, and many people with money will sit on it. Capital becomes “trapped.” The result is idle productive resources. Those who would really benefit from more ²Domitrovic, Brian. “The Injustices Of Keynesianism.” Forbes, Forbes Magazine, 15 May 2018, www.forbes.com/sites/briandomitrovic/2018/05/15/the-injustices-of-keynesianism/#2bb42688481e.

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1 Topic Analysis by Marina Leventis production via higher wages or jobs or consumption, i.e. the poor and the struggling, are deprived. Keynes’s solution was to introduce a non-market agency, the government, to call into use the productive resources left idle given the liquidity trap. Government soaks up the idle resources residual of the trap and allocates them toward productive ends. The economy does something it cannot under the market: it reaches its potential.” This doctrine of Keynesianism is what prompted FDR’s “New Deal,” which essentially spawned several government support programs and laid the foundation for today’s social spending. Some notable programs and agencies established include Social Security, the SEC, the FHA, and the FCIC. Steve Lohr’s of the New York Times³ outlines what this fiscal policy looked like in terms of government spending: “It would not be until the early 1940s, with the beginning of World War II, that a strong dose of Keynesian medicine was administered to the American economy. By 1942, total government spending as a share of the economy rose to 52 percent, and peaked at nearly 70 percent in 1944, when unemployment fell to 1 percent. One lesson from the 1930s, economists say, is how difficult it is to engineer a recovery when an economy has spiraled down as far as it had by 1933. Swift and effective steps early in a downturn, they say, can enable an economy to avoid further slippage and joblessness.” High levels of government spending have not wavered since FDR’s last term as president. All administrations, Republican or Democrat, have exhibited higher levels of government spending following WWII than before. Major initiatives to end poverty under Lyndon B. Johnson’s administration that are still in place today such as SNAP, Head Start, and Medicare/Medicaid have also contributed greatly to the government pressure to spend. In addition, defense spending has also increased federal spending, especially due to the high cost of ongoing military efforts. Ultimately, it is entitlement programs like Social Security and Medicare/Medicaid and discretionary spending for Defense that keep deficit spending high. Continuously spending at a deficit, much less a rising deficit, keeps America digging deeper and deeper into debt.

³Lohr, Steve. “Roosevelt’s Slow Embrace of Government Spending.” The New York Times, The New York Times, 27 Jan. 2009, www.nytimes.com/2009/01/27/business/worldbusiness/27iht-27fdr.19700619.html.

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1 Topic Analysis by Marina Leventis

1.3 Affirmative - Fiscal Conservatism View 1.3.1 Timeframe One of the best ways to argue effectively on a prioritization resolution is to establish timeframe. This gives teams the ability to concede some offense on the other side while retaining a path to the ballot. Rather than relying on defensive answers proving economic growth is bad or ineffective, teams can bolster weighing by arguing that in order for economic growth to happen or be sustainable, reducing debt has to come first. Not only is this an effective strategy for a debate round, but it is also true in reality. Thus, the literature on this kind of analysis will be abundant. Elizabeth Schulze of CNBC⁴ identifies this in her analysis of 2018 numbers: “In June, the Congressional Budget Office estimated federal debt held by the public will rise from 78 percent of GDP at the end of this year to 96 percent in 2028. That would mark the highest percentage since 1946. The report warned such high and rising debt due to higher spending and lower revenues would have ”serious negative consequences for the budget and the nation.” ”As debt gets higher, it becomes harder and harder to stimulate the economy to generate growth,” said Sonja Gibbs, senior director of the Capital Markets and Emerging Markets Policy Department of the Institute of International Finance, to CNBC via telephone.” The US is not alone as other western nations are facing rising debt due to high social and defense spending against an aging population. While she acknowledges that most mature economies are tackling a growing debt problem, sh...