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The Evidence Standard
January 2019
The Evidence Standard
Speech and Debate provides a meaningful and educational experience to all who are involved. We,
as educators in the community, believe that it is our responsibility to provide resources that
uphold the foundation of the Speech and Debate activity. Champion Briefs, its employees,
managers, and associates take an oath to uphold the following Evidence Standard:
1. We will never falsify facts, opinions, dissents, or any other information.
2. We will never knowingly distribute information that has been proven to be inaccurate, even if
the source of the information is legitimate.
3. We will actively fight the dissemination of false information and will provide the community
with clarity if we learn that a third-party has attempted to commit deception.
4. We will never support or distribute studies, news articles, or other materials that use
inaccurate methodologies to reach a conclusion or prove a point.
5. We will provide meaningful clarification to any who question the legitimacy of information
distributed by ourselves or by any third-party.
6. We will actively contribute to students’ understanding of the world by using evidence from a
multitude of perspectives and schools of thought.
7. We will, within our power, assist the community as a whole in its mission to achieve the goals
and vision of this activity.
These seven statements, while simple, represent the complex notion of what it means to
advance students’ understanding of the world around them, as is the purpose of educators.
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Letter from the Editor
January 2019
Letter from the Editor
The first Public Forum resolution of 2019 is “Resolved: The United States Federal
Government should prioritize reducing the federal debt over promoting economic growth.”
This topic can be intimidating to debaters at first, partly because it is so broad. The
federal debt is impacted, at least tangentially, by virtually all government spending and
borrowing, and can potentially hamper or shutdown any spending or borrowing moving
forward. On the other hand, prioritizing economic growth implies any number of policies, and it
similarly could have wide-reaching effects. Economics, even with a specific resolution, is a
complicated subject, but working through this topic will surely help your understanding.
Learning about core economic terms like GDP, jobs, and wages is crucial to understanding this
topic, and debaters shouldn’t be afraid to ask teachers, parents, or other resources for help.
This resolution has a large amount of accessible ground on both the pro and the con,
meaning that debaters will have many arguments to choose from while conducting their
research. Crucially, in tradeoff debates like these where judges must choose to prioritize one
option over another, it’s important to address the prerequisite debate. There is an abundance
of evidence suggesting that paying the debt will increase growth, and conversely that increasing
growth will help pay off the debt. To resolve this dilemma, it’s important to contextualize why
the government should prioritize certain goals and what the government’s goals should be. It’s
easier to weigh impacts as a judge when the debaters tell me what the priorities of the
policymakers should be, and I recommend you do the same.
As a lover of broad topics, I’m truly excited for this month’s brief. We at Champion
Briefs hope you find our final brief of 2018 to be truly helpful as you prepare for the first
resolution of a new calendar year.
Michael Norton
Editor-in-Chief
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Table of Contents
January 2019
Table of Contents
The Evidence Standard ....................................................................... 4
Letter from the Editor ......................................................................... 5
Table of Contents ............................................................................... 6
Topic Analyses .................................................................................... 8
Topic Analysis by Jakob Urda......................................................................................................................... 9
Topic Analysis by Belén Mella .....................................................................................................................17
Topic Analysis by Zachary Ginsberg .........................................................................................................24
General Information ......................................................................... 32
Pro Arguments with Con Responses ................................................. 42
PRO: Higher debt harms American corporations................................................................................43
A/2: Higher debt harms American corporations ............................................................................46
PRO: High American Debt Harms Other Countries ............................................................................49
A/2: High American Debt Harms Other Countries .........................................................................52
PRO: China can weaponize large amounts of US debt .......................................................................56
A/2: China can weaponize large amounts of US debt ...................................................................59
PRO: Debt makes it harder to stimulate the economy in a downturn........................................62
A/2: Debt makes it harder to stimulate the economy in a downturn ....................................65
PRO: More debt leads to higher interest rates which slows economic growth......................68
A/2: More debt leads to higher interest rates which slows economic growth ..................71
PRO: Public Debt Reduces Social Spending ...........................................................................................74
A/2: Public Debt Reduces Social Spending ........................................................................................78
PRO: Public Debt Crowds Out Investment .............................................................................................82
A/2: Public Debt Crowds Out Investment .........................................................................................86
PRO: Public Debt Increases Inflation ........................................................................................................90
A/2: Public Debt Increases Inflation ....................................................................................................94
PRO: Economic Growth Should Not Currently Be A Priority..........................................................98
A/2: Economic Growth Should Not Currently Be A Priority .................................................. 103
PRO: Reducing Debt Now Prevents Snowball Effect ....................................................................... 106
A/2: Reducing Debt Now Prevents Snowball Effect ................................................................. 110
PRO: Reducing debt now makes it more manageable later ......................................................... 114
A/2: Reducing debt now makes it more manageable later...................................................... 117
PRO: Higher interest rates increase inequality ................................................................................. 120
A/2: Higher interest rates increase inequality.............................................................................. 123
PRO: Americans support lowering the debt ....................................................................................... 126
A/2: Americans support lowering the debt .................................................................................... 129
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Table of Contents
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PRO: Higher interest rates hurts small businesses ........................................................................ 133
A/2: Higher interest rates hurt small businesses ........................................................................ 137
PRO: Reducing the federal debt is a prerequisite to promoting economic growth ........... 141
A/2: Reducing the federal debt is a prerequisite to promoting economic growth ....... 145
Con Arguments with Pro Responses ............................................... 149
CON: Economic Growth Increases Social Spending......................................................................... 150
A/2: Economic Growth Increases Social Spending ..................................................................... 154
CON: Economic Growth Decreases Crime ........................................................................................... 157
A/2: Economic Growth Decreases Crime ........................................................................................ 161
CON: Economic Growth Increases Tax Revenue............................................................................... 164
A/2: Economic Growth Increases Tax Revenue ........................................................................... 168
CON: Economic Growth Improves Health .............................................................................................. 172
A/2: Economic Growth Improves Health ........................................................................................ 176
CON: Economic Growth Creates Jobs..................................................................................................... 180
A/2: Economic Growth Creates Jobs ................................................................................................. 184
CON: Economic growth reduces poverty ............................................................................................. 188
A/2: Economic growth reduces poverty .......................................................................................... 192
CON: Economic growth helps small businesses ................................................................................ 195
A/2: Economic growth helps small businesses............................................................................. 199
CON: Economic growth increases standard of living...................................................................... 203
A/2: Economic growth increases standard of living .................................................................. 206
CON: Economic growth increases wages ............................................................................................. 210
A/2: Economic growth increases wages .......................................................................................... 213
CON: Economic Growth promotes less Government borrowing ............................................... 217
A/2: Economic Growth promotes less Government borrowing ........................................... 221
CON: Economic Growth is key to addressing Climate Change .................................................... 224
A/2: Economic Growth is key to addressing Climate Change ............................................... 228
CON: Economic Growth is key to Global Leadership ...................................................................... 231
A/2: Economic Growth is key to Global Leadership ................................................................... 233
CON: Economic Growth helps the working class.............................................................................. 236
A/2: Economic Growth helps the working class .......................................................................... 240
CON: The National Debt is a Political Distraction............................................................................. 242
A/2: The National Debt is a Political Distraction ......................................................................... 246
CON: Economic Growth increases security ......................................................................................... 248
A/2: Economic Growth increases security...................................................................................... 253
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Topic Analysis by Jakob Urda
January 2019
Topic Analysis by Jakob Urda
Resolved: The United States federal government should prioritize reducing the federal debt
over promoting economic growth.
Introduction
The January topic is always a wringer. The topic spans from the Blake tournament in
mid-December till the end of the next month. These competitions are typically among the most
intense in the debate season – large tournaments with competitive fields. Just as the variety of
teams is so broad, so too is the ground covered by the resolution. January topics are typically
big policy topics, and this year is no exception. Virtually everything the American government
does falls within the schema of debt reduction and economic growth. The combination of a
wide topic and intense competition means that the issues debated will change dramatically
over the course of the period. January places a premium on information – being able to keep up
with national circuit developments and adapt casing strategies to changes in the competitive
landscape. The nature of the topic also makes judge adaptation especially important. Different
regions of the country take dramatically different attitudes towards the different facets of
economic policy. Especially in today’s polarized political climate, economic issues are highly
salient to voters and potential judges. Smart teams will be sure to familiarize themselves with a
wide swath of arguments and not just the points that they are running to maximize their ability
to communicate to different types of people.
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Topic Analysis by Jakob Urda
January 2019
Tournament Considerations
The January topic is book-ended by the Blake and Emory tournaments. Having such
large and important competitions at the very start and ends of the topic fosters an atmosphere
of constant renewal and competition. In many topics, the start of the topic defines the scheme
of arguments being run. But by having such high stakes fields populated throughout the month,
January is sure to have consistent developments in the types of points being articulated by
different teams.
The Blake tournament is very important to keep one’s eyes on because it happens
before most high schools go on winter break. The most important piece of advice around Blake
is to try and be familiar with the arguments run in semis and finals. Blake’s elimination rounds
are typically in the same place, during the same time as regular rounds. That means they are
guaranteed to have a large audience, with plenty of flows being circulated. Nearly every year,
the arguments popularized by the end of Blake end up being run in mass by the time the month
of January rolls around. Taking the time over break to analyze these arguments, write blocks,
and understand the nuances involved will be incredibly helpful for any team trying to dominate
the January landscape.
The Emory tournament is a high stake Octos bid at the end of January. By this point in
the game, teams have refined their strategies and perfected their arguments. An important
point to remember is that the Emory judging pool is very diverse, from national circuit judges to
local coaches. This means that being familiar with local audiences will be crucial for prelim
success. The tournament typically rewards teams that are not merely technically proficient, but
also good at communicating complex ideas simply. Remember that this topic is so broad that it
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January 2019
is impossible to expect judges to have as deep an understanding of any particular advocacy as
they might on more narrow topics (like UNCLOS). The judge’s exposure to any single debtreduction plan or economic growth scheme is bound to be far less than the team debating it.
This means that teams should not assume that their judges understand jargon, political context,
or anything else about what they are running. Keep it simple and you will be rewarded!
Strategy Considerations
Much like with other policy related topics, the January debate revolves around
inherency. What is inherency? Inherency is the idea that there exist beliefs or attitudes which
prevent the alter and shape the implementation of the resolution. In Public Forum, out topics
are too narrow to explore the full range of the subject without raising additional questions. On
the other hand, this topic is so broad that simply picking an advocacy would allow teams to
debate about anything from tax cuts to research spending to tariffs to subsidies. Virtually every
policy that the government enacts has some impact on the debt (because it involves spending
money) or economic growth (because it encourages commerce). This raises a few questions:
what policies are most likely to be enacted? How will those policies be paid for – if at all? How
much spending increases or decreases is reasonable for a team to advocate for? Clearly, teams
cannot advocate for anything. It would be strange and ineffective for affirmative teams to talk
about a tripling of the national research budget. This forces debaters to conduct an entire series
of arguments before the substance of the round even starts considering what the most likely
manifestations of the topic are given the current political climate.
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Topic Analysis by Jakob Urda
January 2019
Winning the inherency debate is just as important as winning the subsequent policy
debate. If a team makes an argument about a specific pro-growth policy, there are two ways to
respond. One is the traditional way: attack the links of the policy, say that it does not confer the
desire benefits towards growth. The other is through inherency: attacking the idea that this
specific policy would actually be implemented, saying that affirming the resolution would not
actually lead to those outcomes. The effect is the same, to stop the other side from gaining
access to their desired impacts. Being able to attack an opponent on the inherency front is
crucial because teams will likely have well developed frontlines to arguments on the link level.
Saying that an advocacy is simply not how the resolution would play out is a great way of
circumventing the terms of the debate and being able to foreground your own arguments as
realistic and intuitive.
To be able to win the inherency debate, teams should look into the different arguments
being proposed and debated by actual politicians and policymakers. If a solution appears
politically realistic, it is much more likely to pass the inherency test. One way that policies might
not be inherent to the resolution is if they might run afoul of a presidential veto. A presidential
veto would make it near impossible that the policy in question would be passed, because it
would need a bipartisan supermajority which is difficult to achieve in the modern political
climate. Therefor, it is unrealistic to expect that radical packages like a universal jobs guarantee
would ever be passed in the name of generating economic growth. Similarly, the current
administration’s stance in favor of large corporations means that it would be difficult to
imagine a large tax increase bill ever passing in order to cut the deficit.
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Topic Analysis by Jakob Urda
January 2019
On such a wide topic, ample time should be spent by teams in order to establish a
tactical understanding of what is the most likely manifestation of the resolution. Certain
implementations of the topic favor one side of the debate. Focus on an interpretation of the
topic which leaves you with the most room for argumentation. Being able to win the inherency
debate sets a team up dramatically before the round has even begun.
Affirmative Argumentation
The January topic is made tricky by the intuitive appeal of both the impacts in question.
A majority of Americans are in favor of both reducing the debt and promoting economic
growth. Nor are the two questions opposed to each other. Plenty of literature exists which
suggests that debt reduction is good for economic growth by lowering interest rates and
government crowding-out of private sector investment. The meat and substance of the debate
will therefor hinge on the means and methods by which each side achieves its goals, and how
they interact with each other. This places a premium on in-dept knowledge of the advocacy
which a team is running.
One of the most likely ways that deficit reduction will happen is through cutting
spending. This is because the Trump administration has already shown a sustained willingness
to cut federal funding for programs. By contrast, the current administration does not appear
willing to substantially increase taxes. The difficulty will lie in articulating which programs ought
to be cut, and why.
New reports suggest that President Trump is considering a blanked 5 percent cut to
federal discretionary spending. This would be enormous, tens of billions of dollars slashed from
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Topic Analysis by Jakob Urda
January 2019
the budget. Senator McConnell has suggested that he would like to see cuts primarily target
entitlement programs such as Medicare and Medicaid. Investigating these avenues of debt
reduction would be a good place to start for teams interested in advocating for politically
realistic methods of curbing American spending.
The arguments in favor of entitlement cuts are long and well documented. One of the
most important claims is that entitlements will run out of funding in the near future if reforms
are not made soon. For instance, it is theorized that raising the retirement age by three years
would cut billions in federal spending and ensure that the next generation has money left over
for social security. The weighing for this argument is simple: something is better than nothing. If
entitlement programs run out of money and become fundamentally unworkable, it will lead to
a crisis where American retirees will not have the money necessary for subsistence. By raising
the retirement age, some Americans will have to work for a few more years, but the stability of
the entire apparatus of retirement income will be ensured for the foreseeable future.
Many scholars also point to the secondary benefits of raising the retirement age. Such a
move would not only curb the debt, it would encourage productivity by keeping Americans in
the workforce for longer. When social security was rolled out, most Americans did not live long
enough to collect it. Modern life expectancies are considerably longer, and most white-collar
employees could feasibly work for a few more years without serious consequences to their
lifestyles of productivity. This would in turn stimulate the national economy and encourage long
term economic growth. As America struggles with lower and lower birthrates and a stagnating
demographic pyramid, keeping more citizens in the workforce may be the key to maintaining a
productive and competitive national economy.
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Topic Analysis by Jakob Urda
January 2019
Negative Argumentation
Much as with the Affirmative, the negative will have to think hard about realistic ways
that the current administration might increase economic growth. Based on recent history, three
examples stand out as particularly likely: tax cuts, regulation cuts, and infrastructure spending.
Tax cuts and regulation cuts have been cornerstones of the Trump economic agenda.
2016 and 2017 saw large rounds of corporate tax breaks as well as the curbing of regulatory
agencies such as the EPA. These advocacies have the advantage of being massively inherent to
the resolution – it is difficult to imagine any team calling further tax cuts ‘unrealistic’ under the
current political climate.
The disadvantages of running these arguments is that they are heavily politicized. There
are few issues that voters disagree more about than tax cuts and regulation, so relying too
heavily on them for a topic that will have a wide judging variety may be difficult.
One topic which most judges agree about is the importance of infrastructure spending.
American infrastructure is irrefutably in disarray, having received a ‘D’ on its report card from
the Army Corp of Engineers. Deteriorating infrastructure causes billions of dollars in delays and
lost productivity, and hampers America’s ability to invest in emerging market sectors. Almost all
judges will agree that spending more money on durable infrastructure is a wise use of the
federal government’s money.
The Trump administration has signaled a willingness to roll out a massive infrastructure
package in the near future. Debaters should look into what programs are likely to be funded
and make arguments about those. Infrastructure not only raises the average standard of living
and generates jobs, but also allows the United States to be more competitive internationally by
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Topic Analysis by Jakob Urda
January 2019
lowering the cost of American goods and allowing for the cheap movement of labor. In the long
run, these advantages could demonstrably lower the federal deficit. Infrastructure spending
also helps the poorest in our country, because they often lack access to private infrastructure
and lack the money to compensate for a loss of public goods. Therefore, teams can make an
equity argument that overall gains matter less than targeted economic growth aimed at the
working and lower middle classes.
This topic promises to be engaging and wide ranging. Keep your eyes forward
and your ears open. Good luck!
About Jakob Urda
Jakob grew up in Brooklyn, New York. He attends the University of Chicago where he
hopes to receive a BA in Political Science in 2019, and is interested in security studies and
political economy. Jakob debate for Stuyvesant High School where he won Blake, GMU, Ridge,
Scarsdale, Columbia, the NCFL national championship, and amassed 11 bids. He coached the
winners of the NCFL national tournament, Harvard, and Blake.
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Topic Analysis by Belén Mella
January 2019
Topic Analysis by Belén Mella
Resolved: The United States federal government should prioritize reducing the federal debt
over promoting economic growth.
Introduction
As I write these words, the United States national debt stands at over twenty-one trillion
US dollars.1 For most people, this figure is too large to fathom. Moreover, a figure so large
might lead people to wonder, Does the national debt even matter? After all, we’ve managed to
accumulate twenty-one trillion dollars in debt, so what’s a little more going to do? There are
major reasons to reject this sort of reasoning. Indeed, former Federal Reserve Chair Janet Yellen
has been emphatic that the growing national debt is quickly becoming unsustainable, telling
Congress that “it's the type of thing that should keep people awake at night.2” This January,
Public Forum debaters will become enmeshed in the debate about the national debt, and in
particular, how it should square against other priorities like economic growth. This is a
challenging topic, as mastery of it requires understanding some pretty complicated economic
links. That said, it’s an exciting opportunity to learn about something that people frequently
debate but rarely understand. Let’s dive in.
1 "U.S.
National Debt Clock : Real Time." U.S. National Debt Clock : Real Time. Accessed December 13, 2018.
http://www.usdebtclock.org/.
2 Staff, The Week. "The National Debt, Explained." The Week - All You Need to Know about Everything That
Matters. January 13, 2018. Accessed December 9, 2018. https://theweek.com/articles/747998/national-debtexplained.
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Topic Analysis by Belén Mella
January 2019
Background
The actor of this resolution is the United States Federal Government. In order to debate
this topic, it’s necessary to understand what entities this might specifically refer to, as well as
which tools are at their disposal. To answer these questions, we can start with the federal
budget -- the national plan for how the government will allocate resources for a given year. The
budget process starts with the President, who submits a budget request to Congress.3 Within
Congress, the House and Senate work to pass budget resolutions, vote on appropriation bills
and try to reconcile differences between proposals. This can be a politically fraught process,
most notably when it leads to a government shutdown. When Congress does come to an
agreement, the budget gets sent to the President, who finally signs the budget into law. The
resolution asks whether the government should prioritize reducing the federal debt or
promoting economic growth. Action on either of these fronts starts with designing the budget.
From a strategic perspective, debaters should consider how the word “prioritize”
functions in the resolution. According to the Oxford English Dictionary, to “prioritize” means to
“designate or treat (something) as more important than other things” and “to determine the
order for dealing with (a series of items or tasks) according to their relative importance.” These
definitions differ in profound ways. If a Pro team succeeds in demonstrating the importance of
reducing the federal debt, but the Con team succeeds in convincing the judge that a) they
should accept the second definition of prioritize and that b) economic growth should be
pursued before reducing the federal debt, the Con team may very well win the round.
3 "Budget
Process." National Priorities Project. Accessed December 8, 2018.
https://www.nationalpriorities.org/budget-basics/federal-budget-101/federal-budget-process/.
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Topic Analysis by Belén Mella
January 2019
This also brings to mind a second strategic consideration: timeframe. The federal budget
gets reworked annually, so presumably, these priorities are weighed each and every year. If
debaters interpret this resolution as asking what we should do right now, then current
economic conditions become very relevant to the debate. On the one hand, the economy is
doing pretty well right now, so maybe it’s not the time to prioritize economic growth. On the
other hand, there’s reason to suspect a looming recession (according to CNN, “nearly half of
American CFO’s fear a 2019 recession), so by the time the next budget gets debated, economic
growth could very well be a major priority.4 As debaters will see in the literature, questions of
timeframe lie at the heart of this debate topic. The federal debt is always regarded as a longterm issue, while economic growth is considered a short-term priority. However, repeatedly
putting off a so-called long-term issue is what has gotten us to a $21 trillion debt in the first
place.
Debaters must also recognize that the federal debt and economic growth are deeply
intertwined. To understand this, we must understand how the federal debt comes to be. The
government, just like businesses and individuals, both makes money (through taxes) and
spends money (on government services). More often than not, the federal budget plans for the
government to spend more money than it makes -- this is called a deficit. The federal debt is an
accumulation of these deficits. As Kimberly Amadeo explains in The Balance, deficit spending
drives economic growth in the short run: “The federal government pays for defense equipment,
health care, and building construction. It contracts with private firms who then hire new
4
Egan, Matt. "Nearly Half of US CFOs Fear a 2019 Recession." CNN. December 12, 2018. Accessed December 13,
2018. https://www.cnn.com/2018/12/12/economy/recession-economy-cfos-duke/index.html.
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Topic Analysis by Belén Mella
January 2019
employees.5” However, the federal debt might hurt economic growth in the long run, an issue
we’ll discuss under “Pro Arguments.”
Before we dive into that, we should clarify one more point: how can the government
spend more money than it makes? When individuals have debt, it means they owe money to
some entity, whether that’s a business, a bank, a credit card company, or another individual.
But who does the government owe money to? According to Market Watch, the breakdown is as
follows: 11.2% of the debt is owned by the Federal Reserve, 32.5% of the debt is owned by U.S.
investors, 27% of the debt is owned within the U.S. government, and 29.3% of the debt is
owned by foreign investors, largely located in China and Japan.6 But what does it even mean to
“own” the government’s debt? Basically, the government must issue securities --things like
treasury bills, notes, and bonds-- which are basically IOU’s through which the government
promises to pay the money back, plus some interest. These IOU’s are tradeable: I can sell my
treasury bills, for instance, on the market. Crucially, the United States is able to have so much
outstanding debt because investors tend to trust that the U.S. will always be able to pay it back.
However, if the debt becomes too large, investors might start to doubt this promise. This brings
us to the Pro side.
The Pro Side
Pro teams on this topic will point out that the problem is not just that the debt is huge -it’s also that the debt is huge relative to our gross domestic product or GDP. As Amadeo
5 Amadeo,
Kimberly. "5 Reasons Why America Is in So Much Debt." The Balance Small Business. November 7,
2018. Accessed December 12, 2018. https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778.
6 Bartash, Jeffry. "Here's Who Owns a Record $21.21 Trillion of U.S. Debt." MarketWatch. August 23, 2018.
Accessed December 13, 2018. https://www.marketwatch.com/story/heres-who-owns-a-record-2121-trillion-of-usdebt-2018-08-21.
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Topic Analysis by Belén Mella
January 2019
explains, the current U.S. debt is greater than what "America produces in a whole year," which
might signal to investors that "the country might have problems repaying the loans." To put this
into perspective, Pro teams should note that this is "a new and worrying occurrence for the
United States," which in 1988 had a federal debt that was only half of GDP.7 This is only
expected to get worse, as the Congressional Budget Office estimates that "the debt will be well
over 100 percent of GDP by 2039 under conservative assumptions.8”
Why does this matter? According to David Davenport of Forbes, the rising debt could
jeopardize Social Security and Medicare Entitlements, which account for nearly two-thirds of
federal spending.9 Even more alarming, the Director of National Intelligence Dan Coats recently
stated to the Senate that the federal debt “is threatening our ability to properly defend our
nation, both in the short term and especially in the long term.”
Other major arguments on the Pro side will relate to how our debt gets traded in the
financial markets. For example, “as the debt-to-GDP ratio increases, debt holders could demand
larger interest payments,” since interest is the price of borrowing money, and borrowing
money would logically get pricier if the borrower is untrustworthy.10 However, larger interest
costs would slow the economy, since they ripple onto the cost of borrowing money in general,
7 Amadeo, Kimberly. "5 Reasons Why America Is in So Much Debt." The Balance Small Business. November 7,
2018. Accessed December 12, 2018. https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778.
8 Haskins, Ron. "The Federal Debt Is Worse than You Think." Brookings.edu. July 28, 2016. Accessed December
05, 2018. https://www.brookings.edu/opinions/the-federal-debt-is-worse-than-you-think/.
9 Davenport, David. "Five Reasons Why You Should Worry About The Federal Debt." Forbes. February 28, 2018.
Accessed December 05, 2018. https://www.forbes.com/sites/daviddavenport/2018/02/28/five-reasons-why-youshould-worry-about-the-federal-debt/#5501c55a4932.
