In a speech last night at the Democratic National Convention, Sen. Elizabeth Warren offered a contrast between her party and Republican presidential nominee. "Last week Donald Trump spoke for more than an hour on the biggest stage he's ever had," she said. "But other than talking about building a stupid wall, which will never get built, really, did you hear any actual ideas?"
It's hard to disagree with the idea that both Trump and the Republicans he represents have effectively abandoned governance. Last week's GOP convention was a nearly policy free zone in which Republicans all but bragged about becoming the party of no ideas.
Warren's speech, on the other hand, showed that Democrats have become the party of really bad economic policy ideas. The party has essentially committed to almost totally ignoring federal debt in favor of promoting an ever-expanding laundry list of benefits, programs, and subsidies, consequences be damned.
Warren didn't mention national debt or deficits at all in her speech last night. That seems frustratingly normal now, because over the past few years, Democrats have heavily downplayed the issue.
This wasn't always the case. Just a few years ago, the budgetary burden of high debt and deficits was a regular Democratic talking point. President Obama's 2008 speech accepting the party's nomination for president, for example, attacked rival John McCain for refusing to back down from Iraq while America is "wallowing in deficits."
The common response from the left these days is that they worry less about the budget because the deficit is down. It's true that annual deficits have fallen from their $1 trillion-plus peaks during Obama's first term. But the deficit—the nation's annual gap between spending and tax revenue—is on the rise again, heading towards about $600 billion this year after a couple years below $500-billion.
That's not a one-time glitch, either: As the Congressional Budget Office (CBO) has been warning for a while, deficits are likely to continue to grow for the foreseeable future.
And that brings us to the real problem: the ever-growing federal debt. Interest payments on federal debt are on track to become the nation's third largest spending category. The CBO has warned repeatedly that this level of debt constrains our policy options in both the short and the long term. And while interest rates may be conveniently low for the moment, making debt service relatively pain free, the nation's current budgetary trajectory is ultimately unsustainable. Something will have to give.
This is not an imaginary problem made-up by one side of the political aisle. Indeed, it's a problem that was described at length just four years ago in a primetime speech by a former president at none other than the Democratic National Convention.
Bill Clinton's 2012 DNC remarks included a multi-paragraph passage singling out the long-term debt burden as a problem, and warning that although interest rates are unusually low now, making debt-service relatively easy, the debt will become a significant problem when interest rates inevitably rise. "We've got to deal with this big long- term debt problem or it will deal with us," he said.
The constraints imposed by government debt (and debt service) are the context in which essentially all other economic policy debates should be grounded. As Bill Clinton said in 2012, the alternative to dealing with the debt is that it will "gobble up a bigger and bigger percentage of the federal budget," and in the process will make it impossible to spend on other things—or, for those who might be so inclined, to not spend it at all.
But Warren, like so much of the Democratic party, has essentially erased meaningful worries about the debt and the limitations it might impose from her policy vocabulary. The closest she came to mentioning it last night was when she declared that "America isn't going broke," because stocks, corporate profits, and CEOs are all doing well. She didn't mention the federal budget at all.
For Warren, the fiscal outlook for the United States government is irrelevant. It's just doesn't factor in to her calls for costly new benefits, like Hillary Clinton's proposal to eliminate tuition at state colleges, and expansions of the entitlements we already have, like Medicare and Social Security, which are themselves set for serious fiscal trouble over the coming decades. Warren's vision of government is one in which its fiscal constraints don't matter or don't exist.
Beyond the fiscal constraints, Warren's policy preferences tend to work from an idea of government power and capability that is essentially unbounded by unintended outcomes.
She supports mandatory paid family leave, for example, which would likely impose a variety of new taxes on employers and individuals, and would cost hundreds of billions—and possibly well over $1 trillion—each year to facilitate. Even if you ignore the cost of the program, there are still other unintended consequences. Research consistently finds that family leave policies tend to sideline women in the workforce, trapping them in lower-paying jobs at lower rungs on the career ladder.
The nationwide $15 minimum wage that she backs goes well beyond what the economic evidence supports, and even left-leaning economists who support a significant bump in the federal wage floor have warned that it could result in substantial job losses.
Warren essentially ignores all of this. Her policy worldview does not recognize costs or consequences.
The contrast between Warren and Trump, and the parties they represent, couldn't be more clear or more frustrating for those who favor limited government. Trump's only real policy response to any perceived problem is unbounded arrogance in himself: I alone can solve it. Warren has a similar view—except for government.