10 Amadeo, Kimberly. "5 Reasons Why America Is in So Much Debt."
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January 2019
and borrowing is critical to powering economic growth. Furthermore, “the stock and bond
markets [could] lose confidence in our reckless fiscal policy and send prices plunging.”
The Con Side
While the Con side should not deny that the federal debt is high, it should take on a
different perspective as to how we can work to ameliorate the potential problems -- while
prioritizing economic growth. Indeed, the Con side can very well argue that economic growth is
key to solving the federal debt problem. This relates to a concept we have already alluded to:
the debt to GDP ratio. The debt in and of itself matters less than how it compares to America’s
economic output, so if we improve output, we diminish the problem of the debt (even if the
debt itself increases). As the Brookings Institution puts it, “weak economic growth—or worse,
sliding back into recession—will reduce revenues and make it much harder to reduce or even
stabilize the ratio of debt to GDP.11”
Beyond proving how the Con side solves the Pro issues better, the Con should also have
its own legs to stand on. Namely, this relates to the importance of economic growth. Here is
where a strong narrative can really help build a case. At the end of the day, economic growth is
a tangible impact, and Con teams should go to great lengths to underscore the importance of
job creation, poverty alleviation, and government spending to impact the lives of everyday
Americans. As long as our economy is strong, investors will not have a reason to doubt
11 Rivlin,
Alice M. "Growing the Economy and Stabilizing the Debt." Brookings.edu. July 28, 2016. Accessed
December 10, 2018. https://www.brookings.edu/testimonies/growing-the-economy-and-stabilizing-the-debt/.
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Topic Analysis by Belén Mella
January 2019
America’s ability to pay back its bills. Meanwhile, a strong economy also means an improved
quality of life for the citizens to which the government is accountable.
Conclusion
To get beyond the standard arguments on this topic, debaters will have to get creative. What
might go wrong if the foreign holding of U.S. debt gets too high? Why should economic growth
be a priority right now? Both sides will have their own interpretation of how the federal debt
and economic growth are related, with Pro teams arguing that the federal debt will threaten
economic growth, and Con teams arguing that economic growth is the answer to the federal
debt problem. I suspect that many debates will come down to whichever side has the better
warranting for their interpretation. This will entail having not only the smartest explanation of
the links but also the clearest interpretation of the links. As debaters prepare and argue, they
should put themselves in the judge’s shoes and aim to imbue their speeches with strong
narratives, persuasive rhetoric, and clear explanations.
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Topic Analysis by Zachary Ginsberg
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Topic Analysis by Zachary Ginsberg
Resolved: The United States federal government should prioritize reducing the federal debt
over promoting economic growth.
Introduction
This is one of the broadest topics we have had in a long time. While most topics hone in
on a single law or policy of the United States, basically every economic policy of the United
States has the potential to be up for debate here because almost everything affects economic
growth or the debt in some way, which means the arguments to be made on either side are
nearly endless. This means that to do well on this topic, debaters need to be very well versed in
the basics of economics and economic policy. It also means that on this topic, you will almost
certainly always be behind in research due to its breadth and depth, which puts a premium on
good strategy and weighing.
As daunting as it may seem, this means there is a lot of room for creativity and the topic
will surely be a fun one.
Before getting into strategic advice, let’s just go over a few key terms to make sure we
are all on the same page. Economic growth is the measure of how fast our GDP rises. What is
GDP? Gross Domestic Product is the total market value of all the goods and services produced
within the economy in any given year. It’s worth noting that economies naturally grow over
time due to population growth increasing demand and more industries leading to more
contingent industries. Federal debt is the amount of money the US federal government owes
to other entities, be it private citizens or foreign nations. We accumulate this debt when our
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Topic Analysis by Zachary Ginsberg
January 2019
spending exceeds our tax revenue because we need to get the money from somewhere if not
our taxes.
Defining these important terms in basic wording should help us have a more firmly
grounded understanding of the fundamentals of the topic, which is important on such a broad
one like this.
Tournament Considerations
January is a highly competitive month with at least a tournament a weekend, and many
times multiple major national tournaments at the same time. These include, in no order,
Lexington, Columbia, Emory, Laird Lewis, Sunvitational, and many more. Most of these major
tournaments have very good judging, which is what makes January such an exciting month for
debaters. On the other hand, it is important to not mistake debate experience for experience in
the kind of debate you are used to. Many times, debaters get tripped up because they see a
judge who has a lot of experience and thus debate as tech as they possibly can, leaning in hard.
This can often be a mistake as different styles around the country mean that having a lot of
experience does not translate into knowing your preferred style of debate. This means that
even though the judging is great at January tournaments, you still must appeal to a wide
audience and don’t forget about judge adaptation.
Before moving on, I should make a brief note about Blake, probably the most unique
tournament of the year because it is in December but on the January topic. Blake is known for
being one of the most fun tournaments of the year because the debate rounds are in hotel
rooms and the Mall of America is a great consolation prize for those who don’t break, but it is
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January 2019
also a highly competitive tournament. Because there is so little time to prepare, almost all
teams will not be at their normal level of research. This means that there is a premium on
having the smartest, most strategic arguments rather than simply having the most pieces of
evidence.
Strategy and Weighing
This topic seems simple at first— all you must do is weigh economic growth against
reducing the federal debt. Unfortunately, it’s not that simple. As with any “prioritize” debate,
there is often the misconception that it implies that every debate should be a weighing battle
between these two ends, neglecting the fact that prioritize is a verb, thus making this an action
resolution. It is important to consider that when the judge votes pro, the United States will be
taking the action of prioritizing reducing the federal debt over economic growth. This is a very
vague action that can take many forms, and it is up to the debaters to hone in on exactly what
this will look like in the real world in terms of policy.
There are two main definitions of prioritize normally thrown around in debate: where
one allocates more resources, and which action one takes first. In this case, the resources
being used will probably be either political capital or money.
Debaters should not only have a robust definition of prioritize that fits their case, but a
specific prediction of what actions they believe the government is likely to take when it shifts its
priorities and be able to provide evidence and logic for this prediction. Another important
question to answer is which one we are prioritizing now. Having an answer to this question can
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help debaters narrow in on more specific arguments and figure out which side is defending the
status quo, and which is defending a change.
Once you have all this sorted out, coming up with arguments for this topic should be
simple. All you must do is define prioritize, figure out what action the government will take and
what policy that will affect and go from there. For example, if the government prioritizes debt
reduction, that may mean they cut food stamps to save money and on the con, you could argue
that this is bad. The ground on this topic for both sides is vast, so I will offer a few suggestions
for strategic arguments for either side in the following two sections of my topic analysis.
Affirmative Argumentation
In line with the argument generation scheme I talked about in the strategy and weighing
section, I will offer a few suggestions for types of policies worth arguing for on the affirmative
and how you can link into them.
The first question is: what kinds of policies reduce the federal debt? As we saw in the
introduction section, federal debt is accumulated when we spend more than we take in through
taxes. This means debt reduction must do one of two things: either increase tax revenue or cut
spending.
To raise taxes can be good because it will give the government opportunity to spend
that money later through social programs. This means that even if the con can prove that social
programs or any other kind of beneficial will be cut now when the government prioritizes debt
reduction, in the long run having higher taxes sets the government up to be able to spend more
in a sustainable manner.
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Topic Analysis by Zachary Ginsberg
January 2019
However, the pro might say that if the priority is debt reduction, then it is unlikely that
this money will go toward spending. Instead, it will likely go toward paying off our debts. This is
a fair response, but it can be addressed with the long term weighing I mentioned above.
However, you can also concede to this and simply argue that debt accumulation is bad. This is
true for several reasons, but namely it has a trickledown effect on the economy by raising
interest rates and thus inhibiting business expansion. Interest rates go up because it becomes
riskier to borrow from the United States, which means that anyone who does would like to be
paid more when their money is returned to compensate for the higher risk they are taking on
by lending. This is bad because higher interest rates mean that people and businesses are less
likely to take out loans because it becomes more expensive for them to do so. This ultimately
will threaten the expansion of businesses because it means they will have fewer available funds
for hiring new people or branching out in other ways that could help the economy. It also
means that ordinary people will be unable to afford things that they really need, like buying a
home or a car or paying for college tuition, which they need loans for.
The other option for arguments is to argue that it is good to cut spending. There are lots
of compelling pieces of evidence that claim that billions of dollars in federal spending is wasted
every year. If we had to cut spending, it would probably be cut there since it provides no utility.
This means that the neg gets no ground, and you can win off impacts of debt reduction. While
the con will likely bring up examples of spending that are good, there are also plenty of
programs the government spends money on that are bad. For example, there are lots of
reasons that social spending is harmful for the poor because it creates a cycle of dependency
and never allows them to meaningfully exit poverty. This is because when people receive
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money from the government that it is possible to live on, they may feel it is unnecessary to
work themselves. However, even if the most extreme scenario isn’t true, a more nuanced
version of the argument is that welfare surpasses wages. If people know that they will have a
significant portion of their income paid by the government, they may be willing to accept lower
wages. While this may be ok for people on welfare, it signals to businesses in general that it is
time to reduce wages, hurting people across the economy regardless of their welfare status.
The impact here is very weighable because earning less, for those who already earn barely
enough to live can be a matter of life and death.
The structure of this argument would look something like the following. There would
need to be a definition of prioritize that states that whatever the priority is will get more
resources. Then, this means that to reduce debt, the government will divert resources away
from spending toward paying off our debt. Then there would need to be a piece of evidence
that proves that welfare is likely to be cut. There are many good reasons for why this is the
case. For example, it is often a budgetary goal of Republicans to reduce social spending, which
means that in times of budgetary constraints, this may be the first item they set their aim at.
Then, the contention can go into the benefits of cutting welfare and delineating the impacts I
talked about above.
This is just one example of a laundry list of possible sources of government spending
that cause negative effects on the public. As the pro, there are many options before you. So
just choose whatever you feel you can make the most compelling case for and provide good
logic and evidence for why your definition of prioritize means that this is the action the
government will take.
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Negative Argumentation
On the negative, it is basically the same as the affirmative, but switched. Given that the
resolution is framed as prioritizing reducing the debt over economic growth, this means that
the negative does not imply prioritizing economic growth over debt reduction. It simply means
not doing the opposite, which means that the best path toward an argument is to argue that
putting the debt first is a bad idea.
Again, putting the debt first entails two possibilities: increasing taxes or reducing
spending. From here, you can argue why both options are a bad idea.
First, for taxes, there are many good arguments for why a lower tax rate is good for
America. Lower business taxes frees up capital for enterprises to hire people, thus enabling job
expansion and a reduction in poverty. Lower personal income taxes mean that ordinary citizens
have more disposable income, which they can spend at businesses helping the business owners
and everyone employed there as well. Lower taxes also mean that there may be more
investment, which can lead to more innovation and research and development, which is not
only good for the economy but may also save lives through new inventions.
As for why cutting spending is bad, this is an easy case to make. All you must do is, like
on the pro, pick your favorite government program, offer a reason it will be cut when the
government prioritizes reducing the debt and then weigh the impact. Let’s go through a few
examples.
Take the example I gave for the affirmative, welfare. Cutting welfare spending can be
bad because people rely on welfare for their livelihoods. Welfare does not provide enough
money for people to live on, and wages are already as low as they can be for the poorest
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people because most large corporations already employ at the minimum wage. This means
that the only effect of reducing welfare spending is that people with already low paying jobs
now cannot afford medical care because Medicaid was taken away and they can’t afford food
because their food stamps were cut as well. This is clearly bad and may even lead to the deaths
of many people. The impact of this will be especially large too because of how large the debt is.
This means that to even make a dent into financing our debt, welfare would essentially need to
be entirely gutted. This means that millions of people— huge swaths of the population in
America— may lose access to necessities like food and healthcare.
Another policy the government may cut is education spending, which is important for
helping kids get better paying jobs when they are older. We may also cut spending on the
military, or infrastructure, or maybe research and development, all of which have very
compelling arguments in their favor. The list goes on and on as to what the government may
cut.
This means that as the con, you simply must define prioritize, explain why that means
that the government will cut the programs you want to talk about, and then explain why your
programs are good for the American public.
About Zachary Ginsberg
Zachary Ginsberg is the Debate Coach for Trinity High School in New York City.
Throughout his high school debate career, Zach amassed a total of 15 bids to the Tournament
of Champions and was awarded a top 5 speaker award at Bronx, Harvard, and Columbia. He
has reached semifinals or further of Blake, GMU, Ridge, Bronx, the Glenbrooks, and Scarsdale.
In his senior year, Zach championed the Columbia Invitational and finished in the top ten at the
TOC, NCFL Nationals, and NSDA Nationals. Now, Zach is a sophomore at Columbia University.
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General Information
January 2019
General Information
Resolved: The United States federal government should prioritize reducing the federal debt
over promoting economic growth.
Foreword: We, at Champion Briefs, feel that having deep knowledge about a topic is just as
valuable as formulating the right arguments. Having general background knowledge about the
topic area helps debaters form more coherent arguments from their breadth of knowledge. As
such, we have compiled general information on the key concepts and general areas that we feel
will best suit you for in- and out-of-round use. Any strong strategy or argument must be built
from a strong foundation of information; we hope that you will utilize this section to help build
that foundation.
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The Federal Debt
The national debt level of the United States has always been a subject of controversy.
Two-thirds of the federal government’s debt is held by the public. The government owes this to
buyers of U.S. Treasury bills, notes, and bonds. These are often sold to individuals,
companies, and foreign governments. The remaining third of the debt is within the
government, or intragovernmental. Social Security and other trust funds are the biggest
owners of debt. They have been running surpluses for years, which federal government uses to
pay for other departments.12 As the debt has grown at a significant rate in the last decade, it
has been increasingly discussed around the country. As of March 2018, the country’s federal
debt exceeded $21 trillion (A live tracker of our federal debt can be found here). As a result,
America's debt is the largest sovereign debt in the world for a single country. It runs neck and
neck with that of the European Union, which is a unified trade body of 28 member countries.
Amadeo, Kimberly. “5 Reasons Why America Is in So Much Debt.” The Balance Small
Business, The Balance, 7 Nov. 2018, www.thebalance.com/the-u-s-debt-and-how-it-got-sobig-3305778.
12
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Why the Debt Has Grown13
1. Federal budget deficits. Every time the government cuts taxes or increases spending,
our debt grows. By president, the Obama administration had the largest deficit in
United States history with $800 billion. President Bush had the second largest deficit
with the $700 billion bailout after the 2008 financial crisis. The deficit increase shows no
sign of slowing down, as President Trump is projected to add another trillion dollars to
the deficit with his administration’s corporate tax cuts.14
2. The Social Security Trust Fund. Every president borrows from this. The Fund took in
more revenue than it needed through payroll taxes leveraged on baby boomers. Ideally,
this money should have been invested to be available when the boomers retire. Instead,
the Fund was "loaned" to the government to finance increased spending. This interestfree loan helped keep Treasury Bond interest rates low, allowing more debt financing.
This is where the aforementioned 1/3 of debt comes from and must be repaid by
increased taxes when the boomers do retire.
3. Countries like China and Japan buy Treasuries to keep their currencies low relative to
the dollar. They are more than willing to lend to the United States, their largest
customer, so it will keep buying their exports.
4. The government has benefited from low interest rates. Low interest rates are significant
because purchasers of Treasury bills are confident that America has the economic
power to pay them back. During the recession, foreign countries increased their
holdings of Treasury bonds as a safe haven investment. These holdings went from 13
percent in 1988 to 31 percent in 2011.
5. Congress raises the debt ceiling. Congress sets a limit on the debt but is constantly
increasing it. This didn't happen between 2011-2013 because the debt crisis resulted in
a government shutdown and budget sequestration. In 2015, Congress suspended the
13
Amadeo, Kimberly. “5 Reasons Why America Is in So Much Debt.” The Balance Small Business, The Balance, 7
Nov. 2018, www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778.
Tankersley, Jim. “How the Trump Tax Cut Is Helping to Push the Federal Deficit to $1
Trillion.” The New York Times, The New York Times, 25 July 2018,
www.nytimes.com/2018/07/25/business/trump-corporate-tax-cut-deficit.html.
14
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ceiling until after the 2016 presidential elections. In 2017, it raised the debt ceiling until
December 8, 2017.
15
15
Eyermann, Craig. “Who Owns the U.S. National Debt? | Craig Eyermann.” MyGovCost.org,
15 May 2017, www.mygovcost.org/2017/05/15/who-owns-the-u-s-national-debt-2/.
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16
Potential Ways to Decrease the Debt
v Raise taxes. By increasing taxes, the government has more revenue that can be used to
pay back the debt. Opponents of this argue that higher taxes disincentives investment in
American businesses, so long term growth would be negatively affected. 17
v Decrease government spending. By decreasing the amount of money the government
spends, it will be able to keep more of its revenue. Opponents of doing so argue that if
Congress wanted to make a significant cut in the debt, it would have to make budget
cuts so drastic that it would hurt economic growth. 18
Schroeder, Robert. “The U.S. Is Now over $20 Trillion in Debt - Here's How It Got
There.” MarketWatch, MarketWatch, 13 Feb. 2018, www.marketwatch.com/story/hereshow-the-us-got-to-20-trillion-in-debt-2017-03-30.
17 Amadeo, Kimberly. “3 Reasons Why the United States Probably Won't Ever Get Out of
Debt.” The Balance Small Business, The Balance, www.thebalance.com/will-the-u-s-debtever-be-paid-off-3970473.
18 Amadeo, Kimberly. “3 Reasons Why the United States Probably Won't Ever Get Out of
Debt.” The Balance Small Business, The Balance, www.thebalance.com/will-the-u-s-debtever-be-paid-off-3970473.
16
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January 2019
v Decreasing the debt-to-GDP ratio. If economic growth were to drastically outpace the
increasing debt, the United States would be just fine. The issue, however, comes from
the fact that the Democrats and Republicans can’t agree on a mechanism to do so
effectively. Democrats are more likely to argue increasing government spending will
stimulate the economy, while Republicans are more likely to argue that cutting taxes
will do it better.
Economic Theories in Fiscal Policy
Fiscal policy is the deliberate use of the national government’s taxing and spending
policies to promote economic growth and stability. In other words, fiscal policy is the
government's decision making process when it comes to government spending and taxation.
There are two big schools of thought in fiscal policy: First is the country’s traditional laissez-faire
capitalism that says the government should let the market regulate itself. The way this mostly
conservative ideal is implemented in fiscal policy is through tax cuts. In times of slow economic
growth, the government may cut taxes to stimulate more spending. The logic behind this is that
if people have more money in their pockets, they will spend more money, growing the
economy. This most recently happened earlier this year when President Trump and the
Republican party cut taxes to stimulate the economy. A tax cut stimulus passed by President
Johnson in the 1960s helped the United States reach almost full employment because the
economic growth incentivized businesses to expand.19
The second school of thought in using fiscal policy tends to be used more by liberals.
The Keynesian economic model explains that increasing spending would increase demand for
products thus increasing production and employment. Followers of this economic theory
believe that this would stimulate the economy faster than tax cuts, despite increasing the
budget deficit. A budget deficit happens when a government spends more than it makes in tax
revenue. This last occurred by the Obama administration in response to the 2008 recession
with the aforementioned $800 billion stimulus package. Usually, to avoid an uncontrollable
19 O’Connor, Karen. “American Government” Roots and Reform , 2012
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January 2019
deficit, Democrats will increase taxes to offset the amount of money lost in spending, and
Republicans will cut spending to adjust for the lost tax revenue. In the 1990s, the Clinton
administration used a mix of tax hikes and spending cuts to balance the federal budget.20
Current Trends in Economic Growth
21
20
“Power of Progressive Economics: The Clinton Years.” Center for American Progress,
www.americanprogress.org/issues/economy/reports/2011/10/28/10405/power-of-progressive-economicsthe-clinton-years/.
21 “United States GDP Annual Growth Rate.” TRADING ECONOMICS, tradingeconomics.com/united-states/gdp-
growth-annual?embed.
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January 2019
22
22 Arnold, Chris, and Avie Schneider. “U.S. Economy Surges To A 4.1 Percent Growth Pace In 2nd Quarter.” NPR,
NPR, 27 July 2018, www.npr.org/2018/07/27/632640711/u-s-could-see-blockbuster-economic-growth-numbertoday.
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As seen in the above visuals, the United States is currently seeing economic growth,
with the Gross Domestic Product (GDP), which is the total value of goods produced and services
provided in a country during one year, expanding 3 percent in the third quarter of 2018 over
the same quarter of the previous year.23 The economy also saw a historic 4.1% GDP increase in
the 2nd quarter according to the second graph. This was most likely caused by the Trump
administration’s tax cuts in January of 2018. However, most economists caution this is likely to
be a one-off growth spurt and not a new sustained trend. This is because of the increasing trade
tensions between the United States and China. Exports are a particularly dramatic example.
Economic analysts say the Trump administration's ongoing trade fight with China is a big threat
to the economy, but in recent months, the trade dispute sparked an unexpected short-term
boost in exports. Unfortunately, this reversed due to retaliatory tariffs on the United States’
agriculture sector. 24
23
“United States GDP Annual Growth Rate.” TRADING ECONOMICS, tradingeconomics.com/united-states/gdpgrowth-annual?embed.
24
Arnold, Chris, and Avie Schneider. “U.S. Economy Surges To A 4.1 Percent Growth Pace In 2nd Quarter.” NPR,
NPR, 27 July 2018, www.npr.org/2018/07/27/632640711/u-s-could-see-blockbuster-economic-growth-numbertoday.
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Pro Arguments with Con Responses
January 2019
PRO: Higher debt harms American corporations
Argument: As national debt increases, foreign investors are more wary of investing in American
businesses and buying corporate debt.
Warrant: National debt crowds out investments in corporations
Peter G. Peterson Foundation, "THE FISCAL & ECONOMIC IMPACT",
https://www.pgpf.org/the-fiscal-and-economic-challenge/fiscal-and-economicimpact
Reduced Private Investment. Federal borrowing competes for funds in the nation’s
capital markets, raising interest rates and crowding out new investment in business
equipment and structures. Entrepreneurs face a higher cost of capital, potentially
stifling innovation and slowing the advancement of new breakthroughs that could
improve our lives. At some point, investors might begin to doubt the government’s
ability to repay debt and could demand even higher interest rates, further raising the
cost of borrowing for businesses and households. Over time, lower confidence and
reduced investment would slow the growth of productivity and wages of American
workers.
Warrant: Companies are facing even higher borrowing costs
Molly Smith, Bloomberg, "U.S. Corporate Borrowers Have an Overseas Investor Prob
lem", 03-23-18, https://www.bloomberg.com/news/articles/2018-03-23/u-scorporate-borrowers-have-an-overseas-investor-problem
U.S. companies are finding that the flow from the foreign-money spigot is slowing.
Foreigners showed signs of being net sellers of U.S. investment-grade corporate debt
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Pro Arguments with Con Responses
January 2019
this week, according to Bank of America data. Any selling pressure comes after
international investors bought just $38 billion of U.S. investment-grade corporate debt
in the fourth quarter, according to UBS Group AG, the least since the beginning of 2016,
when the corporate bond market was in a freefall. Overseas money managers are a key
pillar for the market, having bought more than $1.4 trillion of the securities since 2013,
UBS said. With the dollar extending losses after plunging last year and hedging costs
near decade-highs by one measure, overseas investors have fewer reasons to buy
fewer U.S. company notes. The securities are on track for their worst first quarter
since 1994. The weakness could translate to even higher borrowing costs for
companies than they’ve already experienced in the last three months.
Warrant: Investments fell substantially last year
Nicole Goodkind, Newsweek, "U.S. DEBT IS GROWING AND FOREIGNERS ARE
BUYING LESS: HERE’S WHY THAT COULD BE DISASTROUS FOR THE ECONOMY",
05-02-18, https://www.newsweek.com/trump-tax-cuts-debt-china-907763
The amount of money coming into American companies from overseas fell 32% last
year. Foreign investors spent $259.6 billion to acquire, launch, and expand businesses in
the United States in 2017, according to numbers released Wednesday by the US Bureau
of Economic Analysis. That's down from an historic high of $439.5 billion in 2015. The
largest chunk of last year's foreign direct investment came from Canada ($66.2 billion),
followed by the United Kingdom and Japan.
Impact: Even businesses themselves are being forced to buy up more US debt, reducing
investments into their own companies.
Nicole Goodkind, Newsweek, "U.S. DEBT IS GROWING AND FOREIGNERS ARE
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Pro Arguments with Con Responses
January 2019
BUYING LESS: HERE’S WHY THAT COULD BE DISASTROUS FOR THE ECONOMY",
05-02-18, https://www.newsweek.com/trump-tax-cuts-debt-china-907763
If fewer foreigners buy U.S. debt, American investors will be forced to pick up the
slack and buy debt instead of active investments, a problem called "crowding out." “If
foreigners buy less debt, Americans buy more, and they’re buying at the expense of
making productive investments in businesses and startups,” explained Marc Goldwein,
senior policy director for the nonpartisan Committee for a Responsible Federal Budget.
“As a result of the dollars diverged to the treasury from other investments, our
economy experiences less GDP [gross domestic product] growth, and wage growth
slows.”
Analysis: This argument is beneficial as it shows an impact of national debt on corporate
America. With less investment into growing companies, this has a long-term impact for
America’s economic future.
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Pro Arguments with Con Responses
January 2019
A/2: Higher debt harms American corporations
Response: New US policies are responsible for drops in investment, not national debt
Warrant: A bipartisan coalition is pushing for more restrictions on foreign investment
Groves, Steven. “The U.S. Can Mine the Deep Seabed Without Joining the U.N.
Convention on the Law of the Sea.” The Heritage Foundation, The Heritage
Foundation, 4 Dec. 2012, www.heritage.org/report/the-us-can-mine-the-deepseabed-without-joining-the-un-convention-the-law-the-sea.
Hurdles to foreign investments in sensitive US companies would be raised under
proposed legislation that responds to perceived threats to national security from
China and elsewhere. A bipartisan coalition of lawmakers on Wednesday put forward
legislation that would broaden the remit of the Committee on Foreign Investment in
the US and widen the criteria it uses to assess threats to US security.
Warrant: The FIRRMA bill is a perfect example of recent legislation that has curbed
international investment
Heaven, Pamela. “Japan Has Found a 'Semi-Infinite' Deposit of Rare Earth Minerals,
Enough to Supply the World for Centuries to Come.” Financial Post, Financial
Post, 20 Apr. 2018, business.financialpost.com/commodities/mining/japan-hasfound-a-semi-infinite-deposit-of-rare-earth-minerals-enough-to-supply-theworld-for-centuries-to-come.
FIRRMA expands the power of the Committee on Foreign Investment in the U.S.
(CFIUS) to scrutinize foreign investments into “critical technology” companies for
national security implications. Few in the startup world have dealt with CFIUS, but
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Pro Arguments with Con Responses
January 2019
those who have understand its power and implications. It’s the opaque government
entity that blew up the Broadcom-Qualcomm transaction for national security reasons
and has been called the “ultimate regulatory bazooka.”
Ultimately, under FIRRMA, the government will now be able to review — and
potentially reject — any investment by a foreign entity in a critical technology
company that gives the foreign entity: access to any material non-public technical
information of the company; membership or observer rights on the company’s board
or equivalent governing body; or any involvement in substantive decision-making of
the company, other than through voting of shares
Analysis: This is a good response because it establishes an alternate causality to drops in
foreign investment. If there is bipartisan support to push out investments, national debt is not
the primary problem.
Response: The US is losing out on foreign investment because of the Chinese trade war
Warrant: While China has taken larger stakes recently, this trend could be reversed by Trump’s
rhetoric
Spross, Jeff. “How China Can Win a Trade War in 1 Move.” The Week , The Week , 6 Apr.
2018, theweek.com/articles/765276/how-china-win-trade-war-1-move.
In more recent years, Chinese companies have taken stakes in some well-known
Silicon Valley companies. For example, last year, Chinese tech and media investment
firm Tencent acquired a 12 percent stake in the owner of the messaging app Snapchat
and 5 percent of Elon Musk’s Tesla. Also in 2017, China’s sovereign wealth fund invested
$100 million in room-sharing service Airbnb. Overall, China remains a minor U.S.
investor – and the data suggest the president’s rhetoric on the campaign trail may
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have already had a disruptive impact. Last year, China invested $24 billion in the U.S.,
down from $54 billion in 2016, excluding deals under $100 million in size.
Warrant: China’s investments plummeted in 2018
Green, Jeffery. “America's Critical Minerals Problem Has Gone from Bad to Worse.” De
fense News, Defense News, 2 May 2018,
www.defensenews.com/opinion/2018/05/02/americas-critical-mineralsproblem-has-gone-from-bad-to-worse/.
For years, Chinese companies pumped growing amounts of money into the United
States, deepening ties between the countries. But Chinese investment totaled only
$1.8 billion between January and May. That's a 92% drop compared to the same
period in 2017, and the lowest level in seven years, according to a report released
Wednesday by Rhodium Group, a research firm that tracks Chinese foreign investment.
The dramatic decline comes as the fight between Washington and Beijing over trade
escalates, and US regulators increase their scrutiny of Chinese acquisitions. "The more
confrontational approach of the Trump administration toward economic relations
with China has cast some doubt, in these companies' minds, about their position
here," said Thilo Hanemann, a director at Rhodium Group and one of the report's
authors.
Analysis: This is a good response because it provides another alternate causality to why foreign
investments could be dropping. Also, this shows why new investments in the future won’t be
coming in. This weighs well as it implies that the pro is ignoring crucial factors that impact how
American corporations get foreign funding.
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PRO: High American Debt Harms Other Countries
Argument: As national debt increases, the United States is raising interest rates, which harms
other countries that are indebted to the federal government.
Warrant: The United States is raising interest rates in response to larger debt.
Patti Domm, CNBC, "US interest rates are zipping higher, but don't blame the Fed", 0801018, https://www.cnbc.com/2018/08/01/the-interest-rate-that-affectsmortgages-is-rising-even-though-fed.html
U.S. interest rates are moving higher because the U.S. government is taking on more
longer term debt and global central banks are stepping back from some of the easy
policies they adopted in the financial crisis. The benchmark 10-year Treasury yield
jumped through 3 percent for the first time since June 13, after languishing in a range
below 2.90 percent for most of the summer. It is widely watched because it is the key
rate that influences the cost of mortgages and other consumer and business loans, and
is affected by interest rates worldwide. The Fed was meeting Wednesday and was not
expected to hike interest rates, though the market expects it to raise in September and
possibly again in December. The U.S. mostly leads in terms of exiting long running easy
money policies, and U.S. rates are higher and more attractive to bond investors than
those of other major sovereigns. The 10-year yield cracked 3 percent Wednesday on a
combination of factors, including stronger ADP jobs data, an announcement on Treasury
borrowing needs and signs the Bank of Japan may be tweaking its policy. The U.S.
Treasury Wednesday announced changes to its bond sales this quarter that will help it
meet its $329 billion borrowing needs for the third quarter. It surprised the market by
adding more debt issuance in the 5-year sector than was expected. The government is
expected to keep increasing its borrowing to pay for tax cuts and federal stimulus
programs, which also could push interest rates higher.
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Warrant: Rising interest rates makes it harder for other countries to repay their debts
The Economist, "The Next Recession", 10-11-18,
https://www.economist.com/leaders/2018/10/11/the-next-recession
This divergence between America and the rest means divergent monetary policies, too.
The Federal Reserve has raised interest rates eight times since December 2015. The
European Central Bank (ECB) is still a long way from its first increase. In Japan rates are
negative. China, the principal target of Mr Trump’s trade war, relaxed monetary policy
this week in response to a weakening economy. When interest rates rise in America but
nowhere else, the dollar strengthens. That makes it harder for emerging markets to
repay their dollar debts. A rising greenback has already helped propel Argentina and
Turkey into trouble; this week Pakistan asked the IMF for a bail-out.
Warrant: Developing countries are uniquely affected.
Katie Allen, The Guardian, "US interest rate rise to deepen debt crisis in developing
world", 03-13-17, https://www.theguardian.com/business/2017/mar/13/usinterest-rate-rise-to-worsen-developing-countries-debt-crisis
Developing countries are struggling with steep rises in their debt payments after being
hit by a double whammy of lower commodity prices and a stronger dollar, with more
pain to come once the US central bank raises interest rates this week, campaigners
warn. The Jubilee Debt Campaign said that some of the world’s poorest countries have
seen the cost of repaying their debts – as a proportion of government revenue – hit the
highest level for a decade. and the size of dollar-denominated debts has risen as the US
currency has strengthened.
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Impact: The United State’s rising interest rates have a chance to cause a global recession
Jesse Colombo, Forbes, "How Interest Rate Hikes Will Trigger The Next Financial Cri
sis", 09-27-18, https://www.forbes.com/sites/jessecolombo/2018/09/27/howinterest-rate-hikes-will-trigger-the-next-financial-crisis/#669f6e267170
All of the modern interest rate hike cycles we have examined resulted in recessions or
financial crisis, and the current one will be no different. This time around, it will be the
"Everything Bubble" that bursts. "Everything Bubble” is a term that I’ve coined to
describe a dangerous bubble that has been inflating in a wide variety of countries,
industries, and assets – please visit my website to learn more. After nearly a decade of
ultra-low interest rates, the U.S. and global economy are saturated with bubbles and
other distortions that will only be revealed by rising interest rates. Because of our
record debt burden, interest rates do not have to rise nearly as high as in prior cycles
to cause a recession or financial crisis this time around.
Analysis: This argument is beneficial because it gives you an international argument on a topic
where most teams will only be discussing impacts to Americans. This weighs well as you could
argue that the United States should prioritize the economies of developing countries as an
economic collapse for them would be way more disastrous.
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A/2: High American Debt Harms Other Countries
Response: Rising interest rates won’t be that bad for foreign economies
Warrant: Rising commodity rates balance out potential negative effects
Panos Mourdoukoutas, Forbes, "Higher U.S. Interest Rates Won't Cause Another Emerg
ing Markets Financial Crisis", 03-19-18,
https://www.forbes.com/sites/panosmourdoukoutas/2018/03/19/higher-usinterest-rates-wont-cause-another-emerging-markets-financialcrisis/#4ada2efd7513
That shouldn’t be the case this time around. The rise in U.S. interest rates comes at a
time of rising commodity prices, as reflected in the Powershares DB Commodity Index
Tracking Fund, up 21.48% in the last two years. The rising in commodity prices has
helped commodity exporting emerging market economies improve their current
account deficits, reducing their reliance on foreign capital to finance them. Brazil is a
case in point. The country’s current account deficit has been improving recently,
reaching USD 4310 million in January of 2018, lower than a USD 5085 million deficit a
year earlier and market expectations of a USD 4991 million shortfall. Meanwhile,
Brazil’sForeign Exchange Reserves increased to 377035 USD Million in February from
375701 USD Million in January of 2018, and close to the all-time high of 381843 USD
Million in August of 2017. South Africa is another case in point. Its current account
deficit narrowed to ZAR 108.9 billion in the third quarter of 2017 from a revised ZAR
110.7 billion in the previous period. That has helped South Africa avert a crisis, as the
country’s foreign capital reserves have been declining, down by USD 450 million to USD
50.05 billion in February of 2018, the lowest level since October 2017. Financial markets
have taken notice. iShares MSCI Brazil are up 64.10% in the last two years, while iShares
MSCI South Africa are up 37.79%.
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Warrant: Interst rate hikes by the Fed is only detrimental if they are unexpected, looking to the
case of the EU given that they are not, interest rates will not hurt foreign markets.
Jeff Spross, The Week, "America is going to pay a lot of interest soon. But don't fear a
debt crisis.", 10-01-18, https://theweek.com/articles/798463/america-goingpay-lot-interest-soon-but-dont-fear-debt-crisis
The eurozone is so awash in stimulus that a rate increase by the Federal Reserve,
expected on Wednesday, is not likely to create many ripples on the Continent,
economists say. The larger question for Europe is why the eurozone’s economy is not
responding more to the help it is getting not only from its own central bank but also,
inadvertently, from the Fed. The prospect of higher interest rates in the United States,
along with efforts by the European Central Bank to push down rates in the eurozone,
has already prompted investors to sell euros and buy dollars. For much of the year, in
large part because of the Fed, the euro has hovered near lows last seen in 2003. That is
a boon for European exports because it makes products priced in euros cheaper for
foreign buyers. But because the Fed has signaled its intentions so clearly, not much is
likely to change for the eurozone on Wednesday unless there is a surprise — for
example, a statement by the United States’ central bank pointing to faster interest rate
increases than investors are expecting.
Analysis: This is a good response because the argument that interest rates will harm other
economies doesn’t consider other economic factors that influence them. Also, the Fed
predictably raises interest rates often, this phenomenon is unlikely to cause such huge waves
this time around.
Response: Rising interest rates are good for the US economy
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Warrant: Interest hikes curb inflation
Tom Holland, South China Morning Post, "THE ONLY GAME IN TOWN? WHY
CHINA WILL KEEP BUYING US TREASURY DEBT", 12-15-18,
https://www.scmp.com/week-asia/opinion/article/2128056/only-game-townwhy-china-will-keep-buying-us-treasury-debt
Most broad-based measures of prices indicate inflation has continued to remain under
control in the U.S. in recent years. The central bank’s target for inflation is 2 percent, but
inflation has yet to hit the bull’s-eye on a sustained basis, as measured by personal
consumption expenditures, or PCE. If the Fed achieves its objectives in steering the
economy, inflation should remain under control. A positive inflation scenario after a
rate increase might include “lower prices of imported consumer goods, due to a likely
higher exchange value of the dollar if our domestic rate increases are not matched by
policy tightening in other major economies,” says Daniil Manaenkov, U.S. forecasting
specialist at the Research Seminar in Quantitative Economics at the University of
Michigan.
Warrant: This is a normal strategy of the Fed
Sarah McCregor and Katherine Greifeld, Bloomberg, "China Holdings of U.S. Debt Rose
in 2017 by Most in Seven Years", 02-15-18,
https://www.bloomberg.com/news/articles/2018-02-15/china-2017-holdings-ofu-s-treasuries-rise-most-in-seven-years
In 1977, Congress gave the Fed two main tasks: Keep the prices of things Americans buy
stable, and create labor-market conditions that provide jobs for all the people who want
them. The Fed has developed a toolkit to achieve these dual goals of inflation and
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maximum employment. But interest-rate changes make the most headlines, perhaps
because they have a swift effect on how much we pay for credit cards and other loans.
From Washington, the Fed adjusts interest rates with the hope of spurring all sorts of
other changes in the economy. If it wants to encourage consumers to borrow so
spending can increase, which should boost economic growth, it cuts rates and makes
borrowing cheap. After the Great Recession, it kept rates near zero to achieve just that.
To accomplish the opposite and cool the economy, it raises rates so an extra credit
card seems less desirable.
Analysis: This is a good response because one could argue that benefitting the US is more
important than international economies. Particularly because the topic states what the United
States federal government should prioritize.
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PRO: China can weaponize large amounts of US debt
Argument: China owns large amounts of US debt and could sell it and destabilize the US
economy.
Warrant: China is the largest foreign owner of US debt
Kimberly Amadeo, The Balance, "Who Owns the U.S. National Debt?", 11-21-18,
https://www.thebalance.com/who-owns-the-u-s-national-debt-3306124
In September 2018, China owned $1.15 trillion of U.S. debt. It's the largest foreign
holder of U.S. Treasury securities. The second largest holder is Japan at $1.03 trillion.
Both Japan and China want to keep the value of the dollar higher than the value of their
currencies. That helps keep their exports affordable for the United States, which helps
their economies grow. Despite China's occasional threats to sell its holdings, both
countries are happy to be America's biggest foreign bankers. China replaced the United
Kingdom as the second largest foreign holder on May 31, 2007.
Warrant: The trade war motivates China to hurt the US economy
Bryan Borzykowski, CNBC, "China's $1.2 trillion weapon that could be used in a trade
war with the US", 04-05-18, https://www.cnbc.com/2018/04/05/chinas-1-point2-trillion-weapon-that-could-be-used-in-a-us-trade-war.html
If this trade fight does escalate, then more tariffs could be slapped on more goods. But
China could fire back in a far more significant way: selling a large chunk of the $1.17
trillion of U.S. treasury bonds it holds. Over the last several years, China has bought
scores of treasury bonds partly because it has U.S. dollars it needs to spend. Just like any
investor, China wants to put some of the greenbacks it's made off its exports to the
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United States into safe investments, and there's nothing safer than U.S. bonds. For the
most part, China, which has owned around $1 trillion of U.S. bonds for several years, has
held on to these assets, collecting billions in interest payments. It did reduce some of
those assets in late 2016 and early 2017 to help offset an increase in the yuan, but it's
already bought back much of what it sold. If China did decide to sell off those bonds in
a fit of rage aimed at President Donald Trump, then it could cause major havoc on
international markets, said Jeff Mills, co-chief investment strategist at PNC Financial
Services Group. "It's certainly something they could do," he said.
Warrant: Higher interest rates would also pressure China to sell
Shawn Tully, Fortune, "Here's How China Could Really Hurt Trump in a Trade War",
03-22-18, http://fortune.com/2018/03/22/china-tariff-donald-trump-us-debt/
China’s motive for ditching U.S. debt doesn’t have to be anger or retaliation. Its
leaders could reckon that protectionism will hobble U.S. growth; if that were to
happen, fears that America can’t handle its debt and deficits might prompt investors
worldwide to demand higher rates for the extra risk of holding Treasuries. Then, the
Chinese and other overseas lenders would rush for the exits before a looming spike in
yields pummels prices of U.S. bonds.
Impact: Selling their shares of debt would be disastrous for the US economy
Brian Chappatta and Liz Capo McCormick, The Washington Post, "The Worry About
Giant Foreign Buyers of U.S. Debt: QuickTake Q&A", 12-11-18,
https://www.washingtonpost.com/business/the-worry-about-giant-foreignbuyers-of-us-debt-quicktake-qanda/2018/01/11/32480fb4-f6ff-11e7-9af7a50bc3300042_story.html?utm_term=.c8f9156e1c0d
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If China simply slowed its purchases, the effects would likely be gradual and modest. A
true selloff, by contrast, might induce panic selling by other foreign governments,
higher U.S. interest rates, a depreciated dollar and depressed U.S. home prices. U.S.
exporters could see an unintended boost to business because of the cheaper dollar,
although consumers could find imported goods become pricier. Some have even
suggested World War II-style bond drives would be needed to inspire Americans to
buy more debt. In 2009, then-Chinese Premier Wen Jiabao added fuel to a Treasuries
selloff by saying he was "worried"about the safety of the securities, only for China's top
foreign-exchange official to say weeks later that the nation would keep buying
Treasuries.
Analysis: This argument is beneficial because we cannot focus on the US economy if China has
the ability to throw it into chaos because of our large amounts of debt. Regaining control over
our own economy by limiting the amount of debt we have to sell to foreign powers would be
better for America in the long term.
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A/2: China can weaponize large amounts of US debt
Response: China would not sell its debt
Warrant: Selling the debt would cause international backlash
Steven Englander, Bloomberg, "China Will Do What's Best for China: Not Shooting
Markets", 04-11-18, https://www.bloomberg.com/opinion/articles/2018-0411/china-won-t-sell-treasuries-to-hurt-trump
The key problem is that these financial measures do as much damage to China as to
the U.S., and several of them do tremendous damage to China's neighbors and
emerging-market countries that Beijing is courting in making the yuan an international
currency. The last time China depreciated its currency significantly, in August 2015, it
set off a sequence of cascading declines in emerging markets and a rise in asset
volatility. That was set off by a mere 2 percent yuan depreciation. Depreciation would
have to be much greater to have an impact on trade. Enlarging the range of countries
and asset markets that are affected by a bilateral trade dispute will earn China strong
criticism from countries that might otherwise by partners. Similarly, selling U.S.
Treasuries is a problem both for China and emerging markets. U.S. Treasury yields tend
to lead Chinese yields as shown in the first chart below. The co-movements are not
identical, but they are close enough to be very significant. Moreover, an increase in U.S.
yields would spill over globally. The People's Bank of China could change domestic policy
to offset this, but that would not insulate the rest of the emerging markets and even the
developed world. China will get neither sympathy nor thanks for pushing global interest
rates higher.
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Warrant: China wouldn’t do this on a whim, it would have to be an unprecedented offense by
the US which is unlikely.
Tracey Samuelson, MarketPlace, "Would China weaponize its U.S. debt as a trade war
tactic?", 10-17-18, https://www.marketplace.org/2018/10/17/economy/wouldchina-weaponize-its-us-debt-trade-war-tactic
While China’s holdings are significant, they amount to less than 5 percent of the U.S.
total debt. What’s more, the country hasn’t been adding much to its reserves in recent
years. Selling its current supply would be an aggressive move that China would not
undertake unless provoked, said Wing Woo, an economic professor at the University of
California-Davis. China wouldn’t instigate a sale “unless they are outraged by some
American actions which they view as excessive,” he said. “A fire sale means that the
price of bonds will be lower. The Chinese would suffer big capital losses.”
Analysis: This is a good response because there are other motivations for China to hold onto US
debt. Now the affirmative has to prove that not only would the US have to act in a way to
outrage the Chinese government, but this outrage would have to be enough that they’d be
willing to destabilize the economies of partner nations.
Response: Even if China wanted to sell US debt, they wouldn’t do it all at once
Warrant: Selling all of the US debt would hurt the Chinese economy
Kimberly Amadeo, The Balance, "Top 10 Reasons the U.S. Economy Won't Collapse",
11-18-18, https://www.thebalance.com/us-economy-wont-collapse-3980688
China would not call in its debt all at once. If it did, the demand for the dollar would
plummet. This dollar collapse would disrupt international markets even more than the
2008 financial crisis. China's economy would suffer along with everyone else's.
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Warrant: China would have to sell off shares slowly to protect their economy
Kimberly Amadeo, The Balance, "US Debt to China, How Much It Is, Reasons Why, and
What If China Sells", 11-23-18, https://www.thebalance.com/u-s-debt-to-chinahow-much-does-it-own-3306355
It's more likely that China would slowly begin selling off its Treasury holdings. Even
when it just warns that it plans to do so, dollar demand starts to drop. That hurts
China's competitiveness. As it raises its export prices, U.S. consumers would buy
American products instead. China could only start this process if it further expands its
exports to other Asian countries and increases domestic demand. China's low-cost
competitive strategy worked. Its economy grew 10 percent annually for the three
decades before the recession. As of 2018, it's growing at nearly 7 percent, a more
sustainable rate. China has become the largest economy in the world, outpacing the
United States and the European Union. China also became the world's biggest exporter
in 2010. China needs this growth to raise its low standard of living. Despite its threats,
China will continue to be one of the world's largest holders of U.S. debt.
Analysis: Because of the potential harms to their economy, it would be very difficult for China
to sell all of their debt holdings. Even if they were to do so, they would have to make the
transition slowly to protect their exports, meaning that the harms to the United States would
be lessened as well.
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PRO: Debt makes it harder to stimulate the economy in a
downturn
Argument: As national debt rises, it reduces our ability to stimulate the economy should we fall
into another recession. The government should prioritize its citizens financial security.
Warrant: National debt is steadily rising
Congressional Budget Office, "The Budget and Economic Outlook: 2018 to 2028", April
2018, https://www.cbo.gov/system/files?file=115th-congress-20172018/reports/53651-outlook.pdf
As a result, federal debt is projected to be on a steadily rising trajectory throughout
the coming decade. Debt held by the public, which has doubled in the past 10 years as
a percentage of gross domestic product (GDP), approaches 100 percent of GDP by 2028
in CBO’s projections. That amount is far greater than the debt in any year since just
after World War II. Moreover, if lawmakers changed current law to maintain certain
current policies—preventing a significant increase in individual income taxes in 2026
and drops in funding for defense and nondefense discretionary programs in 2020, for
example—the result would be even larger increases in debt.
Warrant: Higher debt makes it more difficult to stimulate the economy in a downturn
Elizabet Schulze, CNBC, "3 charts that show why the US should stop ignoring its debt
problem", 07-26-18, https://www.cnbc.com/2018/07/26/3-charts-that-showwhy-the-us-should-stop-ignoring-its-debt-problem.html
"Even if you think that public debt just doesn't matter to economic outcomes, the thing
you have to admit is that when we hit a downturn, governments are less likely to take
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significant steps if the debt is as high as ours is now," said Jared Bernstein, a senior
fellow at the Center on Budget and Policy Priorities, to CNBC via telephone. 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.
Warrant: The Fed has less room to lower interest rates to stimulate the economy
Natasha Turak, CNBC, "America may not have the tools to counter the next financial cri
sis, warn Bernanke, Geithner and Paulson", 07-18-18,
https://www.cnbc.com/2018/07/18/america-may-not-have-the-tools-tocounter-the-next-financial-crisis.html
Far higher debt and deficit levels than those of a decade ago also mean there is less
insulation in the event a potential stimulus package is needed. Obama in 2009
implemented the controversial American Recovery and Reinvestment Act to offset the
drop in private sector spending, at a price tag of more than $800 billion. What’s more,
the Fed has less room to lower interest rates in the event that more stimulus is
needed — the bank’s benchmark rate target is now just 1.75 to 2 percent compared to
5.25 percent in summer of 2007. Still, Geithner, Bernanke and Paulson praised a now
stronger banking sector and the government’s improved ability to deal with failing
institutions before they need bailouts. But the economists, echoing numerous market
players and public officials, stressed their concern over U.S. debt. Publicly-held federal
debt is now 77 percent of gross domestic product (GDP) — double its 2007 level. “If we
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don’t act, that is the most certain fiscal or economic crisis we will have,” Paulson said.
“It will slowly strangle us.”
Impact: 2/3rds of Americans are not prepared for an economic recession like we saw in 20082009.
Kenneth Rapoza, Forbes, "Here's What Would Happen If U.S. Faces Another Recession",
07-22-17, https://www.forbes.com/sites/kenrapoza/2017/06/29/heres-whatwould-happen-if-u-s-faces-another-recession/#ebba01c7a791
Online financial services firm GoBankingRates recently surveyed 1,007 Americans to ask
how they were prepared for another deep recession like the last one we had in 200809. Roughly half of survey respondents are strapped for cash. A downturn would ruin
about two-thirds of us this time.
- 61% do not have enough money saved to cover six months of living expenses
- 49% of Americans are currently living paycheck to paycheck
- 68% of all respondents' investment strategy does not account for a recession
- 64% of Americans do not have secondary sources of income.
Analysis: This argument is best contextualized as the United States taking a risky investment.
Focusing on economic growth would be irresponsible if it reduced our safety net in the case of
an unexpected downturn.
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A/2: Debt makes it harder to stimulate the economy in a
downturn
Response: The US is not headed for a recession
Warrant: Economic growth is not rapid enough to cause a recession
Kimberly Amadeo, The Balance, "Top 10 Reasons the U.S. Economy Won't Collapse",
11-18-18, https://www.thebalance.com/us-economy-wont-collapse-3980688
Economic growth is slow but stable. Since the Great Recession, the economy has grown
between 1.5 - 2.7 percent per year. According to business cycle theory, a bust only
occurs after a boom. That's when GDP is more than 3 percent. It hasn't been that high
since 2005 according to a review of GDP by year.
Warrant: The curve typically used to judge the timing of the next recession is inaccurate due to
recent Federal Reserve actions
Chris Arnold, NPR, "Is The U.S. Headed For Recession?", 07-29-18,
https://www.npr.org/2018/06/29/624241713/is-the-u-s-headed-for-recession
That can be a sign that a lot of investors see trouble ahead, which is why it sets off a
blinking red light on economists' dashboards. In fact, every recession in the past 60
years has happened after the yield curve's red light started blinking. And it's getting
pretty close to that level again. That may sound ominous. But Simon says the yield
curve "hasn't been a very good predictor because it keeps predicting recessions that
haven't occurred. It was wrong in 1994, it was wrong in 1998, it was right in 2001 [and]
it was also right in 2006-07." But he says he is not worried about it this time around.
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That's because ever since the Great Recession, the Federal Reserve and other central
banks around the world have been doing unusual things that distort the bond market.
And he says that has thrown off this recession meter.
Analysis: This is a good response because if the United States is not headed towards a
recession, there’s no reason to make economic decisions based on a safety net. Thus, it’s best
to focus on economic growth.
Response: A recession wouldn’t be as harmful as the pro assumes
Warrant: Banks are more resilient than they were during the 2008-2009 crisis, the probability
of a crisis that bad is low
The Economist, "The Next Recession", 10-11-18, https://www.economist.com/lead
ers/2018/10/11/the-next-recession
The good news is that banking systems are more resilient than a decade ago, when the
crisis struck. The chance of a downturn as severe as the one that struck then is low.
Emerging markets are inflicting losses on investors, but in the main their real economies
seem to be holding up. The trade war has yet to cause serious harm, even in China. If
America’s boom gives way to a shallow recession as fiscal stimulus diminishes and rates
rise, that would not be unusual after a decade of growth.
Warrant: Banks are in their strongest position since 1938
Leslie Shaffer, CNBC, "US banks are at their healthiest in decades: Richard Bove", 0406-16, https://www.cnbc.com/2016/04/06/amid-stress-test-us-banks-arestronger-than-theyve-been-in-decades-richard-bove.html
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Despite concerns about the safety of U.S. banks, they're the strongest they've been in
decades, storied bank analyst Richard Bove told CNBC's Squawk Box. "They do have the
protections that basically other people seem to want them to have," said Bove, an
equity analyst at Rafferty Capital Markets. "If you take a look at their capital as a
percentage of assets, you have to go back to 1938 during the bank holiday to find
banks in stronger condition."
Analysis: This is a good response because it doesn’t matter if a small recession were to happen
if US banks are more resilient now than they were in the last decade. This counters the warrant
that debt reduces the capacity for the economy to recover.
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PRO: More debt leads to higher interest rates which slows
economic growth
Argument: As national debt increases, foreign buyers demand larger interest rates. This is
because as the debt grows larger, the less likely it is that they will get paid back.
Warrant: Foreign countries hold more US debt than ever before
Brian Chappatta and Liz Capo McCormick, The Washington Post, "The Worry About
Giant Foreign Buyers of U.S. Debt: QuickTake Q&A", 12-11-2018,
https://www.washingtonpost.com/business/the-worry-about-giant-foreignbuyers-of-us-debt-quicktake-qanda/2018/01/11/32480fb4-f6ff-11e7-9af7a50bc3300042_story.html?utm_term=.c8f9156e1c0d
No. Nor has the U.S. ever owed so much. Foreign investors hold $6.35 trillion in U.S.
government debt, more than twice as much as in 2008. (The share of debt owned by
foreigners fell in that time period, to 44 percent from 56 percent, primarily because the
U.S. Federal Reserve was buying so much itself.) China is the largest holder of Treasuries
at the moment, followed by Japan, and between them they account for more than $2
trillion of U.S. securities.
Warrant: As the debt to GDP ratio increases countries are inclined to ask for higher interest
rates.
Kimberly Amadeo, The Balance, "The US Debt and How It Got So Big", 11-07-18,
https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778
Over the long term, a growing federal debt is like driving with the emergency brake on.
As the debt-to-GDP ratio increases, debt holders could demand larger interest
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payments. They want compensation for an increasing risk they won't be repaid.
Diminished demand for U.S. Treasuries would further increase interest rates. That
would slow the economy.
Warrant: Reduced demand also forces the United States to raise intrest rates to lure investors.
Brian Chappatta and Liz Capo McCormick, The Washington Post, "The Worry About
Giant Foreign Buyers of U.S. Debt: QuickTake Q&A", 12-11-2018,
https://www.washingtonpost.com/business/the-worry-about-giant-foreignbuyers-of-us-debt-quicktake-qanda/2018/01/11/32480fb4-f6ff-11e7-9af7a50bc3300042_story.html?utm_term=.c8f9156e1c0d
It relies on bonds to finance government budget deficits. Reduced demand, at a time
when Treasury issuance is set to surge as the budget shortfall grows, would force the
U.S. to offer higher interest rates to lure investors. Those higher borrowing costs in
turn would squeeze the U.S. budget just as spending on an aging population is projected
to dramatically increase. Making matters worse, Republicans in Washington just
approved a tax-cut package that is estimated to lift federal deficits by about $1 trillion
over the next decade. For investors, a selloff of bond holdings, or even just a drop in
bond purchases, risks reducing the value of outstanding Treasuries, harming portfolios.
Impact: Yearly payments on interest rates can crowd out funds for necessary public
investments
Peter G. Peterson Foundation, "Higher Interest Rates Will Raise Interest Costs On The
National Debt", 09-26-18, https://www.pgpf.org/analysis/2018/09/higherinterest-rates-will-raise-interest-costs-on-the-national-debt
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Ballooning interest costs threaten to crowd out important public investments that can
fuel economic growth in the future. In its most recent long-term budget report, CBO
estimates that by 2048, interest costs are projected to be more than double what the
federal government has historically spent on R&D, nondefense infrastructure, and
education, combined.
Analysis: This argument is beneficial on face, as it doesn’t matter how much the economy
grows if larger and larger percentages of our GDP have to go to paying off interest on debt.
Additionally, this is compounded by the argument that overtime this also takes away from
infrastructure and education investments that would grow the economy substantially in the
long term.
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A/2: More debt leads to higher interest rates which slows
economic growth
Response: Countries won’t raise interest rates because the United States is still a stable
investment
Warrant: The United States controls its own currency.
Kimberly Amadeo, The Balance, "Top 10 Reasons the U.S. Economy Won't Collapse",
11-18-18, https://www.thebalance.com/us-economy-wont-collapse-3980688
The U.S. debt is $21 trillion, more than the economy produces in a year, but although
the debt-to-GDP ratio is in the danger zone, it's not enough to cause a collapse. First,
the United States prints its money. That means it is in control of its currency. Lenders
feel safe that the U.S. government will pay them back. In fact, the United States could
run a much higher debt-to-GDP ratio than it does now and still not face economic
collapse. Japan is another strong economy that controls its currency. It has had a debtto-GDP ratio above 200 percent for years. Its economy is sluggish but in no danger of
collapse.
Warrant: Inflation, not interest rates, is what actually risks a debt crisis.
Jeff Spross, The Week, "America is going to pay a lot of interest soon. But don't fear a
debt crisis.", 10-01-18, https://theweek.com/articles/798463/america-goingpay-lot-interest-soon-but-dont-fear-debt-crisis
The U.S. government controls the supply of U.S. dollars. While private households,
businesses, or even state and local governments must bring in dollars before they can
spend them, the federal government must spend dollars before it can tax them. This is
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more intuitive than it sounds. Since the government literally prints dollars for
circulation, it must provide money before it can take it back. (If you don't believe me,
here's former New York Federal Reserve Chairman Beardsley Ruml, making the same
point way back in 1946.) When one line item in the federal budget grows, it doesn't
"crowd out" other priorities because the government can never run out of dollars. "But
what about inflation?" you might ask. That is the proper question: The inflation level,
not the risk of a debt crisis, is what actually determines the government's room to
spend on public priorities. When inflationary pressure is too great, the U.S. can relieve
it by raising taxes or hiking interest rates to remove money from the economy.
Analysis: This is a good response because it removes the internal link that rising interest rates
would cause a debt crisis. Instead, in the case of the United States, rising interest rates wouldn’t
have a substantial effect on the risk of a recession.
Response: Countries won’t hike interest rates, because they still want to buy our debt.
Warrant: China benefits from buying US debt
Tom Holland, South China Morning Post, "THE ONLY GAME IN TOWN? WHY
CHINA WILL KEEP BUYING US TREASURY DEBT", 12-15-18,
https://www.scmp.com/week-asia/opinion/article/2128056/only-game-townwhy-china-will-keep-buying-us-treasury-debt
China buys US Treasury debt – lending money to the US government – because its
export industries earn enormous sums of foreign currency. Over the 12 months to
November, China ran a trade surplus of US$416 billion. And despite Beijing’s efforts to
denominate more of China’s international trade in yuan, the bulk of those earnings
came in the form of US dollars.
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Warrant: China is buying more US debt than ever before
Sarah McCregor and Katherine Greifeld, Bloomberg, "China Holdings of U.S. Debt Rose
in 2017 by Most in Seven Years", 02-15-18,
https://www.bloomberg.com/news/articles/2018-02-15/china-2017-holdings-ofu-s-treasuries-rise-most-in-seven-years
China increased its holdings of U.S. Treasuries last year by the most since 2010, in a
signal its demand for American debt remains resilient. The value of China’s holdings of
U.S. bonds, notes and bills rose by $126.5 billion to $1.18 trillion in December from a
year earlier, according to Treasury Department data released Thursday in Washington.
China remains the largest non-U.S. holder of debt followed by Japan, whose holdings fell
for the fifth straight month in December, to $1.06 trillion after ending 2016 at $1.09
trillion.
Analysis: This is a good response because it shows that, empirically, the pro’s claim that
countries are buying less debt is untrue. Because other economies are so closely linked to the
United States, it’s in their best interest to continue buying debt.
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PRO: Public Debt Reduces Social Spending
Argument: As the federal debt increases, the feasibility of paying for other social safety net
programs decreases.
Warrant: As interest payments on the debt increase, budgetary pressure increases as our ability
to pay interest on the debt declines. Consequently, Congress will be more likely to reduce
benefits than to increase taxes for political reasons.
Amadeo, Kimberly. “The US Debt and How It Got So Big”. The Balance. Nov 7 2018,
https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778
“Over the long term, a growing federal debt is like driving with the emergency brake on.
As the debt-to-GDP ratio increases, debt holders could demand larger interest
payments. They want compensation for an increasing risk they won't be repaid.
Diminished demand for U.S. Treasurys would further increase interest rates. That would
slow the economy. Lower demand for Treasurys also puts downward pressure on the
dollar. That's because the dollar's value is tied to the value of Treasury Securities. As the
dollar declines, foreign holders get paid back in currency that is worthless. That further
decreases demand. Also, many foreign holders of U.S. debt are investing more in their
own countries. At that point, the United States will have to pay exorbitant amounts
just for the interest. The amount of federal spending today points to high-interest
payments on the debt in the near future. Congress realizes it is facing a debt crisis. Over
the next 20 years, the Social Security Trust Fund won't have enough to cover the
retirement benefits promised to baby boomers. That could mean higher taxes once the
high U.S. debt rules out further loans from other countries. Congress is more likely to
curtail benefits than raise taxes. That would primarily affect retirees younger than 70. It
might also hit those who are high income and not as dependent on Social Security
payments to fund their retirement.”
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Warrant: The increasing cost of paying for our debt directly competes with budget allocations
for social programs that help the most vulnerable.
Tom Slefinger. "Weekly Relative Value: Debt Does Matter." Alloya Company. (Week of
Oct 30 2017).
http://www.balancesheetsolutions.org/stored/pdf/WRV103017.pdf
“Higher debt equals lower income. The CBO projects that our debt would reduce the
income of a four-person family by $16,000 on average by 2047. We should all be
concerned about stagnating wages and the growing disparities in income and wealth. At
the very least, the federal government should not let its own budget imbalances
contribute to these harmful trends. 4) Protects the safety net. There is a close
relationship between Social Security and Medicare and interest payments on the
national debt. Dollars allocated to making higher interest payments are not available
for benefit payments. Conversely, dollars allocated to making rapidly increasing
benefit payments are not available to make interest payments on a national debt that
is also rapidly increasing. Our unsustainable fiscal path threatens the safety net and
the most vulnerable in our society. 5) Less flexibility to respond to crises. On our
current path, we are at greater risk of a fiscal crisis, and high debt leaves policymakers
with much less flexibility to deal with unexpected events. If we face another major
recession like that of 2009, it will be harder to work our way out. The bottom line:
Excessive debt growth could damage the economy, undermine our standard of living,
and leave future generations worse off.”
Link: The coming debt crisis would have its largest impacts on those who relied on the
government for assistance, like the impoverished and the elderly.
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House Budget Committee. “Debt Crisis in America: What It Might Look Like”.
https://budget.house.gov/uploadedfiles/debt_crisis_analysis.pdf
“Deloitte also illustrates what debt and interest payments might mean for the average
taxpayer since the buildup in debt will likely mean higher taxes or benefit reductions in
future. If current federal interest payments were allotted to taxpayers (including those
who file but pay no income tax), they would equal about $255 per month. Under
Deloitte’s alternative scenario— in which growth is slightly lower than expected, interest
rates are slightly higher than expected, and current tax and spending policies are
extended— that amount is expected to jump to $424 per month for each taxpayer over
the next decade.19 Probably the greatest impact would be on those who depend on the
federal government for assistance. The federal budget is dominated by programs that
provide transfer payments to individuals. While defense spending dominated the federal
budget for most of its history, Social Security at over $700 billion this year is the largest
program in the budget. Most of this spending on direct assistance to individuals is
mandatory spending and not subject to annual approval each year. This spending
automatically rises during recessions, and Congress frequently augments it. For example,
during the recent recession, unemployment assistance grew by more than four-fold,
rising from $32 billion in FY 2007 to $152 billion in FY 2010.”
Impact: Social safety net programs are absolutely essential for keeping millions of Americans out
of poverty.
Alexia Campbell. “Social Security, food stamps, and other programs kept 44 million
people out of poverty last year”. Oct 18 2018. Vox.
https://www.vox.com/2018/9/12/17850426/census-poverty-income-2017trump
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“During President Donald Trump’s first year in office, income from these safety net
programs directly kept 44.9 million people out of poverty in 2017. That’s 200,000 more
people compared to 2016. So far, Trump and congressional Republicans have been
unable to gut spending on the safety net programs they have long despised, facing
resistance from Democrats whose votes they needed to pass a budget deal in March. Of
all the social safety net programs, Social Security had the biggest impact last year,
keeping 27 million people above the poverty level, which was $12,060 for an individual
in 2017. Refundable tax credits, such as the earned income tax credit, helped another
8.3 million people. Food stamps (a.k.a. SNAP), disability insurance, and housing
subsidies each kept about 3 million people from falling into poverty. That good news,
however, was (partly) canceled out by one of the most persistent drivers of economic
hardship: health care costs. In 2017, out-of-pocket medical costs, which includes health
insurance premiums, copays, and prescription drug costs, pushed the incomes of 10.9
million people below the poverty threshold. That’s 400,000 more people who were
impoverished by medical bills in 2017, compared to last year.”
Analysis: This arguments allows affirmative teams to argue from a humanitarian standpoint, and
humanize the importance of our unsustainable fiscal track. By pointing out specific welfare and
entitlement programs that are jeopardized by perpetually increasing interest payments on our
debt, teams can emphasize the importance of reducing the debt in order to preserve the current
US social safety net and maintain the quality of life for millions.
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A/2: Public Debt Reduces Social Spending
Answer: Prioritizing economic growth now allows us to reduce the public debt without having to make
difficult choices about social spending now. Debt may be a far-off concern, but economic growth is
better to prioritize now.
Warrant: There is no situation where the public debt forces the government to make choices between
interest payments and social spending because of how the public debt is structured.
Spross, Jeff. “America is going to pay a lot of interest soon. But don't fear a debt crisis.”,
The Week, Oct 1 2018, https://theweek.com/articles/798463/america-goingpay-lot-interest-soon-but-dont-fear-debt-crisis
“When one line item in the federal budget grows, it doesn't "crowd out" other
priorities because the government can never run out of dollars. "But what about
inflation?" you might ask. That is the proper question: The inflation level, not the risk
of a debt crisis, is what actually determines the government's room to spend on public
priorities. When inflationary pressure is too great, the U.S. can relieve it by raising taxes
or hiking interest rates to remove money from the economy. But simply introducing
new dollars into the economy does not necessarily lead to price increases. Where the
money goes is crucial. To create inflation, new dollars must go into new spending and
consumer demand. Interest payments on the national debt are extremely unlikely to
do that. The key thing to understand here is that most U.S. government debt is
denominated in treasury bonds, which are pretty much the most liquid asset in the
world. If you own a treasury bond, but you'd rather have cash, you will have no trouble
finding a buyer. That means pretty much anyone who owns a treasury bond prefers it to
cash because they're looking to save it. And since owning a treasury bond is the
prerequisite for receiving federal interest payments, people are almost certainly going
to save those payments as well.”
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Warrant: Economic growth now can be used to reduce the public debt in the future, because
wealth as a country is an effective way to fend off debt. Otherwise, we would either need to
raise taxes or cut social spending to reduce the debt anyways.
Rampell, Catherine. “Sure Cure for the Debt Problem: Economic Growth”. The New York
Times. July 30 2011.
https://www.nytimes.com/2011/07/31/business/economy/sure-cure-for-debtproblems-is-economic-growth.html
“The basic issue is that the U.S. is on an unsustainable fiscal track,” says Dean Maki, the
chief United States economist at Barclays Capital. “From that point, none of the choices
are fun.” The most obvious choices, Mr. Maki says, are to reduce spending (ouch),
raise taxes (yuck), let inflation run (gasp) or default (thud). We wouldn’t need any of
that if we could restore economic growth. If that happened, Americans would become
richer and pay more taxes. Et voilà! — we’d pay down the debt painlessly. Crazy as that
might sound, particularly given Friday’s figures, the possibility isn’t some economic
equivalent of that nice big farm where your childhood dog Skip was sent to run free.
There are precedents. Before its economy crashed, Ireland was a star of this sort of debt
reduction. In the 1980s, Ireland’s debt dwarfed its economy. Over the next two decades,
though, that debt shrank to about a quarter of gross domestic product, largely because
the economy went gangbusters. “Ireland went from being, you know, the emerging
market in a European context, to a very dynamic economy,” says Carmen Reinhart, a
senior fellow at the Peterson Institute for International Economics and co-author of
“This Time Is Different,” a history of debt crises. The United States has done the same in
the past, too. After World War II, gross federal debt reached 122 percent of G.D.P., the
highest ratio on record. But over the next 40 years, it fell to about 33 percent. That
wasn’t because some blue-ribbon panel prescribed austerity; it was because the
American economy became much, much richer. The same happened during the
prosperous 1990s, which began with deficits and ended with surpluses. Former
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President Bill Clinton is often credited for that turnabout, as he engineered higher tax
rates. But most economists attribute the surplus years primarily to extraordinarily
rapid growth. It would be lovely to repeat that experience today, and send our federal
debt off to that farm with Skip.”
Impact: The reality of the matter is that US government revenue needs to grow, which can best be
accomplished by economic growth. Otherwise, we won’t be able to keep up with the demands of
changing demographics.
Paul Van de Water. "Federal Spending and Revenues Will Need to Grow in Coming
Years, Not Shrink." Center on Budget and Policy Priorities. September 6 2017.
https://www.cbpp.org/research/federal-budget/federal-spending-and-revenueswill-need-to-grow-in-coming-years-not-shrink
“Although some policymakers seek to prevent the federal government from growing,
or to shrink it, federal spending and taxes will have to grow significantly as a share of
the economy in the coming decades. This is not a statement of political values; it’s a
reflection of basic realities — the aging of America’s population, health care costs that
rise faster than the economy grows (especially as medical advances continue),
potential national security threats, and current and emerging domestic challenges
such as large infrastructure needs that cannot be deferred indefinitely. Those factors,
we estimate, will boost federal spending by about 2½ percent of gross domestic product
(GDP) between now and 2035 — from 20.9 percent in 2016 to an estimated 23.5
percent in 2035 (see Figure 1). Revenues will need to rise at least as much to prevent
the debt-to-GDP ratio from growing. Since 1976, federal spending has averaged 20.5
percent of GDP, although its composition has changed substantially (see Box 1), while
federal revenue has averaged 17.4 percent of GDP. Some policymakers have said these
historical averages should serve as ceilings for fiscal policy for coming decades, and
some have proposed constitutional or legal limits on spending or taxes at or below
these averages.[1] But whether historical averages were ever appropriate fiscal
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benchmarks, they cannot be in the future due to these inescapable realities. And as
spending grows, so too must revenue to finance it.”
Analysis: Use the first piece of evidence to call into question whether or not there is a genuine
tension between our ability to pay for social services and our ability to pay the interest on debt.
Then, demonstrate that the best way to continue financing social spending is by encouraging the
growth of the economy. The second piece of evidence states that economic growth can be
effective in reducing the burden of debt, and the last piece of evidence states unequivocally that
we will need increased revenues as a country to maintain our current social safety net. Therefore,
prioritizing economic growth allows us to reduce the debt and maintain support for vulnerable
Americans, accomplishing the goal of the affirmative more effectively.
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PRO: Public Debt Crowds Out Investment
Argument: Due to high rates of public debt, private and public entities in the United States will
ultimately invest less, threatening the economic foundations of the country.
Warrant: As interest payments on the debt increase, our ability to put money into other public
investments as a country, like infrastructure or R&D, decreases.
Peter
G.
Peterson
Foundation.
"
The
Fiscal
&
Economic
Impact”
https://www.pgpf.org/the-fiscal-and-economic-challenge/fiscal-and-economicimpact
“As the federal debt increases, the government will spend more of its budget on
interest costs, increasingly crowding out public investments. Over the next 10 years,
CBO estimates that interest costs will total $5.2 trillion under current law. In just under a
decade, interest on the debt will be the third largest “program” in the federal budget. It
will be the second largest in 2046 and the single largest in 2048. Yet those interest costs
are not investments in programs that build our future. Instead, they are largely about
the past. And the more that resources are diverted to interest payments, the less that
will be available for the federal government to invest in areas that are important to
economic growth. Although interest rates are currently low, we can’t expect these
conditions to last forever. As economic growth improves, interest rates are likely to rise,
and the federal government's borrowing costs are projected to increase markedly. By
2047, CBO projects that interest costs alone could be more than two times what the
federal government has historically spent on R&D, nondefense infrastructure, and
education combined.”
Warrant: A higher public debt causes interest rates to rise and increases the cost of capital,
lowering private investment in the economy.
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Huang, Yi, Ugo Panizza, and Richard Varghese. "Does Public Debt Crowd Out Corporate
Investment? International Evidence." (2018).
https://repository.graduateinstitute.ch/record/296011/files/HEIDWP082018.pdf
“While economists disagree on the effects of fiscal policy on aggregate economic
activity (Perotti, 2008) most macroeconomic models agree in predicting that fiscal
deficits, and the subsequent increase in public debt, should reduce private investment
when measured as a share of total aggregate demand.6 This consensus
notwithstanding, it is difficult to use cross-country data to move beyond correlations
and show that public debt has a causal effect on private investment. In this paper, we
use industry and firm-level data and show that, controlling for all possible countryyear shocks, higher levels of public debt reduce investment for industries that need
more external financial resources. We also show that public debt increases the
sensitivity of investment to internally generated funds for firms that are, ex-ante, more
likely to be credit constrained. Besides addressing most endogeneity and model
specification concerns and, therefore, providing evidence of a causal link going from
debt to private investment, our empirical exercises allow us to test for the presence of
a credit rationing channel by showing that public debt is particularly damaging for
credit constrained firms.”
Warrant: Debt is rising quickly and will soon reach the area where it is particularly toxic for
investors if nothing is done.
Congressional Budget Office. “The 2018 Long-Term Budget Outlook”. June 2018.
https://www.cbo.gov/system/files?file=2018-06/53919-2018ltbo.pdf
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“In CBO’s projections, the federal budget deficit, relative to the size of the economy,
grows substantially over the next several years, stabilizes for a few years, and then grows
again over the rest of the 30-year period, leading to federal debt held by the public that
would approach 100 percent of gross domestic product (GDP) by the end of the next
decade and 152 percent by 2048. Moreover, if lawmakers changed current laws to
maintain certain policies now in place—preventing a significant increase in individual
income taxes in 2026, for example—the result would be even larger increases in debt.
The federal government’s net interest costs are projected to climb sharply as interest
rates rise from their currently low levels and as debt accumulates. Such spending would
about equal spending for Social Security, currently the largest federal program, by the
end of the projection period.”
Impact: Some debt is acceptable, but a high ratio of debt-to-GDP (like the one we’re approaching)
reduces investment, saving, productivity, and increases interest rates.
Checherita-Westphal, Cristina, and Philipp Rother. "The impact of high and growing
government debt on economic growth: an empirical investigation for the euro
area." (2010).
“We also find evidence that the annual change of the public debt ratio and the budget
deficit-to-GDP ratio are negatively and linearly associated with per-capita GDP
growth. The channels through which government debt (level or change) is found to
have an impact on the economic growth rate are: (i) private saving; (ii) public
investment; (iii) total factor productivity (TFP) and (iv) sovereign long-term nominal
and real interest rates. For the first three channels – private saving, public investment
and TFP – a non-linear (concave) relationship also predominates across the various
models used. As regards the channel of long-term sovereign interest rates, a strong and
robust impact on nominal, as well as real, interest rates is found to come from the
change in the debt ratio (first difference) and from the primary budget balance ratio.
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The level of the public debt ratio (in either linear or quadratic forms) is not found to be
significant on average in determining long-term interest rates in our sample. The change
in the public debt ratio and the primary budget balance prove to be highly statistically
significant and remain robust even after controlling for short-term interest rates as a
proxy for monetary policy effects. Overall, a robust conclusion of our paper is that
above a 90-100% of GDP threshold, public debt is, on average, harmful for growth in
our sample. The question remains whether public debt is indeed associated with higher
growth below this turning point. The additional evidence in this analysis, i.e. that (i) the
debt turning points for the first two channels (private saving and public investment)
seem to be much below the range of 90-100%; (ii) government budget deficits and the
change in the debt ratio are found to be linearly and negatively associated with
growth (and the long-term interest rates), may point to a more detrimental impact of
the public debt stock even below the threshold.”
Analysis: This argument pinpoints a direct facet of the US economy that is powerfully affected by
the debt-to-GDP ratio: investment. Investment, in both the short- and long-term, is critical for
the vitality of the US economy. The first two pieces of evidence demonstrate that a high level of
public debt reduces both public and private investment, and the last two pieces of evidence
indicate that we are approaching the level of public debt that would severely hamper US
economic development, making debt reduction a prerequisite for sustainable and healthy US
growth.
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A/2: Public Debt Crowds Out Investment
Answer: Investment is only modestly affected by public debt, and economic growth is a potent solution
to public debt in the first place.
Warrant: Historically, economic growth is a powerful antidote for public debt. By prioritizing economic
growth, we can reduce the debt without the negative ramifications of cutting spending or raising taxes.
Rampell, Catherine. “Sure Cure for the Debt Problem: Economic Growth”. The New York
Times. July 30 2011.
https://www.nytimes.com/2011/07/31/business/economy/sure-cure-for-debtproblems-is-economic-growth.html
“The basic issue is that the U.S. is on an unsustainable fiscal track,” says Dean Maki, the
chief United States economist at Barclays Capital. “From that point, none of the choices
are fun.” The most obvious choices, Mr. Maki says, are to reduce spending (ouch),
raise taxes (yuck), let inflation run (gasp) or default (thud). We wouldn’t need any of
that if we could restore economic growth. If that happened, Americans would become
richer and pay more taxes. Et voilà! — we’d pay down the debt painlessly. Crazy as that
might sound, particularly given Friday’s figures, the possibility isn’t some economic
equivalent of that nice big farm where your childhood dog Skip was sent to run free.
There are precedents. Before its economy crashed, Ireland was a star of this sort of debt
reduction. In the 1980s, Ireland’s debt dwarfed its economy. Over the next two decades,
though, that debt shrank to about a quarter of gross domestic product, largely because
the economy went gangbusters. “Ireland went from being, you know, the emerging
market in a European context, to a very dynamic economy,” says Carmen Reinhart, a
senior fellow at the Peterson Institute for International Economics and co-author of
“This Time Is Different,” a history of debt crises. The United States has done the same in
the past, too. After World War II, gross federal debt reached 122 percent of G.D.P., the
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highest ratio on record. But over the next 40 years, it fell to about 33 percent. That
wasn’t because some blue-ribbon panel prescribed austerity; it was because the
American economy became much, much richer. The same happened during the
prosperous 1990s, which began with deficits and ended with surpluses. Former
President Bill Clinton is often credited for that turnabout, as he engineered higher tax
rates. But most economists attribute the surplus years primarily to extraordinarily
rapid growth. It would be lovely to repeat that experience today, and send our federal
debt off to that farm with Skip.”
Warrant: Public debt itself doesn’t cause the crowding out of investment – instead, the way
that policies are structures cause an increase or decrease in investment. If policies are shaped
to promote economic growth, investment can increase even if debt rises.
Traum, Nora, and Shu-Chun S. Yang. "When does government debt crowd out
investment?." Journal of Applied Econometrics 30.1 (2015): 24-45.
http://www4.ncsu.edu/~njtraum/CrowdingOut.pdf
“Two key factors drive the investment response to rising government debt: the source
of policy changes that give rise to debt growth and distortionary debt financing. In the
short run, the effect of government debt is mainly determined by the type of fiscal or
monetary policy shock that triggers a debt expansion. Higher government debt can
crowd in investment if the debt is generated by a reduction in capital tax rates or by
an increase in productive government investment, because both raise the net return
to capital. Over a longer horizon, distortionary financing plays an important role in the
negative investment response following a debt expansion. After World War II, many
economists were concerned about the impact of government debt [e.g., Domar (1944),
Leland (1944), Wallich (1946), and the references therein]. Since then, a conventional
view has emerged, suggesting that government borrowing is expansionary in the short
run but contractionary in the long run.2 Keynesian theory argues that when prices and
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wages are sticky, higher debt that is caused by deficit-financed tax cuts or spending
increases adds to aggregate demand, leading income and output to increase.
However, the deficits reduce public saving. If private saving and capital inflows do not
increase enough to fully offset government borrowing, interest rates rise over time.
Consequently, investment is crowded out, and capital and output eventually decline,
negating the short-run expansionary benefits”
Impact: When government funds are used correctly and productively, even deficit-financed spending
can have positive long-term effects on the economy.
Buchanan, Neil H. "Why We Should Never Pay Down the National Debt." U. Louisville L.
Rev. 50 (2011): 683.
https://scholarship.law.gwu.edu/cgi/viewcontent.cgi?article=1025&context=fac
ulty_publications
“Beyond the possibility of financial collapse, the second legitimate concern about
federal borrowing is that it will “crowd out” productive investment that private
businesses would otherwise have undertaken.47 When the government uses economic
resources (workers, raw materials, and so on) that private businesses would otherwise
have used, we potentially reduce the long-term growth rate of the economy. This is the
plausible basis for concerns that government borrowing might reduce the size of the
economy that we bequeath to future generations of Americans. It is important to
remember, however, that the government can sometimes use economic resources in
more productive ways than those resources would have been used by private
businesses. When the government engages in productive investment, such as building
the infrastructure that allows private commerce to flourish, that spending more than
pays for itself.48 For example, the best recent economic research indicates that each
dollar spent to prevent students from dropping out of school before receiving their
high school diplomas results in a return to the government of between $1.45 to $3.55,
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saving approximately $90 billion for each year that the government succeeds in
halving dropout rates from current levels.49 Therefore, the concern about reducing
investment, and thus harming future living standards, does not justify across-the-board
reductions in government spending. Instead, it calls for increases in spending on
programs—including early-childhood nutrition programs, as well as government
support for basic scientific research—that offer handsome long-term payoffs.
Moreover, given that the private sector—both during the current downturn and in the
longer term—has not fully utilized the available capital that is already in existence,50 it
is difficult to argue that the government’s short- or long-term borrowing patterns are
actually compromising future growth..”
Analysis: First, in order to answer the affirmative claim that debt will, in the long-term, crowd
out public investment, demonstrate that economic growth is an effective way to reduce debt
without incurring the negative costs of tax increases or spending cuts. Then, show that reductions
in spending to reduce the debt are not an effective way to stimulate the economy. Instead,
publically-funded programs, such as infrastructure or education, can be more effective in the
long-term in building our economy than private sector programs. Even if private sector
investment does decrease somewhat, government spending can be more effective, as
demonstrated by the final piece of evidence.
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PRO: Public Debt Increases Inflation
Argument: Economic growth, when coupled with a high level of federal debt, ultimately leads to
higher levels of inflation, significantly hurting the poor.
Warrant: Federal debt, over time, creates inflation because it requires the government to create
new money.
Dass, Anthony. "How does public debt make our money worth less?” 6 June 2018. The
Star.
https://www.thestar.com.my/business/business-news/2018/06/06/how-
does-public-debt-make-our-money-worth-less/#YlBqVVOPoRYji3c0.99
“A government is able to add the national debt in various ways such as deficit
spending, quantitative easing and stimulus measures. Each time the government does
that, it has to create money or credit. It will add pressure on inflation. Rising prices is
what many believe is the definition of inflation. Possibilities for those rising prices can
be hidden or postponed or made to look disassociated. Also, the public debt is like a tax
on us all because it makes everything more expensive so that the government can
spend money it does not have. Furthermore, it can be viewed as a regressive tax in the
sense that it impacts the poor more than the rich. Aside from the ups and downs of the
economy, it makes energy, groceries and housing more expensive because it makes
our money worth less.”
Warrant: Due to the increasing weight of the debt burden, attempts to stimulate the economy
in the event of economic downturn would create high inflation.
Tully, Shawn. “How Debt Could Blow Up the Trump Economy” March 15 2018. Fortune
Magazine. http://fortune.com/2018/03/15/us-national-debt-trump-tax-cuts/
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“By 2028, America’s government debt burden could explode from this year’s $15.5
trillion to a staggering $33 trillion—more than 20% bigger than it would have been
had Trump’s agenda not passed. At that point, interest payments would absorb more
than $1 in $5 of federal revenue, crippling the government’s capacity to bolster the
economy, and constraining the private sector too. Contrary to the claims of the
President and his supporters, the U.S. can’t grow fast enough to shed this burden;
indeed, Trump’s agenda on immigration and trade looks likely to stunt that growth.
(More on that later.) “This is almost like climate change,” says Mark Zandi, chief
economist at Moody’s Analytics. “It doesn’t do you in this year, or next year, but you’ll
see the ill effects in a day of reckoning.”. In the absence of decisive, quick action to
tackle this slow-motion crisis, the best-case scenario for the next few years is that
America becomes a much riskier place to do business. A high debt load will limit our
flexibility to keep the economy on an even course. “Countries with high debt don’t
respond aggressively to downturns,” says Harvard economist Kenneth Rogoff. If the
U.S. slips into recession, we’ll lack the option of lowering taxes or increasing spending
on infrastructure, for example, as tools to revive growth. And as the debt load grows,
efforts by the Federal Reserve to stimulate the economy with lower rates would be
more likely to feed runaway inflation. “Then, investors will dump Treasuries,” says John
Cochrane, an economist at the Hoover Institution. “That will drive rates far higher, and
make the budget picture even worse
Warrant: Increasing economic growth in our current economic climate would only make inflation
worse.
Amadeo, Kimberly. “Trump and the National Debt”. The Balance. Oct 23 2018,
https://www.thebalance.com/trump-plans-to-reduce-national-debt-4114401
“Candidate Trump had two strategies to reduce the debt. He promised grow the
economy 6 percent annually to increase tax revenues. Once in office, he lowered his
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growth estimate to 3.5 percent to 4 percent. These projections are above the 2-3
percent healthy growth rate. When growth is more than that, it creates inflation. Too
much money chases too few good business projects. Irrational exuberance grips
investors. They create a boom-bust cycle that ends in a recession. Trump’s Fiscal Year
2019 budget lowered annual growth rates down to between 2.4 percent and 2.9
percent annually. Trump promised he could get that growth with tax cuts. In his first 100
days, he released the outline of would become the Tax Cuts and Jobs Act. It cuts the
corporate tax rate from 35 percent to 21 percent beginning in 2018. The top individual
income tax rate drops to 37 percent. It doubles the standard deduction, and eliminates
personal exemptions. The corporate cuts are permanent, while the individual changes
expire at the end of 2025. But it won't stimulate the economy enough to make up for
lost tax revenue. According to the Laffer curve, tax cuts only do that when the rates
were above 50 percent. It worked during the Reagan administration because the highest
tax rate was 90 percent.”
Impact: Inflation functions as a ‘hidden tax’ on everyone, making wages worth less and goods
cost more. Ultimately, this results in more poverty and inequality.
Hulsmann, Jorg. “How Inflation Helps Keep the Rich Up and the Poor Down” May 31
2014. Mises Institute. https://mises.org/library/how-inflation-helps-keep-richand-poor-down
“This excessive production of money and money titles is inflation by the Rothbardian
definition, which we have adapted in the present study to the case of paper money.
Inflation is an unjustifiable redistribution of income in favor of those who receive the
new money and money titles first, and to the detriment of those who receive them last.
In practice the redistribution always works out in favor of the fiat-money producers
themselves (whom we misleadingly call central banks) and of their partners in the banking
sector and at the stock exchange. And of course inflation works out to the advantage of
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governments and their closest allies in the business world. Inflation is the vehicle through
which these individuals and groups enrich themselves, unjustifiably, at the expense of
the citizenry at large. If there is any truth to the socialist caricature of capitalism — an
economic system that exploits the poor to the benefit of the rich — then this caricature
holds true for a capitalist system strangulated by inflation. The relentless influx of paper
money makes the wealthy and powerful richer and more powerful than they would be
if they depended exclusively on the voluntary support of their fellow citizens. And
because it shields the political and economic establishment of the country from the
competition emanating from the rest of society, inflation puts a brake on social
mobility. The rich stay rich (longer) and the poor stay poor (longer) than they would in
a free society.”
Analysis: This is a powerful argument because it directly addresses the economic and fiscal
situation of the United States right now. Because unemployment is historically low and corporate
profits are high, it does not make much sense to try and stimulate economic growth as a priority
because those benefits are unlikely to accrue to average Americans. If corporations were going
to spend more on workers, they would already be doing so. Instead, teams can point out that the
state of the economy right now is generally good, but that debt threatens the economy and
workers, so reducing debt will help to control interest rates and reduce the burden on workers.
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A/2: Public Debt Increases Inflation
Answer: Inflation is a relatively unimportant concern, and there is only an ambiguous relationship
between the public debt and inflation.
Warrant: There are ways to successfully pay off the federal debt without increasing the rate of inflation
due to how our debt is structured.
Strain, Michael. “The Right Is Wrong to Lose Faith in Economic Growth”. Bloomberg.
Nov 23 2018. https://www.bloomberg.com/opinion/articles/2018-11-23/rightwing-populists-are-wrong-about-economic-growth
“While private households, businesses, or even state and local governments must bring
in dollars before they can spend them, the federal government must spend dollars
before it can tax them. This is more intuitive than it sounds. Since the government
literally prints dollars for circulation, it must provide money before it can take it back. (If
you don't believe me, here's former New York Federal Reserve Chairman Beardsley
Ruml, making the same point way back in 1946.) When one line item in the federal
budget grows, it doesn't "crowd out" other priorities because the government can
never run out of dollars. "But what about inflation?" you might ask. That is the proper
question: The inflation level, not the risk of a debt crisis, is what actually determines
the government's room to spend on public priorities. When inflationary pressure is too
great, the U.S. can relieve it by raising taxes or hiking interest rates to remove money
from the economy. But simply introducing new dollars into the economy does not
necessarily lead to price increases. Where the money goes is crucial. To create
inflation, new dollars must go into new spending and consumer demand. Interest
payments on the national debt are extremely unlikely to do that. The key thing to
understand here is that most U.S. government debt is denominated in treasury bonds,
which are pretty much the most liquid asset in the world. If you own a treasury bond,
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but you'd rather have cash, you will have no trouble finding a buyer. That means pretty
much anyone who owns a treasury bond prefers it to cash because they're looking to
save it. And since owning a treasury bond is the prerequisite for receiving federal
interest payments, people are almost certainly going to save those payments as well.”
Warrant: Empirically, there is a very small or even nonexistent relationship between federal
debt and inflation.
Vague, Richard. “Rapid Money Supply Growth Does Not Cause Inflation.”, Institute for
New Economic Thinking, Dec 2 2016,
https://www.ineteconomics.org/perspectives/blog/rapid-money-supply-growthdoes-not-cause-inflation
“Although less often discussed than money supply growth, economic commentators
also often mention high rapid government debt growth as a cause of inflation. A more
recent variant of this is the case when a central bank is active in purchasing government
debt or bank loans—what is commonly called quantitative easing—with the result of
high balance sheet growth. Some economists have argued that this too will bring
inflation. Some also suggest that rapidly declining or low interest rates are a cause of
high inflation. We tested all three of these theories. We followed the method used
above in assessing whether rapid government debt growth leads to inflation. We
defined a period of rapid government debt growth in two ways. One was to define it as
20-percentage point growth in government debt to GDP in a five-year period, and the
second was to define it as 200 percent nominal growth in government debt growth in a
five-year period. We defined high inflation as a period of five consecutive years of
inflation of five percent or more. Then we reviewed the data for each country to see
how many times high inflation followed high government debt growth, and how many
times high inflation occurred that was not preceded by rapid government debt growth.
Our results on government debt were as follows. In case 10, of the 47 instances where
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government debt growth was at least 20 percentage points in five years, six were
followed by periods of high inflation, while 41 were not. By contrast, there were 25
instances of high inflation that were not preceded by this level of rapid government
debt growth. In case 11, of the 85 instances where nominal government debt was at
least 60 percent in five years, 17 led to high inflation, 68 did not. There were 9 cases of
high inflation that were not preceded by a public debt boom. In case 12, of the 40
instances where nominal government debt growth was at least 200 percent in five
years, eight were followed by periods of high inflation; 32 were not. There were 23
instances of high inflation that were not preceded by this level of high government debt
growth.”
Impact: All other factors being equal, economic growth cannot increase inflation. If the money supply
remains the same and more goods are being created, the prices of goods must fall.
Henderson, David. “Does Growth Cause Inflation?”. Cato Institute.
November/December 1999, https://www.cato.org/policyreport/novemberdecember-1999/does-growth-cause-inflation
“For the last few years, the claim that an increase in economic growth leads to an increase in
inflation and that decreased growth reduces inflation has been a mantra. That is the
conventional wisdom in Washington and, to a lesser extent, on Wall Street. On October 12, for
example, Federal Reserve Board governor Laurence Meyer stated, “Tightening monetary policy
slows spending growth, opens up some slack temporarily in labor and product markets, and
allows the slack to reduce inflation.” Yet, taken literally, that claim cannot be true. All other
things being equal, an increase in economic growth must cause inflation to drop. Here’s why.
The seat-of-the-pants explanation of inflation is that it is caused by too much money “chasing”
too few goods. It follows that the more goods that are produced, the lower the prices of
goods. This connection between the level of production and the level of prices also holds for
the rate of change of production (that is, the rate of economic growth) and the rate of change
of prices (that is, the inflation rate).”
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Analysis: Use the first two pieces of evidence to call into question the strength of the link between the
affirmative’s claims of debt causing inflation, and then use the final piece of evidence to demonstrate that
the negative team can also link into reducing inflation. The affirmative is assuming that the federal debt
can only be paid off in one way – by increasing the money supply – but this is simply not the case, and
there are other ways to reduce the debt burden without causing inflation. In fact, the final piece of
evidence demonstrates that economic growth itself could be used to reduce inflation.
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PRO: Economic Growth Should Not Currently Be A Priority
Argument: The current US economic outlook means that prioritizing economic growth is unlikely
to help those who need it, whereas the federal debt is hurting everyone.
Warrant: Because growth is already high and the unemployment rate is already very low,
economic stimulus right now is unlikely to create jobs or boost wages.
Egan, Matt. "Why now's not the time for expensive tax cuts”. Dec 20 2017. CNN Business.
https://money.cnn.com/2017/12/20/investing/tax-changes-economydebt/index.html
“But some prominent voices in business are pushing back on the timing of deficitfinanced stimulus. Pointing to low unemployment and 3% economic growth, Goldman
Sachs (GS) CEO Lloyd Blankfein recently told Bloomberg: "I don't know that this is the
moment that you provide the biggest stimulus." New York Fed President Bill Dudley
said he's not in favor of deficit-financed stimulus because "the economy doesn't need
it." Too much stimulation could cause both the economy and the stock market to
overheat. That in turn could force the Fed to accelerate interest rate hikes, offsetting
the benefits of tax cuts. Treasury rates have begun to jump, a sign that investors are
anticipating greater government borrowing. "Yes, it could blow out deficits and that
could be a big problem. There is no question about it," said Peter Boockvar, chief market
analyst at The Lindsey Group. Meanwhile, companies are doing just fine without tax
cuts. Corporate profits are already at record highs, as are cash levels. Companies can
afford to hire more people. "We don't need the money," Michael Bloomberg, the
billionaire former New York mayor and CEO of Bloomberg LP, wrote in an op-ed last
week. "It's pure fantasy to think that the tax bill will lead to significantly higher wages
and growth, as Republicans have promised," he wrote. Bloomberg slammed the tax
overhaul as an "economically indefensible blunder that will harm our future" because it
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makes key challenges like rising deficits, growing wealth inequality and the skills crisis
worse.”
Warrant: Even despite consistent economic growth, there are increasing levels of income
inequality in the United States.
Reinicke, Carmen. “US income inequality continues to grow” July 19 2018. CNBC.
https://www.cnbc.com/2018/07/19/income-inequality-continues-to-grow-inthe-united-states.html
“Between the years 2009 to 2015, the incomes of those in the top 1 percent grew
faster than the incomes of the bottom 99 percent in 43 states and the District of
Columbia. In nine states, the income growth of the top 1 percent was half or more of all
income growth in that time period. A recent trend This trend is a reversal of what
happened in the United States in the years during and after the Great Depression. From
1928 until 1973, the share of income held by the top 1 percent declined in nearly every
state. The report from the EPI attributes that growth to a different atmosphere for
workers, where the minimum wage generally was steadily rising and they were able to
join unions and bargain for rights. Today, while unemployment remains low and the
economy is doing exceptionally well, wage growth has remained stagnant. “When you
look at economic expansions, it’s in that recovery that you see income growth –
businesses recover, reorganize, workers find jobs,” Price said. In those expansions since
1973, there has been less income growth for the bottom 99 percent, said Price.
Warrant: Corporations already have sufficient capital to hire more workers and increase wages
– they simply aren’t.
Jared Bernstein, NY Times, “Drug Price Controls Are Vital in a Market That’s Not Free”,
June 29 2016, https://www.nytimes.com/roomfordebate/2015/09/23/should-
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the-government-impose-drug-price-controls/drug-price-controls-are-vital-in-amarket-thats-not-free
“Last month a Wall Street Journal editor asked a room full of CEOs to raise their hands
if the corporate tax cut being considered in Congress would lead them to invest more.
Very few hands went up. Attending was Gary Cohn, President Donald Trump's
economic adviser and a friend of mine. He asked: "Why aren't the other hands up?"
Allow me to answer that: We don't need the money. Corporations are sitting on a
record amount of cash reserves: nearly $2.3 trillion. That figure has been climbing
steadily since the recession ended in 2009, and it's now double what it was in 2001.
The reason CEOs aren't investing more of their liquid assets has little to do with the
tax rate. CEOs aren't waiting on a tax cut to "jump-start the economy" -- a favorite
phrase of politicians who have never run a company -- or to hand out raises. It's pure
fantasy to think that the tax bill will lead to significantly higher wages and growth, as
Republicans have promised. Had Congress actually listened to executives, or economists
who study these issues carefully, it might have realized that. Instead, Congress did what
it always does: It put politics first. After spending the first nine months of the year trying
to jam through a repeal of Obamacare without holding hearings, heeding independent
analysis or seeking Democratic input, Republicans took the same approach to tax
"reform" -- and it shows. The Treasury Department claimed to have more than 100
professional staffers "working around the clock" to analyze the tax cut. If true, their
hard work must have been suppressed. The flimsy one-page analysis Treasury released - which accepts the White House's reality-defying economic projections in order to claim
that the tax cuts will pay for themselves and then some -- is a politically driven
document that amounts to economic malpractice. So does the bill itself. The largest
economic challenges we face include a skills crisis that our public schools are not
addressing, crumbling infrastructure that imperils our global competitiveness, wage
stagnation coupled with growing wealth inequality, and rising deficits that will worsen
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as more baby boomers retire. The tax bill does nothing to address these challenges. In
fact, it makes each of them worse.”
Impact: Conversely, the national debt affects the average income substantially and needs to be
addressed right now.
Davidson, Jacob. “How Much Does America's Huge National Debt Actually Matter?” Feb
11 2016. Time Magazine. http://time.com/4214269/us-national-debt/
“The United States has never owed as much debt as it is projected to owe by the 2030s.
CBO warns that such high and rising debt could have dramatic adverse consequences.
Rising debt is likely to substantially slow economic growth and reduce future incomes by
leading savers and investors to purchase Treasury bonds in place of productive
investments. CBO’s projections of GNP per capita show that in three decades, currently
projected rising debt will reduce average income by about 3 percent – roughly $3,000
per person. Assuming various tax cuts and spending hikes are extended and debt grows
by an extra 50 percent of GDP, income could be as much 6 percent or $6,000 lower by
our estimate (based on last year’s report). Rising debt also causes interest rates to rise.
CBO estimates average rates on federal debt will be 13 percent, or 50 basis points, higher
as a result of rising debt. These higher rates will spill over into mortgages, car loans,
student loans, business loans, and credit card debt. As a result of higher interest rates
and higher debt, government interest payments will grow. Under current law, interest
payments will almost quadruple from 1.6 percent of GDP this year to 6.3 percent by 2048,
exceeding the size of Medicaid in 2020, defense in 2023, and Medicare in 2046, Interest
will become the largest spending program by exceeding Social Security after 2048. If
Congress extended various expiring policies, we estimate that interest costs would more
than quintuple to 8.1 percent of GDP by 2048, becoming the largest government program
by 2042.
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Analysis: This is a powerful argument because it directly addresses the economic and fiscal
situation of the United States right now. Because unemployment is historically low and corporate
profits are high, it does not make much sense to try and stimulate economic growth as a priority
because those benefits are unlikely to accrue to average Americans. If corporations were going
to spend more on workers, they would already be doing so. Instead, teams can point out that the
state of the economy right now is generally good, but that debt threatens the economy and
workers, so reducing debt will help to control interest rates and reduce the burden on workers.
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A/2: Economic Growth Should Not Currently Be A Priority
Answer: Economic growth is always helpful for workers, and this is especially true even in the current
economy.
Warrant: Economic growth right now is actually benefiting low-skill workers the most, along with other
vulnerable groups like disabled and previously incarcerated workers.
Strain, Michael. “The Right Is Wrong to Lose Faith in Economic Growth”. Bloomberg.
Nov 23 2018. https://www.bloomberg.com/opinion/articles/2018-11-23/rightwing-populists-are-wrong-about-economic-growth
“This task is made easier by the visible proof that the hot U.S. economy is the best jobs
program available for lower-wage and vulnerable workers. As I wrote in a column
earlier this month, this strength is benefiting low-wage workers more than other
groups. The unemployment rate for the least-skilled workers is outperforming its
average to a greater extent than for higher-skilled workers. Earnings are growing
significantly faster for workers without a high school diploma than for highereducated workers. The rate of employment among workers with a disability has jumped
26 percent in the last six years. The formerly incarcerated seem to be having a much
easier time in the workforce than in previous years, and employers are less likely to
require background checks on job applications. Growth doesn’t just help low-income
and working-class households in the short term. Over longer periods, seemingly small
changes in the growth rate have large consequences. In the past four decades, for
example, real GDP per person has increased from about $28,000 to over $55,000,
growing at about 1.7 percent per year. If growth instead had been 1 percent, average
GDP per head would be about three-quarters what it is today. Today’s critics of
growth-focused public policy are correct that a rising tide does not lift all boats equally,
and it doesn’t lift them instantaneously. But over time, all boats do rise considerably.”
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Warrant: Even if the poor and lower class do not directly see benefits from new jobs or higher
wages, they see indirect benefits in quality of life whenever economic growth occurs.
Spross, Jeff. “America is going to pay a lot of interest soon. But don't fear a debt crisis.”,
The Week, Oct 1 2018, https://theweek.com/articles/798463/america-goingpay-lot-interest-soon-but-dont-fear-debt-crisis
“Such sustained, rapid economic growth is the ultimate solution to poverty. It was
economic growth in the last century that reduced U.S. poverty from roughly 50% in
1900, and 30% in 1950, to 12.1% in 1969. Among blacks, poverty was reduced in the
20th century from 3 in 4 to 1 in 4 through economic growth. Child poverty of 40% in the
early 1950s was also reduced by half. It was economic growth that made the elimination
of child labor possible as well. The living standards of the poor in America today are
equivalent to the living standards of the middle class 35 years ago, if not the middle
class in Europe today. With sustained, vigorous economic growth, 35 years from now
the lowest income Americans will live at least as well as the middle class of today. If
real compensation growth for the poor can be sustained at just 2% a year, after just 20
years their real incomes will increase by 50%, and after 40 years their incomes will more
than double. If pro-growth economic policies could raise that real compensation
growth to 3% a year, after just 20 years their real incomes would double, and after 40
years it would triple. That is the most effective anti-poverty program possible.”
Impact: By prioritizing economic growth, we can reduce the real burden of our debt while also
experiencing the benefits of economic growth.
Committee for a Responsible Budget, “Could Faster Growth Solve Our Debt Woes?”,
October 28 2013, http://www.crfb.org/blogs/could-faster-growth-solve-ourdebt-woes
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“A final way to stabilize the debt, but not necessarily decrease it in gross terms, would be to
focus on the growth of the nation’s gross domestic product (GDP). The debt-to-GDP ratio
(usually calculated using the “debt held by the public,” which omits the trust fund debt that the
government owes to itself), like the size of a household’s mortgage or credit card balance, is the
best indicator of the burden that the debt imposes on the borrower (Figure 3). Investors,
government leaders, and economists use this ratio as an indicator to gauge the country’s ability
to service and perhaps ultimately pay off its debts. A high ratio (discussed in later sections)
signifies to investors that a country is not producing enough to repay those who have “bought”
US debt (that is, loaned to the federal government expecting the government to repay the loan
with interest). Think of the US government as a household. Like a household, the government
has an income (derived from the GDP). Banks, or in the case of the government, investors, will
give the household a bigger loan if the members of the household make more money. But, if the
household is not making money, the bank is unlikely to lend for fear of default. To understand
the impact of a high debt-to-GDP ratio, take the example of Greece in the mid-2010s. In 2015,
Greece’s debt was $352.7 billion, which seems trivial compared to its fellow EU member,
Germany’s $2.39 trillion. However, Germany’s GDP at the time was $3.4 trillion (or a debt-toGDP ratio of 70 percent), whereas Greece’s GDP was at a low $194 billion, making its debt-toGDP ratio a whopping 182 percent. This difference explains why Germany was in the position to
bail out Greece with loans adding up to nearly $27 billion. Investors no longer felt secure buying
Greek debt, correctly presuming that the country would not be able to pay interest and
refinance the debt in the future.
Analysis: The first two pieces of evidence are effective at refuting the affirmative argument that lowerand middle-classes are unlikely to see benefits from economic growth, because lower-class individuals
already are seeing benefits from economic growth and because growth creates quality-of-life
improvements for everyone regardless. The last piece of evidence demonstrates how a country can focus
on economic growth and subsequently make their debt less burdensome regardless. Taken together,
negative teams can compellingly argue that economic growth will improve everyone’s lives and solve
some of the affirmative’s concerns about debt.
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PRO: Reducing Debt Now Prevents Snowball Effect
Argument: The US Federal Government will need to reduce its debt eventually, and choosing to
prioritize debt reduction now prevents later negative consequences.
Warrant: Interest rates on the debt are rapidly growing, and this problem is only growing to
increase in magnitude as time goes on.
Schwartz, Nelson. " As Debt Rises, the Government Will Soon Spend More on Interest
Than on the Military”. Sept 25 2018.
https://www.nytimes.com/2018/09/25/business/economy/us-governmentdebt-interest.html
“The federal government could soon pay more in interest on its debt than it spends on
the military, Medicaid or children’s programs. The run-up in borrowing costs is a onetwo punch brought on by the need to finance a fast-growing budget deficit, worsened
by tax cuts and steadily rising interest rates that will make the debt more expensive.
With less money coming in and more going toward interest, political leaders will find it
harder to address pressing needs like fixing crumbling roads and bridges or to make
emergency moves like pulling the economy out of future recessions. Within a decade,
more than $900 billion in interest payments will be due annually, easily outpacing
spending on myriad other programs. Already the fastest-growing major government
expense, the cost of interest is on track to hit $390 billion next year, nearly 50 percent
more than in 2017, according to the Congressional Budget Office.”
Warrant: As debt increases, it becomes harder to pay off, and could subsequently crowd out
other forms of social spending.
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Amadeo, Kimberly. “The US Debt and How It Got So Big”. The Balance. Nov 7 2018,
https://www.thebalance.com/the-u-s-debt-and-how-it-got-so-big-3305778
“Over the long term, a growing federal debt is like driving with the emergency brake on.
As the debt-to-GDP ratio increases, debt holders could demand larger interest
payments. They want compensation for an increasing risk they won't be repaid.
Diminished demand for U.S. Treasurys would further increase interest rates. That would
slow the economy. Lower demand for Treasurys also puts downward pressure on the
dollar. That's because the dollar's value is tied to the value of Treasury Securities. As the
dollar declines, foreign holders get paid back in currency that is worthless. That further
decreases demand. Also, many foreign holders of U.S. debt are investing more in their
own countries. At that point, the United States will have to pay exorbitant amounts
just for the interest. The amount of federal spending today points to high-interest
payments on the debt in the near future. Congress realizes it is facing a debt crisis.
Over the next 20 years, the Social Security Trust Fund won't have enough to cover the
retirement benefits promised to baby boomers. That could mean higher taxes once the
high U.S. debt rules out further loans from other countries. Congress is more likely to
curtail benefits than raise taxes. That would primarily affect retirees younger than 70. It
might also hit those who are high income and not as dependent on Social Security
payments to fund their retirement.”
Warrant: The sooner we take steps to reduce the debt, the less painful the measures to pay off
the debt will be.
Davidson, Jacob. “How Much Does America's Huge National Debt Actually Matter?” Feb
11 2016. Time Magazine. http://time.com/4214269/us-national-debt/
“But while the U.S. is far from trouble at the moment, it will have to clean up its fiscal
house at some point. The Congressional Budget Office projects public debt in 2026 will
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jump ten points to 86% of GDP, and will hit a record 155% of GDP in three decades.
Interest on debt, that minimum credit card payment, is projected to eclipse military
spending by 2021, putting the squeeze on other fiscal priorities. If spending continues on
its projected course and nothing is changed, debt interest payments will become a larger
government expense than even Social Security by about 2060. The CBO says we can we
can keep debt-to-GDP levels where they are now by either cutting spending or raising
taxes by 1.1% of GDP if we start now, or 1.9% if we start in ten years (returning to
historically normal levels will take more severe measures). That’s not a huge burden, but
it will get more painful the longer we wait.”
Impact: Ignoring the debt overhang in America will ultimately affect millions of the most
vulnerable segments of America’s population.
Harris, Benjamin. " The looming debt crisis will hurt these Americans the most" 12 April
2018. CNBC. https://www.cnbc.com/2018/04/11/the-looming-debt-crisis-willhurt-these-americans-the-most.html
“These concerns all exacerbate the fundamental problem with our fiscal dilemma: a
structural mismatch between revenues and outlays. When the government consistently
runs deficits in excess of 4 percent of GDP during the height of an economic expansion,
policymakers are pretty much begging for a fiscal crisis. This imbalance will eventually
impact millions. Here's who will feel the most pain: First up is any American hoping to
borrow. Homebuyers seeking a mortgage. Students borrowing for tuition.
Entrepreneurs looking for a small business loan. The 10-year Treasury bill rate has
already risen by about 40 basis points this year alone, and earlier this week JPMorgan CEO
Jamie Dimon said it could rise by another 120 basis points by year's end. The second group
facing a bleak future? Retirees. With the ink barely dry on a budget-busting $1.5 trillion
tax cut, a group of conservative economists recently proposed entitlement cuts to right
the fiscal ship—calls from policymakers are soon to follow. But there is simply no way
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to substantially cut these programs without forcing American seniors to work longer
and pay more out-of-pocket for health care. If the cost to last year's corporate tax cut
was losing an extra year or two of retirement, Americans should have been presented
with an honest choice when the tax bill was passed back in December. The third casualty
affects everyone: future growth. Whether by financial crisis, higher interest rates, or
severed spending on public investment, these massive deficits will be a drag on
economic growth one way or another. And when the next recession comes (and it will),
we may not be able to stimulate our way out of it. America found its way out of the Great
Recession in large part through tax rebates and infrastructure spending—these options
may not be available if excessive debt is the cause of the slowdown in the first place.
There are plausible exit strategies. Cutting tax expenditures like stepped-up basis or
untargeted incentives for retirement saving have long stood as a possible savior to our
budget woes. Budget commissions of all stripes have recommended cutting these
expenditures as a way to lower the debt, and eventually Congress just might listen.
Analysis: Teams who use this argument should pair it with a framework analysis that defines
‘prioritize’ as what an actor should do first rather than what is most important. Afterwards, they
should argue that taking on the federal debt now is uniquely advantageous because it becomes
more and more costly to tackle the debt the longer we wait. Simply ignoring the debt isn’t an
option, as demonstrated by the impact – interest payments will balloon over time and ultimately
crowd out other forms of critical government spending.
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A/2: Reducing Debt Now Prevents Snowball Effect
Answer: The concerns of the affirmative team are largely unfounded, and economic growth is a better
way to manage debt concerns anyways.
Warrant: Because the rate of economic growth is higher than the interest rate on debt, the impacts laid
out by the pro team are unlikely to materialize.
Paul Krugman. “On the Debt Non-Spiral”. New York Times. Sept 11 2018.
https://www.nytimes.com/2018/09/11/opinion/on-the-debt-nonspiral.html?rref=collection%2Fsectioncollection%2Fopinion-columnists
“The usual scare story about debt warns about a debt spiral: deficits mean higher
debt, which means higher interest payments, which means bigger deficits, which
means faster growth in debt, and so on until confidence collapses. But this kind of
debt spiral can only happen if the interest rate on the debt is higher than the
economy’s growth rate. And this hasn’t been true for a while. Here’s the average
interest rate paid on federal debt: These days that rate is well below 3 percent even
when the economy is near full employment. Meanwhile, we think the U.S. economy
has an underlying growth rate of maybe 2 percent, plus 2 percent inflation – which
means 4 percent nominal growth. What this means is that debt doesn’t spiral. On the
contrary, it tends to fall as a share of GDP unless the government runs large primary
deficits. I’m not saying that we shouldn’t worry about debt at all, because there may be
future contingencies when real interest rates rise and debt becomes an issue. But debt
is way, way down on the list of things to worry about – absolutely trivial compared
with, say, crumbling infrastructure, which should be fixed without worrying about
paying as you go.”
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Warrant: Even if there is a debt crisis later on, the US will be able to repay debt later on without
increasing inflation because of how our debt is structured.
Spross, Jeff. “America is going to pay a lot of interest soon. But don't fear a debt crisis.”,
The Week, Oct 1 2018, https://theweek.com/articles/798463/america-goingpay-lot-interest-soon-but-dont-fear-debt-crisis
“The paper even suggested the interest burden could force the government to cut
spending and raise taxes in the next recession, despite the economy needing additional
stimulus to recover. "There will eventually be another recession, and this increases the
chances we will have to slam on the brakes when the car is already going too slowly,"
Jeffrey Frankel, a Harvard economist, told the Times. It's difficult to overemphasize
how utterly wrong this is. The U.S. government controls the supply of U.S. dollars.
While private households, businesses, or even state and local governments must bring
in dollars before they can spend them, the federal government must spend dollars
before it can tax them. This is more intuitive than it sounds. Since the government
literally prints dollars for circulation, it must provide money before it can take it back. (If
you don't believe me, here's former New York Federal Reserve Chairman Beardsley
Ruml, making the same point way back in 1946.) When one line item in the federal
budget grows, it doesn't "crowd out" other priorities because the government can
never run out of dollars. "But what about inflation?" you might ask. That is the proper
question: The inflation level, not the risk of a debt crisis, is what actually determines
the government's room to spend on public priorities. When inflationary pressure is too
great, the U.S. can relieve it by raising taxes or hiking interest rates to remove money
from the economy. But simply introducing new dollars into the economy does not
necessarily lead to price increases. Where the money goes is crucial. To create
inflation, new dollars must go into new spending and consumer demand. Interest
payments on the national debt are extremely unlikely to do that. The key thing to
understand here is that most U.S. government debt is denominated in treasury bonds,
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which are pretty much the most liquid asset in the world. If you own a treasury bond,
but you'd rather have cash, you will have no trouble finding a buyer. That means pretty
much anyone who owns a treasury bond prefers it to cash because they're looking to
save it. And since owning a treasury bond is the prerequisite for receiving federal
interest payments, people are almost certainly going to save those payments as well.
Impact: Increasing economic growth is the best solution to deal with debt overhang, because it
increases revenue and increases the economy’s capacity to carry debt.
Committee for a Responsible Budget, “Could Faster Growth Solve Our Debt Woes?”,
October 28 2013, http://www.crfb.org/blogs/could-faster-growth-solve-ourdebt-woes
“These ten-year estimates can serve as an important guide to understanding the effects
of larger or smaller growth scenarios. Importantly, however, these estimates may be
overly optimistic on the deficit impact, since they assume that there will be no feedback
between economic growth and either health care spending or interest rates (both could
be higher, leading to higher spending). They are also unlikely to be very predictive of
long-run impact, over which higher growth is likely to result in higher spending -- like
Social Security benefits, which grow with wages -- as well as revenue. Faster economic
growth can help improve debt projections in at least two ways. First, faster growth
produces more revenue -- enough to result in $315 billion of deficit reduction for
every 0.1 percentage point increase in the annual growth rate. But in addition, faster
growth increases the economy's capacity to carry debt. Thought of another way: when
we measure debt as a share of GDP, a higher GDP can help lower debt-to-GDP the
same as lower nominal debt levels can lower the ratio. As a result, even small
improvements in growth can help slow debt accumulation. If growth were 0.1
percentage point higher annually, for example, debt levels would reach 71 percent of
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GDP by 2023, compared to 73 percent under the CRFB Realistic Baseline. Even just a
faster economic recovery that brings GDP back to its potential sooner would bring debt
levels to 72 percent of GDP by 2023.
Analysis: Use the above pieces of evidence to argue that the affirmative team is overstating the
threat of a looming debt crisis, and that debt is actually a rather trivial concern in the present. In
the future, the US government will be able to pay off debt without crowding out other spending,
as shown by the second piece of evidence. Ultimately, prioritizing economic growth helps to
reduce the debt burden now and better equips us to combat debt-related issues in the future.
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PRO: Reducing debt now makes it more manageable later
Argument: It is important to reduce the debt now because the longer we wait the more of a
burden it becomes, and the more tax dollars it costs us and the higher interest rates will go.
Warrant: Debt will keep growing if we don’t act
Watson, Kathryn. “Under Trump's Watch, National Debt Tops $21 Trillion for First Time
Ever.” CBS News, CBS Interactive, 17 Mar. 2018,
www.cbsnews.com/news/under-donald-trump-national-debt-tops-21-trillionfor-first-time-ever/.
Despite President Trump's declaration that he would eliminate the national debt over
eight years, the debt-to-Gross Domestic Product ratio has reached its highest level
since after World War II, according to a new report from the Congressional Budget
Office (CBO). And if current law and spending levels remain unchanged, national debt
will be nearly the size of the economy by 2028. "At 78 percent of gross domestic
product, federal debt held by the public is now at its highest level since shortly after
World War II," the CBO found. "If current laws generally remained unchanged, the
Congressional Budget Office projects, growing budget deficits would boost that debt
sharply over the next 30 years; it would approach 100 percent of GDP by the end of the
next decade and 152 percent by 2048. That amount would be the highest in the nation's
history by far."
Warrant: The US has the biggest debt problem in the world
Patton, Mike. “The U.S. Debt: Why It Will Continue To Rise.” Forbes, Forbes Magazine,
24 Sept. 2014, www.forbes.com/sites/mikepatton/2014/09/18/the-u-s-debtwhy-it-will-continue-to-rise/#3932bc192e6c.
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America has the largest debt burden in the world. There were some precipitating
events which contributed greatly. For the sake of perspective, consider this. Japan, the
world's fourth largest economy (as measured by GDP), has a debt-to-GDP ratio of
227%. This is the highest such ratio in the world. The U.S. has a debt-to-GDP ratio of
101% which seems rather modest in comparison. Modest perhaps, but in absolute
terms, our debt is rapidly approaching $18 trillion (Chart 1). Japan's debt is
approximately $13.4 trillion, however, its economy is only one-fourth the size of
America’s. If Japan's debt-to-GDP ratio is more than two times greater than America's,
does this indicate that we are far from the edge of the cliff? In other words, could we
support a debt burden of $30 or $40 trillion? Considering the myriad of economic
problems Japan has faced since 1990, let's just say I would hate to test this hypothesis.
Warrant: Debt will cost us more to fix later
Peterson, Peter. “Four Key Takeaways from the CBO 2018 Long-Term Outlook.” Peter G.
Peterson Foundation, 2018, www.pgpf.org/blog/2018/06/four-key-takeawaysfrom-the-cbo-2018-long-term-outlook.
2) Rising debt is the result of a structural imbalance between revenues and spending.
Under current law, spending growth, which is fueled primarily by the aging of the
population, rising healthcare costs, and mounting interest payments will significantly
outpace the projected growth in revenues. 3) As the debt grows and interest rates rise,
interest costs are projected to increase rapidly. By 2026, interest will become the third
largest category of the budget, behind only Social Security and Medicare. And by 2048,
interest is projected to be tied with Social Security as the largest category. 4) Rising debt
will harm our economy and slow the growth of productivity and wages. To stabilize
the debt, changes should be enacted as soon as possible; on our current path, waiting
just five years raises the cost of stabilizing the debt by 21 percent.
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Impact: Growing debt hurts the economy
Peterson, Peter. “The Fiscal and Economic Challenge.” Peter G. Peterson Foundation,
2018, https://www.pgpf.org/the-fiscal-and-economic-challenge/fiscal-andeconomic-impact.
Growing long-term debt also has a direct, real world effect on the economic
opportunities available to every American. In terms of real (inflation-adjusted) income
levels, CBO estimates that rising federal debt could reduce the real income for a 4person family by as much as $16,000, on average, in 2047. This represents a 4.4
percent loss in income, compared to stabilizing the debt. In addition the debt
negatively impacts economic opportunity and social mobility because it crowds out
investments that help Americans get ahead. Higher interest rates make it harder for
families to buy homes, finance car payments, or pay for college. Fewer education and
training opportunities would leave workers without the skills to keep up with the
demands of a more technological, global economy. Faltering R&D support would make
it harder for American businesses to remain on the cutting edge of innovation, and
would hurt wage growth in the U.S. Slower economic growth generally would also
make our fiscal challenges even worse, as lower incomes reduce tax collections and
put the federal budget further out of balance. Vital safety net programs would come
under even greater budgetary pressure, threatening support for those who need them
most.
Analysis: This is a good argument because it responds well to all the possible con objections
about how the debt has had no impact on the economy so far. This argument states that it is
true that the debt has not mattered in the past, but if we let it grow problems will arise.
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A/2: Reducing debt now makes it more manageable later
Response: The debt is not an issue
Warrant: Debt has been rising but interest rates have not
Rubin, Robert E. “America's Debt Has Exploded. Why Does No One Care?” The
Washington Post, WP Company, 13 Aug. 2018,
www.washingtonpost.com/opinions/americas-debt-has-exploded-why-does-noone-care/2018/08/13/f1d96aee-9cdb-11e8-843b36e177f3081c_story.html?utm_term=.8440f2033d26.
Despite rising debt, interest rates have remained low, and a fiscal crisis has not
occurred. That is because private demand for business investment has been sluggish in
a slow recovery, the Federal Reserve has provided liquidity through its unconventional
monetary policy, and financial markets often ignore unsustainable fiscal conditions for
an extended time. Our ability to borrow in our own currency doesn’t eliminate these
risks.Similarly, our diminished fiscal resilience hasn’t mattered because of the absence
of economic or geopolitical emergencies. Business confidence has not been affected
because businesses often ignore unsustainable fiscal conditions for a lengthy period
before losing confidence. Vitally needed public investment — everything from
infrastructure to education and lifelong learning — might be deficit-funded, like the
misguided 2017 tax cuts, but ultimately the fiscal pressure to scale back investment will
be intense.
Warrant: Debt does not raise interest rates
Tamny, John. “Ignore The Endless Talk Of Doom, Budget Deficits Really Don't Matter.”
Forbes, Forbes Magazine, 24 Sept. 2017,
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www.forbes.com/sites/johntamny/2017/09/24/forget-the-protests-ofconservatives-deficits-really-dont-matter/#24590f9a3707.
Williamson concludes that “Deficits and public debt are a drag on the economy,
hoovering up investable capital and putting upward pressure on interest rates.” Here
he’s plainly mistaken. As the last forty years once again remind us, there’s no clear
correlation between deficits and interest rates. Importantly, this isn’t just a U.S. thing
for those who naively believe the Federal Reserve has uniquely driven down yields on
U.S. Treasuries. As Duke professor Richard Salsman has pointed out, in 1980 the G-7
nations in aggregate had debt/GDP ratios of 37 percent, and the average interest rate
on their 10-year government bonds was 11.9 percent. By 2015, the debt/GDP ratio of
those same countries was 115 percent, but average yields on their 10-years was 1.3
percent.
Analysis: This is a good response because even if it is true that the debt is rising, that doesn't
mean we will surpass any bright line that means anything. We haven’t yet, so why would it be
in the imminent future? This takes out the link to the argument.
Response: Debt will go down eventually
Warrant: Debt goes up and down in cycles
Staff, Marketplace. “Ray Dalio Discusses the Anatomy of the Debt Cycle.” Marketplace,
Marketplace, 2018, www.marketplace.org/2018/09/20/world/dalio-debt-cycle.
Ray Dalio: It's my job. I live and die on that. There are six stages of those, OK? There's
healthy debt growth and then healthy debt growth leads to extrapolating past trends
and thinking those things that went up are going to continue to go up and then they
borrow money to do that and that is called a bubble. You can anticipate whether
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those debts can be paid off. Then there is a top, and that top is usually because central
banks then need to tighten, slow things down or because those debts can't be paid.
And so the bubble bursts, and then there is a contraction. And the worst ones are the
ones when we hit zero interest rates, and those are called depressions. And because
you hit zero interest rates, monetary policy can't be the same, and they inevitably print
money to buy financial assets, push those financial assets up in value. And that is what
we've been through.
Warrant: Trump promises to reduce the debt
Amadeo, Kimberly. “Trump Pledged to Eliminate the Debt. Instead He Will Add $5.6
Trillion.” The Balance Small Business, The Balance, 2018,
www.thebalance.com/trump-plans-to-reduce-national-debt-4114401.
Candidate Trump had two strategies to reduce the debt. He promised grow the
economy 6 percent annually to increase tax revenues. Once in office, he lowered his
growth estimate to 3.5 percent to 4 percent. These projections are above the 2-3
percent healthy growth rate. When growth is more than that, it creates inflation. Too
much money chases too few good business projects. Irrational exuberance grips
investors. They create a boom-bust cycle that ends in a recession. Trump’s Fiscal Year
2019 budget lowered annual growth rates down to between 2.4 percent and 2.9
percent annually.
Analysis: This is a good response because it makes the pro’s impact fundamentally short term.
If the debt will go down naturally anyway, there is no reason letting it grow now will do very
much to stop anything bad.
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PRO: Higher interest rates increase inequality
Argument: Rising federal debt increases interest rates because people distrust the US’s ability
to pay back loans. Rising interest rates make it harder for ordinary families to get loans for
things they need.
Warrant: Rising debt increases interest rates
Nelson, Edward, and Jason J. Buol. “Budget Deficits and Interest Rates: What Is the
Link?” St. Louis Fed, Federal Reserve Bank of St. Louis, 13 Jan. 2015,
www.stlouisfed.org/publications/central-banker/summer-2004/budget-deficitsand-interest-rates-what-is-the-link.
Two recent studies have measured the influence of budget deficits on interest rates.
The first of these studies, by Thomas Laubach, finds a "statistically and economically
significant" relationship between higher deficit projections and future long-term
interest rates. According to Laubach's estimates, when the projected deficit to GDP
ratio increases by one percentage point, long-term interest rates increase by roughly 25
basis points. A more recent working paper, by Eric Engen and R. Glenn Hubbard, found
that when government debt increased by 1 percent of GDP, interest rates would
increase by about two basis points. The Laubach study implies that moving to a
balanced budget would tend to reduce interest rates by about one percentage point;
however, the Engen and Hubbard study suggests that interest rates would only fall by
roughly a tenth of that amount. While recent research confirms there is a significant
relationship between budget deficits and interest rates, just how much deficits affect
interest rates is still being debated.
Warrant: Interest rates will triple soon
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Peterson, Peter. “Higher Interest Rates and the National Debt.” Peter G. Peterson
Foundation, 26 Sept. 2018, www.pgpf.org/analysis/2018/09/higher-interestrates-will-raise-interest-costs-on-the-national-debt.
The continued tightening of monetary policy should be viewed as a positive sign of
economic strength — it demonstrates the bank’s confidence in the progress the
economy has made toward its economic objectives. However, higher short- and longterm Treasury rates mean that the federal government’s borrowing costs will also rise,
thereby generating significant consequences for the budget and the national
debt.Under current law, CBO projects that net interest costs will nearly triple over the
next 10 years, soaring from $315 billion in 2018 to $914 billion in 2028 and totaling
$6.9 trillion over the period. Interest costs are expected to continue climbing beyond
the next 10 years and are projected to be the third largest category in the federal
budget by 2026 (after just Social Security and Medicare), the second largest category
in 2046, and the single largest category by 2048.
Warrant: Rising interest rates makes essential loans harder to attain
Staff Writers. “How the Fed's Interest Rate Hike Affects Consumers.” Product Reviews
and Ratings - Consumer Reports, 2018, www.consumerreports.org/interestrate/fed-rate-hike-your-money/.
One way to avoid paying higher rates is to pay down your credit card debt. Another
option is to transfer an outstanding balance to an interest-free balance-transfer card,
offered by many card issuers. Just be sure that you can pay off the balance before the
promotional rate, which can be as long as 18 months, expires. Student Loans. If you
take out a new fixed-rate federal student loan or you have a loan that charges variable
rates, the amount you pay is likely to inch up. Higher rates may kick in soon—the
government resets the rate it charges on new fixed and variable federal loans every
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July. If you have a private student loan with a variable rate, your rate is also likely to
rise. As rates increase, you can avoid paying more by refinancing your loan and locking
in a fixed rate. Not everyone can do this, though. A recent report from LendEDU, a
marketplace for student loans, found that 43 percent of applicants were denied
refinancing. Those with an average FICO credit score of 757 had a better chance of
being approved. Car loans. The cost of borrowing to buy a car may also rise. The rate
increase today was small, but if future increases are on their way, car loans stand to
become much more expensive.
Impact: Rising interest rates increase inequality
Sarsfield, Liam. “The Dark Side of Higher Interest Rates.” The Walrus, 3 Aug. 2017,
thewalrus.ca/the-dark-side-of-higher-interest-rates/.
This widened the already significant gap between rich and poor. If most of your savings
are tied up in the value of your home, chances are that you’re less likely to have money
in the stock market when things rebound—and, because you’re not that high up the
corporate ladder, you’ll be the first to have your hours cut when your employer starts to
fear for their future. There are those who would benefit from a significant rate hike,
however: namely, people who have had time to accumulate a diversity of assets.
“Interest rates are both a cost and an income,” points out Mario Seccareccia, an
economist and professor at the University of Ottawa. “And it’s the wealthy who are
holding financial assets.” Raising interest rates today would amount to an intergenerational transfer of wealth: “the burden of higher rates [would be] on younger
people. Students who are borrowing like hell. That’s where it’s going to hit.”
Analysis: This is a good argument because even if there is more growth in the economy, it
doesn't matter if rising interest rates mean that all the growth is directed toward the rich.
Ultimately, any benefit to the poor that the con will read probably won’t materialize if the debt
is too high.
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A/2: Higher interest rates increase inequality
Response: Inequality isn’t necessarily bad
Warrant: Poverty is the issue, not inequality
CNBC. “Why Inequality Isn't a Problem.” CNBC, CNBC, 23 Jan. 2014,
www.cnbc.com/2014/01/23/why-inequality-isnt-a-problemcommentary.html.
Focus on the problem, not the side effect. Shifting attention back to America,
inequality isn't the problem — the problem is the level of people in and near poverty
(as well as the struggles of those in the middle class of late). The fact that some people
have significantly more wealth makes this no more of a problem than if those people
were less wealthy. We need more people focused on solving the problem, not treating
the side effect, which is a lack of appropriate skills to put to work more people in our
changing economic environment. Education and training are musts, and would be
musts regardless of the size of the gap between the poorest and the wealthiest.
Warrant: Growth matters more than inequality
Henderson, David. “Income Inequality Isn't The Problem.” Hoover Institution, 2018,
www.hoover.org/research/income-inequality-isnt-problem.
If the problem we care about is poverty, then the calls to tax the rich and reduce
income inequality are misguided. Instead, we should be cheering for policies that lead
to higher economic growth. One other important measure is increased immigration.
Allowing more immigration into the United States would allow people to move from
low-productivity jobs in poor countries to higher-productivity jobs in America. That
would dramatically improve the plight of the poor while also improving, but by a
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smaller margin, the well-being of the rich. Piketty, for all his faults, put his finger on
how to do so. He wrote: “A seemingly more peaceful form of redistribution and
regulation of global wealth inequality is immigration. Rather than move capital, which
poses all sorts of difficulties, it is sometimes simpler to allow labor to move to places
where wages are higher.”
Analysis: This is a good response because even if the pro can prove the entirety of their
argument, it still isn't enough to win the round because rising inequality doesn't actually have
an impact. Just because the gap between the rich and the poor is growing, that doesn't mean
the poor are being hurt.
Response: Interest rates have not risen because of the debt
Warrant: Debt is merely an indicator of when taxes will be paid
Lastrapes, William D. “Why the National Debt Doesn't Matter – or How I Learned to Stop
Worrying and Love Treasuries.” The Conversation, The Conversation, 19 Nov.
2018, theconversation.com/why-the-national-debt-doesnt-matter-or-how-ilearned-to-stop-worrying-and-love-treasuries-38775.
To be sure, $18 trillion is a large number. But that number is essentially irrelevant to
proper thinking about the economic role of the US government, or about responsible
fiscal policy. Government debt simply reflects the timing of taxes. The face value of
debt will be large if, for given past and future levels of government spending, taxes are
collected later rather than sooner. But regardless of when taxes are collected, what
ultimately matters is the quantity of the economy’s scarce resources the federal
government commands and controls, which mostly depends on the level and path of
government spending. Government debt is not necessarily a good indicator of such
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control – the government can be wildly intrusive in the economy even if it never
borrows, or it can be fiscally effective and efficient with high levels of debt.
Warrant: Interest rates remain low despite high debt
Yglesias, Matthew. “A House Republican Explains Why Deficits Don't Matter Anymore.”
Vox.com, Vox Media, 28 Sept. 2017, www.vox.com/policy-andpolitics/2017/9/28/16378854/mark-walker-deficit.
In truth, even though the national debt is large in absolute terms and projected to
grow in future years, there’s little reason to believe it’s a big problem currently.
Interest rates remain fairly low, and to the extent that they’re not super-duper low it’s
because the Federal Reserve is slowly but surely trying to raise them, even though
there’s no sign of inflation. Taking on more debt to finance a tax cut for the rich may
not be a good idea, but it’s also probably not going to cause any big problems. But the
benign nature of the debt situation was even more true two or five or eight years ago
when interest rates were rock-bottom, unemployment was sky-high, and putting people
back to work with new spending or low payroll taxes was absolutely vital.
Analysis: This is a good response because even if there is high debt, that doesn't mean that
interest rates will actually rise. This means that the impact of the pro’s argument will never
materialize.
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PRO: Americans support lowering the debt
Argument: Because Americans support lowering the debt, it should be prioritized over
economic growth. To not do so would be an affront to democracy by disregarding the public
will.
Warrant: The federal debt is the highest it has ever been
Watson, Kathryn. “Under Trump's Watch, National Debt Tops $21 Trillion for First Time
Ever.” CBS News, CBS Interactive, 17 Mar. 2018,
www.cbsnews.com/news/under-donald-trump-national-debt-tops-21-trillionfor-first-time-ever/.
About a year ago, President Trump pledged to eliminate the national debt "over a
period of eight years." But for the first time in history, the national debt surpassed $21
trillion this week, according to the U.S. Treasury. The landmark comes shortly after
Congress passed, and Mr. Trump signed, a suspension on the federal debt limit last
month, allowing the government to borrow an unlimited amount of money until
March 1, 2019. When Mr. Trump took office on Jan. 20, 2017, the national debt was
$19.9 trillion, according to U.S. Treasury data. Since then, the GOP-led Congress has
passed a $1.5 trillion tax cut bill and a two-year spending deal which, together, are
expected to drive the deficit and debt further upward. The Committee for a
Responsible Federal Budget estimates annual deficits could top $2.1 trillion per year in
the next decade, which would send the national debt soaring even higher.
Warrant: People have feared the debt for a long time
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Peterson, Peter. “Fiscal Confidence Index.” Peter G. Peterson Foundation, 2018,
www.pgpf.org/what-we-are-doing/education-and-awareness/fiscal-confidenceindex/.
The Fiscal Confidence Index is an important indicator of the American public’s views
about our fiscal and economic condition and the progress elected leaders are making in
addressing it. Since its inception, the Fiscal Confidence Index has consistently shown
that Americans hold deep concerns about the level of our long-term debt, and they
urge policymakers to make addressing our fiscal and economic future a top priority.
The Fiscal Confidence Index, released monthly, is modeled after the Consumer
Confidence Index and measures public opinion about the national debt and the
economy by asking questions in three key areas: CONCERN: Level of concern and views
about the direction of the national debt. PRIORITY: How high a priority addressing the
debt should be for elected leaders. EXPECTATIONS: Expectations about whether the
debt situation will get better or worse in the next few years. The individual scores in
these three areas are averaged to produce the Fiscal Confidence Index value. For
November 2018, the Fiscal Confidence Index value is 56 (100 is neutral).
Warrant: A majority believe reducing the debt should be a priority
Elis, Niv. “Poll: Majority Worried about National Debt.” TheHill, The Hill, 27 June 2017,
thehill.com/policy/finance/339544-poll-majority-worried-about-national-debt.
Voters are troubled about the national debt, according to a monthly survey by the Peter
G. Peterson Foundation, which advocates for deficit and debt reduction. June’s version
of the “fiscal confidence index,” obtained by The Hill ahead of its Tuesday release,
reports that 53 percent of voters think the country is on the wrong track in terms of
the national debt, while just 31 percent believe it is on the right path. Seventy-two
percent said that addressing the debt should be among the government’s top three
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priorities, and 76 percent said that the president and Congress should spend more
time on the issue. But voters also expressed little confidence that progress was
forthcoming, with just 36 percent saying the problem would get better in the next few
years.
Impact: We need to respect public opinion to protect democracy
Naqvi, Hassan. “The Role of Public Opinion in a Democracy.” The Express Tribune, The
Express Tribune, 31 Mar. 2015, tribune.com.pk/story/861573/the-role-of-publicopinion-in-a-democracy/.
In modern society, the voice of the people forms the crux of any legislation or policy in
the land. While this facet of societal feedback is prevalent in all societies regardless of
the degree of authoritarianism, it is especially true for democratic societies of the
world. But it is important to first realise and understand what public opinion really is.
The term ‘public opinion’ was coined by philosopher John Locke in the 17th century.
However, the concept itself predates Locke. Vox populi or ‘voice of the people’ is a
similar Latin concept. Today, public opinion is defined in the following way: collective
evaluations expressed by people on political issues, policies, institutions and individuals.
It is important to differentiate between public opinion and pressure groups. Public
opinion changes policy through passive observations that accumulate amongst citizens.
Pressure groups work to change policy actively through direct interaction with
policymakers. Public opinion is important in a democracy because the people are the
ultimate source of political power.
Analysis: This is a good argument because regardless of the pragmatic outcomes of the debate,
protecting democracy is an important end in and of itself. Even if it would be good to enact
certain policies or to retroactively change the results of an election, that doesn’t mean we
should because democracy matters more than pragmatics on a principled level.
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A/2: Americans support lowering the debt
Response: People also believe we should increase growth
Warrant: The majority is concerned about the economy
Walsh, Kenneth. “Majority of Americans Worried About the Economy.” U.S. News &
World Report, U.S. News & World Report, 2015,
www.usnews.com/news/blogs/ken-walshs-washington/2015/04/07/majority-ofamericans-worried-about-the-economy.
Sixty-two percent of women worry about the cost of health care compared with 47
percent of men. Sixty-nine percent of women are concerned about having enough
money to retire, compared with 58 percent of men. Sixty-one percent of Hispanics and
51 percent of African-Americans are worried about losing their homes compared with
41 percent of white Americans The survey's results indicate that economic pessimism
is strong even though there has been positive news about the economy recently,
including a gradual reduction in the national unemployment rate and a surging stock
market.
Warrant: Federal debt doesn’t affect anything
Tamny, John. “Ignore The Endless Talk Of Doom, Budget Deficits Really Don't Matter.”
Forbes, Forbes Magazine, 24 Sept. 2017,
www.forbes.com/sites/johntamny/2017/09/24/forget-the-protests-ofconservatives-deficits-really-dont-matter/#24590f9a3707.
U.S. federal debt added up to $908 billion in 1980, but today, nearly 40 years later, the
number comes in around $20 trillion. That the amount owed by U.S. taxpayers has
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soared over twenty-fold would, in a static world, correlate with a huge increase in
borrowing costs for the U.S. Treasury. Except borrowing costs haven’t risen. While the
yield on 10-Year U.S. Treasuries was 10.8 percent in 1980, as of today the yield has
declined to 2.27%. Yes, you read that right, amid soaring federal debt the cost of
government borrowing has plummeted. Up front, low yields are not an endorsement of
more government waste. Not at all. Government spending is always and everywhere
the principal tax on the U.S. economy simply because it amounts to federal control of
precious resources always and everywhere created in the private sector. It can’t be
stressed enough that the federal government doesn’t take in dollars as much as its
taxing and borrowing powers are its way of arrogating to itself the right to control the
direction of goods and services (things like trucks, tractors, computers, desks, chairs,
buildings, massages, restaurant meals, haircuts, automobiles, airplanes), but most
problematic of all, crucial human capital.
Analysis: This is a good response because insofar as the public wants both priorities, who can
say that we should do one over the other on the basis of public will. At least this means we
should simply look to pragmatics since the democratic debate is a wash, and the con wins that
because there is no effect of the debt.
Response: Sometimes the public can be wrong
Warrant: The public can actively believe incorrect information
Page, Ben. “It's OK for Politicians to Ignore Public Opinion | Ben Page.” The Guardian,
Guardian News and Media, 25 Mar. 2013,
www.theguardian.com/commentisfree/2013/mar/25/opinion-polls-publicopinion-politicians.
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The public can be wrong. There are many areas where public understanding of an issue
is well out of line with the facts. For example, we find that the public believes at least
a quarter of the UK population was not born here – the actual figure is much lower.
People massively overestimate the threat paedophiles pose to their children
compared to bad drivers. And as Tony Blair remarked, when politicians listen to the
public, they often find that they don't speak with one voice. This is partly because
there are different shades of opinion. There are the public's values, which change only
slowly like deep ocean currents, for example on gay marriage; their attitudes, which
might shift more quickly, like a tide; and their opinions, which are like waves and froth
on the surface of the sea. Knowing whether what the public are expressing is a value or
an opinion is vital.
Warrant: The public is uninformed
Odugbemi, Sina. “Public Opinion: Should Leaders Follow It or Lead It?” Jobs and
Development, 7 July 2016, blogs.worldbank.org/publicsphere/public-opinionshould-leaders-follow-it-or-lead-it.
The assumption here, of course, is that you can always trust “the people”. In any case, it
is argued, not to trust the people is to favor rule by unaccountable elites, the same
people who almost always look after their own interests…and nothing else. There are at
least two problems with always trusting “the people”. The first is the problem of
expertise or civic competence. Many public issues are complex and many sided, and
you need to be able to wade through boatloads of often contradictory expert opinion.
Your average citizen in a democracy, even while reasonably educated, is not likely to
be terribly well-informed generally let alone be able to decide complex issues.
Deliberative Polls try to solve the problem of expertise by (a) selecting a representative
sample of the people (b) exposing them to a full range of expert opinions on the key
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public issue they will vote on (c) allow them to discuss the issue at length before (d)
asking them to vote on the issue. These polls often produce fascinating opinion shifts.
Analysis: This is a good response because even if it is true that we should listen to what the
people want even if it is bad pragmatically, the people may not want what they say they want if
they were better informed about reality. This means it is not always a good thing to do exactly
what opinion polls say.
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PRO: Higher interest rates hurts small businesses
Argument: Rising debt increases interest rates because people distrust the US’s ability to pay
back its debt. Rising interest rates hurt small businesses from taking out loans essential for
their enterprises.
Warrant: Debt increases interest rates through crowding out
Nelson, Edward, and Jason J. Buol. “Budget Deficits and Interest Rates: What Is the
Link?” St. Louis Fed, Federal Reserve Bank of St. Louis, 13 Jan. 2015,
www.stlouisfed.org/publications/central-banker/summer-2004/budget-deficitsand-interest-rates-what-is-the-link.
Warnings about the consequences of U.S. budget deficits, while not new, have shifted
over time. During the 1970s, emphasis was on the inflationary consequences of deficits.
For example, in 1975, Ronald Reagan stated that inflation "has one cause and one cause
alone: government spending more than government takes in." By contrast, the concern
voiced since the 1980s rests on the argument that deficits put upward pressure on
interest rates. This shift is apparent in the market's current expectation that the Federal
Reserve will not accommodate deficits with money creation. Since 1982, U.S. inflation
has been controlled despite several years of high deficits. Fiscal 1983's $208 billion
deficit was approximately 6 percent of GDP; this year's estimated deficit represents 4.5
percent of GDP. This demonstrates that monetary policy is capable of keeping inflation
low even in the face of large deficits. Why might interest rates rise in response to
deficit financing? When you rule out monetary accommodation of the deficit, the
government needs to create an incentive for the private sector to buy more
government bonds. If the private sector's purchase of government bonds does not
increase one-for-one with the higher deficit, the government must borrow more
money, which leaves less money for financing private projects, such as investment in
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residences or factory equipment. This is sometimes referred to as the "crowding-out"
effect.
Warrant: Interest rates are rising
Irwin, Neil. “Interest Rates Are Rising for All the Right Reasons.” The New York Times,
The New York Times, 11 Oct. 2018,
www.nytimes.com/2018/10/11/upshot/interest-rates-are-rising-thats-greatnews-for-most.html.
The cost to borrow money is on the rise. That is bad news for home buyers and other
prospective borrowers. It helped cause a stock market sell-off on Wednesday and
Thursday, and prompted President Trump to say that the Federal Reserve has “gone
crazy.” But it amounts to good news for the long-term direction of the economy. In
effect, the multi-trillion dollar global bond market is signaling a little greater confidence
than it did just a few weeks ago that the nine-year expansion in the United States may
have room to keep going for years to come, and without inflation taking off. The yield
on 10-year United States Treasury bonds reached a seven-year high this week of 3.25
percent (it receded amid plunging stocks Wednesday and Thursday), up from 2.82
percent in August. The 10-year rate was below 1.4 percent as recently as July 2016.
Warrant: Interest rates hurt small businesses
Arora, Rohit. “With Interest Rates Rising, Small Businesses Should Apply For Loans
Now.” Forbes, Forbes Magazine, 20 June 2018,
www.forbes.com/sites/rohitarora/2018/06/20/with-interest-rates-rising-smallbusinesses-should-apply-for-loans-now/#263720bc264e.
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Companies that need to borrow money for growth incur a higher cost of capital when
interest rates go up. This includes firms that have already borrowed money since most
small business loans come with floating, rather than fixed, rates. Currently, the
interest rate that the Small Business Administration (SBA) allows its lending partner
banks to charge on SBA 7(a) loans is between 7.0 and 9.5 percent. The federal agency
itself does not directly lend money. Rather, the loans are made by banks – community
and regional banks oftentimes. The actual interest rate hinges on various factors,
including the amount of money being borrowed, industry risk, and other factors.
Traditional term loans from banks usually come at slightly lower interest rates than
SBA loans. However, they are harder to obtain because the SBA mitigates lender risk
by providing government guarantees against borrower default.
Impact: Small businesses employ millions
Biery, Mary Ellen. “The Big Impact of Small Businesses: 9 Amazing Facts.” Forbes, Forbes
Magazine, 22 Oct. 2017, www.forbes.com/sites/sageworks/2017/10/22/the-bigimpact-of-small-businesses-9-amazing-facts/#3e68e5761f33.
1. Nearly all small. Virtually all U.S. firms are small businesses. Small businesses
comprise 99.9 percent of all firms and 99.7 percent of firms with paid employees. Out
of 29.6 million businesses, all but 19,000 are small. (2014 data) 2. Exporters? You bet.
Nearly all U.S. exporters are small businesses. Small exporters numbered 287,835 in
2015, representing 97.6 percent of all exporting firms, and they were responsible for
$440 billion in exports (32.9 percent of total known export value). 3. Job generators.
Small businesses generate three-fifths of net new jobs, driving a big share of U.S.
employment growth. In total, small businesses employ 58 million, or 47.8 percent of
all private-sector employees.
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Analysis: This is a good argument because it affects the people most in need in America— small
businesses. Even if the con can prove that economic growth will occur, that doesn’t mean it
will go to small businesses, which are the bedrock of the US economy.
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A/2: Higher interest rates hurt small businesses
Response: Small businesses are not good for the economy
Warrant: Big businesses pay more
Pofeldt, Elaine. “Do Big Companies Pay More Than Small?” Working for Lockheed Martin
| Employee Reviews, 22 Apr. 2015, www.ivyexec.com/career-advice/2015/dobig-companies-pay-more-than-small.
A new document from the U.S. Census Bureau, “Statistics of U.S. Businesses
Employment and Payroll Summary: 2012,” shows just how much company size affects
employees’ pay. In the research, the government found that 51.6% of private sector
workers are employed by large enterprises with 500 employees or more and 48.4%
work for smaller ones. The average pay per employee for very small business with 20
employees or less was $36,912, according to the research. For small firms with 20 to
99 employees, it was $40,417. At medium-sized firms it was $44,916. And at large
companies it was $52,554. Pay for senior level employees would likely be significantly
higher. The pay swings vary by industry. In professional, scientific and technical
services, big-company employees average $85,290, compared to $66,679 at
companies under 500 employees. In finance and insurance, the average big-company
paycheck is $93,041 vs. $74,902. Those differences are not tremendous. But they can
have a real impact on your lifestyle and ability to save over time, especially when you
consider how your base pay will affect your raises over time.
Warrant: Big businesses employ more people
Staff Writers. “Small Business or Big Business - Which Creates More Jobs?” Factor
Finders, 8 Aug. 2018, www.factorfinders.com/small-business-job-creation-vs-big.
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Lastly, large businesses have also been heralded as those that are creating the most jobs
by researchers. Small businesses, which account for 99.7% of all companies, generate
less than 2/3 of the U.S.’s new jobs – which means that the .03% of companies that are
big create one out of every three new jobs, more than pulling their weight Over the last
twenty years, small and medium-sized companies have accounted for 29% and 27%,
respectively, of the U.S.’s overall employment, yet the total of new jobs added by
them has come in at 16% and 19%. During that time, businesses with over 500
workers have employed around 45% of the workforce and yet are accountable for 65%
of the new jobs created since 1990.
Analysis: This is a good response because even if the pro can prove that small businesses are
helped, that doesn't mean this is good for the economy overall. Big businesses pay more and
employ more people, so really we should focus on helping them over smaller businesses. This
takes out the weighing of the argument.
Response: The debt is not an issue
Warrant: The debt doesn’t really exist
Norman, Mike. “The National Debt: Why Fret over Something That Doesn't Exist?” Real
Money, TheStreet, 25 Oct. 2016,
realmoney.thestreet.com/articles/10/25/2016/national-debt-why-fret-oversomething-doesnt-exist.
The public is lied to when it comes to the so-called national debt. They're clueless about
it, as are most, if not all, of our lawmakers. First off, there is no debt. The debt is
dollars. The government spent $20 trillion more than it took away in taxes over the
last 240 years, and those dollars, held by the non-government, comprise a big portion
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of the non-government's wealth. Nothing is "owed." It's owned, by us, the people.
Second, there is nothing to pay back. The money was paid, ended up in someone's
bank account and now it's being held in the form of Treasuries. What's a Treasury? A
Treasury is a dollar, the only difference being it's a dollar with a term (duration) and a
coupon (interest payment). Why would people hold dollars in the form of Treasuries?
To earn some interest, that's all. It's like saying, why would you put your money in a
savings account as opposed to a checking account? Same reason, to earn interest. If
you want it back in your checking account, you tell your bank and it switches it back
from your savings account to your checking account.
Warrant: The US actually owes less
Davidson, Jacob. “America's Nation Debt: Does It Matter?” Time, Time, 11 Feb. 2016,
time.com/4214269/us-national-debt/.
To understand why, looking at the country’s total debt, which has nearly doubled
following the financial crisis, matters less than how much it costs to finance our debt.
That is, the most important number is the minimum payment on the credit card bill,
rather the the total amount we owe. Luckily for the U.S., that minimum payment has
actually decreased even as total debt has risen. The more people want to buy U.S.
debt (Treasury bonds), the lower interest payments the government needs to offer in
order to incentivize those purchases, and American bonds are in high demand because
they’re seen as a relatively safe investment in a troubled economic climate. As a
result, the United States is forking over less in debt interest payments (as a
percentage of GDP) now than it has since the late 1970s—even though the country
owes significantly more.
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Analysis: This is a good response because it means that there is very little impact of the debt
since its affect on the economy is practically nonexistent. This means that the impact of the
pro’s argument will never materialize.
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PRO: Reducing the federal debt is a prerequisite to promoting
economic growth
Argument: A high federal debt inhibits economic growth in the long term. Because of this, the
USFG should prioritize reducing the federal debt in order to allow for economic growth to
actually happen.
Warrant: A rising public debt to GDP ratio empirically stifles economic growth in the long term.
Chudik, Alexander “Rising Public Debt to GDP Can Harm Economic Growth”, Dallas Fed,
March 2018,
https://www.dallasfed.org/research/~/media/documents/research/eclett/2018/
el1803.pdf
“While no evidence is found for a universally applicable threshold effect in the
relationship between public debt and economic growth (top panel of Table 1), the
findings show that countries with rising debt-to-GDP ratios exceeding 60 percent tend
to have lower real output growth rates (bottom panel of Table 1). These results suggest
that debt trajectory is probably more important for growth than the level of debt itself.
The post-1965 experience of 40 advanced and developing economies reveals a
statistically robust long-term relationship between a persistent accumulation of public
debt and economic growth. Moreover, estimates of the corresponding long-run
coefficients are all negative, implying that countries that incurred persistent increases
in the debt-to-GDP ratio over long periods also experienced lower output growth.
However, a temporary increase in the ratio (for instance, to help smooth out businesscycle fluctuations) does not play a role in the long-term relationship between public
debt and economic growth.”
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Warrant: Debt-to-GDP ratios above 90 percent are found to reduce economic growth by an
average of 1.2 percent over 23 years.
Swedroe, Larry “How our national debt hurts our economy”, MoneyWatch, 12 Nov
2012, https://www.cbsnews.com/news/how-our-national-debt-hurts-oureconomy/
“Perhaps the biggest finding is that high levels of public debt have been associated
with lower growth. The vast majority of the episodes -- 23 of the 26 -- coincided with
substantially slower growth, and average annual growth was 1.2 percent lower during
periods with debt-to-GDP levels above 90 percent (2.3 percent growth) than below 90
percent (3.5 percent growth). Another issue is that these episodes tended to last a long
time. The average duration was 23 years, and 20 of the 26 episodes lasted more than a
decade. The long duration suggests that even if such episodes were originally caused by
a traumatic event such as a war or financial crisis, they took on a self-propelling
character. It also implies that the cumulative shortfall in output from debt overhang is
potentially massive -- with an average duration of 23 years, the cumulative effect of
annual growth being 1 percentage point slower is GDP that is roughly one-fourth lower
at the end of the period.”
Warrant: The United States is rapidly approaching the dangerous 90 percent debt-to-GDP ratio
that economists believe will lower growth.
Reinhart, Carmen “Will Our Monstrous Debt Swallow America’s Prosperity?”, Investor’s
Business Daily, 14 Nov 2018,
https://www.investors.com/politics/editorials/debt-large-spending-threatenprosperity//
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The federal government claims we just over $15 trillion in debt, or roughly 78% of our
GDP. But the reality is, we owe nearly $21 trillion, which is all of our GDP. The
government doesn't count what we "owe ourselves," namely debt run up to pay off
entitlements. But those are debts just as anything else is. As we noted in recent years,
and others have noted more recently, a debt of 90% or higher of GDP is a dangerous
thing. It reduces private investment, since it requires enormous amounts of money
each year to pay off. As a result, it causes economic growth to slow dramatically. Don't
believe it? Look at Europe. Look at Japan. All stuck in slow-growth ruts they can't get out
of. The result of abnormally high debt. As Reason's Nick Gillespie points out this week —
and we've noted the same study in the past —a 2012 study by economists Carmen
Reinhart and Kenneth Rogoff looked at the experience of 22 advanced economies with
high debt-to-GDP ratios since 1800. The study found that "on average, debt levels above
90% are associated with growth that is 1.2% lower than in other periods (2.3% versus
3.5%)."
Impact: Reducing the debt leads to long term increases in GNP by boosting savings and
investment.
Elmendorf, Douglas “Macroeconomic Effects of Alternative Budgetary Paths”,
Congressional Budget Office, Feb. 2013,
http://cbo.gov/sites/default/files/cbofiles/attachments/43769_AlternativePaths
_2012-2-5_0.pdf
“By CBO’s estimates, the unspecified policies reducing the deficit by $2 trillion relative
to that under current law would decrease aggregate demand in the near term. As a
result, real GNP would be 0.3 percent lower in the fourth quarter of 2014 than the
amount under current law, CBO projects (or between 0.1 percent and 0.5 percent lower
under CBO’s full range of assumptions). In 2023, real GNP would be 0.9 percent higher
than the outcome under current law (or between 0.5 percent and 1.3 percent higher
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under CBO’s full range of assumptions), as the effects of Path 1 are reversed: Smaller
deficits would increase national saving and boost domestic investment, raising
output.”
Analysis: This argument portrays reducing the federal debt as a prerequisite to pursuing
economic growth. This means that if the government wanted to concentrate on growing the
economy they would first have to address the rising debt to GDP ratio. This works well with the
word “prioritize” in the resolution as the argument indicates that debt reduction should be
prioritized to even allow economic growth to be effective.
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A/2: Reducing the federal debt is a prerequisite to promoting
economic growth
Response: Prioritizing economic growth will reduce the national debt.
Warrant: Restoring economic growth increases American wealth and tax contributions which
contributes to reducing the debt.
Rampell, Catherine “Sure Cure for the Debt Problem: Economic Growth”, The New York
Times, 30 July 2011,
https://www.nytimes.com/2011/07/31/business/economy/sure-cure-for-debtproblems-is-economic-growth.html
“But there is, in theory, a happy solution to our debt troubles. It’s called economic
growth. No need to raise taxes or cut programs. Just get the economy growing the
way it used to. Good luck with that. Growth is in short supply these days, as
new, dismal numbers underscored on Friday. Revised data showed that the recession took
an even bigger bite of the economy than we thought. And economists are sizing up
the risks of another recession. “The basic issue is that the U.S. is on an unsustainable
fiscal track,” says Dean Maki, the chief United States economist at Barclays Capital.
“From that point, none of the choices are fun.” The most obvious choices, Mr. Maki
says, are to reduce spending (ouch), raise taxes (yuck), let inflation run (gasp) or
default (thud). We wouldn’t need any of that if we could restore economic growth. If
that happened, Americans would become richer and pay more taxes. Et voilà! —
we’d pay down the debt painlessly.”
Warrant: Weak economic growth reduces revenue and makes it more difficult to stabilize the
GDP to debt ratio.
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Rivlin, Alice “Growing the Economy and Stabilizing the Debt”, Brookings, 14 March 2013,
https://www.brookings.edu/testimonies/growing-the-economy-and-stabilizingthe-debt/
“The two goals reinforce each other and neither can be achieved without the other.
Weak economic growth—or worse, sliding back into recession—will reduce revenues
and make it much harder to reduce or even stabilize the ratio of debt to GDP. But the
prospect of debt growing faster than the economy for the foreseeable future reduces
consumer and investor confidence, raises a serious threat of high future interest rates
and unmanageable federal debt service, and reduces likely American prosperity and
world influence. Stabilizing and reducing future debt does not require immediate
austerity—on the contrary, excessive budgetary austerity in a still-slow recovery
undermines both goals—but it does require a firm plan enacted soon to halt the rising
debt/GDP ratio and reduce it over coming decades. Financial markets will not provide
advance warning of when such a plan is required to avert negative market reactions.”
Analysis: These responses reverse the aff’s prerequisite argument, showing that economic
growth is actually a method to reduce the debt. In this scenario, the team with better warrants
as to why one economic policy leads to the other will generally win the argument, as this
debate can become quite circular.
Response: A high national debt does not affect levels of economic growth.
Warrant: High levels of GDP does not necessarily mean lower economic growth, other studies
only conclude this due to omitted variables.
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Loussikian, Kylar. “High debt doesn’t hurt economic growth: IMF”, The Conversation, 13
Feb. 2014, http://theconversation.com/high-debt-doesnt-hurt-economicgrowth-imf-23247
“High levels of government debt won’t hurt economic growth in the medium and longterm, according to a new paper released by the International Monetary Fund.
The research findings contradict earlier arguments that high debt is a constraint on
growth. Monash University’s Rodney Maddock said the findings were a “good antidote
to some of the feverish debate about debt that had been going on internationally”. The
IMF paper found that growth performance for countries with government debt above
90% of GDP was “quite diverse”. It said it was “equally possible that increases in
public debt above 90% are driven by an omitted variable that reduces GDP and tax
revenues that, in turn, leads to higher debt”
Warrant: There is no causal link between high levels of debt and economic growth.
Panizza, Ugo. “Is high public debt harmful for economic growth?”, Vox, 22 April 2012,
https://voxeu.org/article/high-public-debt-harmful-economic-growth-newevidence
“Correlation, however, does not imply causation. The link between debt and growth
could be driven by the fact that it is low economic growth that leads to high levels of
public debt (Krugman 2010). Establishing the presence of a causal link going from debt
to growth requires finding what economists call an ‘instrumental variable’. To answer
the question "Do high levels of public debt reduce economic growth?" we follow the
econometric procedure of trying to reject the proposition that “debt has no growth
effects”. Our research shows that this proposition cannot be rejected, so it may well be
that it is true. We cannot, however, be sure. Indeed, none of the papers in the
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literature on debt-growth links can make a strong claim the debt has a causal effect on
economic growth.
Analysis: This response points out that the Pro’s evidence about how a high debt to GDP ratio
lowers economic growth is not necessarily true. Other studies conclude that this long term
causality does not exist, disproving the idea that reducing the debt is a prerequisite to
economic growth.
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CON: Economic Growth Increases Social Spending
Argument: Economic growth means that there is more money for the government to collect in
taxes, which means that there will be more money available to spend on social programs, which
help the poor.
Warrant: Economic growth increases tax revenue
Lundeen, Andrew. “Economic Growth Drives the Level of Tax Revenue.” Tax Foundation,
Tax Foundation, 16 Jan. 2017, taxfoundation.org/economic-growth-drives-leveltax-revenue/.
As The Economist writer implies, economic growth is a major driver of the level of tax
revenues. In the times when tax revenues are up, the economy is doing well. When
tax revenues are down, it’s because the economy is doing poorly. We see this in each
of the times when revenue fluctuates. From the mid-1980s through the late 1990s the
economy grew steadily and tax revenues grew along with it. Conversely, between 2007
and 2009, total tax revenue in the U.S. dropped from 26.9 percent of GDP to 23.3
percent of GDP. The driver: the financial crisis and great recession. How Do We
Maximize Tax Revenue? The short answer to how we maximize tax revenue: increase
economic growth. We can do this by limiting taxes on economic factors that drive
economic growth, namely investment. This means reducing tax rates on businesses,
limiting the double taxation of investment created by taxing corporate income at both
the entity level (corporate tax) and the shareholder level (capitals gains and dividend
taxes), and moving toward full expensing (which would allow businesses to account for
all their costs).
Warrant: Nine percent of spending goes to safety net programs
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Staff Writers. “Policy Basics: Where Do Our Federal Tax Dollars Go?” Center on Budget
and Policy Priorities, 11 Oct. 2017, www.cbpp.org/research/federalbudget/policy-basics-where-do-our-federal-tax-dollars-go.
Safety net programs: About 9 percent of the federal budget in 2016, or $366 billion,
supported programs that provide aid (other than health insurance or Social Security
benefits) to individuals and families facing hardship. Spending on safety net programs
increased by only $4 billion between 2015 and 2016, and declined as a share of the
budget, as the economy continued to improve. Safety net programs include: the
refundable portions of the Earned Income Tax Credit and Child Tax Credit, which assist
low- and moderate-income working families; programs that provide cash payments to
eligible individuals or households, including Supplemental Security Income for the
elderly or disabled poor and unemployment insurance; various forms of in-kind
assistance for low-income people, including SNAP (food stamps), school meals, lowincome housing assistance, child care assistance, and help meeting home energy bills;
and various other programs such as those that aid abused and neglected children.
Warrant: Social spending decreases in economic downturns
Titan, Emilia. The Impact of the Great Recession on Social Spending in Romania. Nov.
2014,
www.researchgate.net/publication/268803830_The_Impact_of_the_Great_Rece
ssion_on_Social_Spending_in_Romania.
Oprea et al. (2012) also point out that inRomania, the recent crisis has brought about
fiscal consolidation, resulting in awage cut of 25% for civil servants, and a VAT increase
of 6 percentage points.However, the authors also point out that budgetary revenues
were relatively stablethroughout the crisis period, falling only in 2009. An interesting
finding was the evolution of budgetary spending on socialservices during the crisis.
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Bourget (2003) cited by Prasad and Gerecke (2010),finds that social spending increases
initially during crisis, and falls afterwards due to a shortage of funding, fact consistent
with the research on health spending doneby Keegan et al. (2013). However, other
authors cited by Prasad and Gerecke(2010) point out to a resilience of social spending
during crises, which exhibit ahigh degree of countercyclicality.
Warrant: Social spending helps the poor
Kenworthy, Lane. Social Spending and Poverty. 17 Nov. 2010,
lanekenworthy.net/2010/06/07/social-spending-and-poverty/.
Each of the surveys asked identical or very similar questions about seven indicators of
material hardship: inability to adequately heat one’s home, constrained food choices,
overcrowding, poor environmental conditions (e.g., noise, pollution), arrears in payment
of utility bills, arrears in mortgage or rent payment, and difficulty in making ends meet.
Boarini and Mira d’Ercole create a summary measure of deprivation by averaging, for
each country, the shares of the population reporting deprivation on questions in each of
these seven areas. Government services — medical care, child care, housing,
transportation, and so on — reduce material hardship directly. They also free up
income to be spent on other needs. The comparative data, though by no means
perfect, are consistent with the hypothesis that public services help the poor more in
the Nordic countries than in the United States. The gap between the countries in
material deprivation is larger than in low-end incomes.
Impact: Social spending reduces poverty
Bruenig, Matt. “News Flash: Government Spending Reduces Poverty.” Vox.com, Vox
Media, 16 Sept. 2015, www.vox.com/2015/9/16/9341075/poverty-childrenelderly-disabled.
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The weak American welfare state actually does quite a bit to compensate for the
market’s failures. In 2014, the welfare benefits counted under the official poverty
measure — most notably Social Security but also Temporary Assistance to Needy
Families (TANF) and Supplemental Security Income (SSI) — kept 25.7 million people
out of poverty, bringing the actual poverty rate down from 22.9 percent to 14.8
percent. As currently constructed, the US welfare state tends to do the most for the
elderly and disabled, mainly because of the remarkably effective Social Security
program. Transfer programs kept 15.5 million seniors out of poverty last year, cutting
the elderly poverty rate from 43.7 percent to 10 percent. Benefits also kept 4.4 million
non-elderly disabled people out of poverty, cutting their poverty rate from 49.9
percent to 30.7 percent. Breaking down the non-elderly disabled population further,
the hard of hearing fared the best, with a 20.4 percent poverty rate. Other groups —
which aren't mutually exclusive — hovered around a 33 percent poverty rate, even after
counting benefits. (Note: Categories refer to aspects of life affected by the disability. So
someone with difficulty living independently counts under "living independently," but
may have trouble walking or performing intellectual tasks as well.)
Analysis: This is a good argument because it impacts directly to helping people’s lives. The link
chain for debt leading to harms on the economy is tenuous at best, and here we have a very
simply link story and an extremely clear impact. Thus, it becomes really easy to outweigh the
pro on strength of link and clarity of impact.
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A/2: Economic Growth Increases Social Spending
Response: Social spending creates dependency
Warrant: Welfare creates dependency
Spalding, Matthew. “Why the U.S. Has a Culture of Dependency.” CNN, Cable News
Network, 21 Sept. 2012, www.cnn.com/2012/09/21/opinion/spalding-welfarestate-dependency/index.html.
Meanwhile, although spending on welfare has been cut in half since it was reformed in
1996, other federal spending on programs, such as food stamps, has soared year after
year and decade after decade. Simply put, spending on social welfare programs has
exploded. Under a culture of dependency, poverty becomes a trap, and recipients get
stuck. Long-term welfare recipients lose work habits and job skills and miss out on the
marketplace contacts that lead to job opportunities. That's a key reason the
government should require welfare recipients to work as much as they can. What
could be called "workfare" thus tends to increase long-term earnings among potential
recipients. Another problem is that we simply can't afford all this spending. The national
debt is at $16 trillion, more than the entire GDP of the United States last year. High as it
is, that debt is about to soar.
Warrant: Welfare increases poverty
Dorfman, Jeffrey. “Welfare Offers Short-Term Help And Long-Term Poverty, Thanks To
Asset Tests.” Forbes, Forbes Magazine, 17 Oct. 2016,
www.forbes.com/sites/jeffreydorfman/2016/10/13/welfare-offers-short-termhelp-and-long-term-poverty/#355af40932cd.
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Welfare Offers Short-Term Help And Long-Term Poverty, Thanks To Asset Tests. The
government provides at least one means-tested, welfare-type program to roughly one
out of every five Americans (unless you count Social Security, in which case the number
goes up considerably). In one sense, the government’s approximately 100 different
welfare programs (including Social Security) do an excellent job, lifting about 48 million
people out of poverty. However, there are other ways that our current welfare system
fails to prepare people to take care of themselves, makes poor people more financially
fragile, and creates incentives to remain on welfare forever. The first failure of
government welfare programs is to favor help with current consumption while placing
almost no emphasis on job training or anything else that might allow today’s poor
people to become self-sufficient in the future.
Analysis: This is a good response because even if the con can prove that social spending goes
up, that doesn't necessarily write the ballot for them. In fact, their own argument should be a
reason to vote pro because social spending is actually bad for society, not good.
Response: Social spending hurts the economy
Warrant: Social spending makes the poor poorer
Moore, Stephen. “Government Makes The Poor Poorer.” The Heritage Foundation,
2017, www.heritage.org/poverty-and-inequality/commentary/governmentmakes-the-poor-poorer.
For all the obsession in Washington and in college faculty lounges over income
inequality, why isn't there more outrage over government policies that exacerbate the
problem? There are hundreds of programs that make the poor, poorer and increase
poverty in America. Many of them were exposed last week by my colleagues at the
Heritage Foundation forum on this very topic. Economist Don Boudreaux of George
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Mason University unmasked two such policies. One is trade protectionism. Trade
barriers raise prices and "act as a regressive tax" on Americans, Boudreaux explains.
They also stunt the very innovation process that makes goods and services widely
available to people at affordable prices to begin with. Think about who the consumers
are that shop for those everyday low prices at Walmart. It's not Hillary Clinton.
Minimum wage clearly fits into this category as well. In every other industry, Boudreaux
notes, when something is more expensive we buy less of it. Why do some economists
think that isn't so when it comes to buying labor.
Warrant: Social spending reduces economic growth
Connely, Michael. “Government Spending and Economic Growth in the OECD
Countries.” Research Gate, Aug. 2017,
www.researchgate.net/publication/307934138_Government_spending_and_eco
nomic_growth_in_the_OECD_countries.
Using panel data from 1995 to 2011 for 34 OECD countries, we examine the effects of
government consumption spending, public social spending, and public investment on
economic growth. We use a generalized method of moments estimation technique to
solve inconsistency problems with fixed effects and random effects panel estimation.
We find that an increase in public social spending has a significant negative effect on
subsequent economic growth. Government consumption spending and public
investment have no significant effect on subsequent economic growth.
Analysis: This is a good response because even if the con can prove that social spending helps
the people who receive it, if it reduces wages across the board then more people are harmed
than are helped. This makes their argument into a very compelling reason to vote for the pro
instead.
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CON: Economic Growth Decreases Crime
Argument: More economic growth means that people have more disposable income and thus
less of a reason to rob others or resort to illegal activities in order to make money. This
increases everyone’s safety.
Warrant: Millions of people are incarcerated
Wagner, Peter, and Wendy Sawyer. “Mass Incarceration: The Whole Pie 2018.” States of
Incarceration: The Global Context 2016 | Prison Policy Initiative, 2018,
www.prisonpolicy.org/reports/pie2018.html.
Can it really be true that most people in jail are being held before trial? And how much
of mass incarceration is a result of the war on drugs? These questions are harder to
answer than you might think, because our country’s systems of confinement are so
fragmented. The various government agencies involved in the justice system collect a lot
of critical data, but it is not designed to help policymakers or the public understand
what’s going on. Meaningful criminal justice reform that reduces the massive scale of
incarceration, however, requires that we start with the big picture. This report offers
some much needed clarity by piecing together this country’s disparate systems of
confinement. The American criminal justice system holds almost 2.3 million people in
1,719 state prisons, 102 federal prisons, 1,852 juvenile correctional facilities, 3,163
local jails, and 80 Indian Country jails as well as in military prisons, immigration
detention facilities, civil commitment centers, state psychiatric hospitals, and prisons
in the U.S. territories. And we go deeper to provide further detail on why people are
locked up in all of those different types of facilities.
Warrant: Poverty causes crime
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"How Does Poverty Cause Crime Criminology Essay." UKEssays.com. 11 2013. All
Answers Ltd. 12 2018 <https://www.ukessays.com/essays/criminology/howdoes-poverty-cause-crime-criminology-essay.php?vref=1>.
In the current essay we will discuss the fact that poverty causes crime. Poverty is a
characteristic of the economic situation of the individual or social group in which they
cannot satisfy a certain range of the minimum requirements needed for life saving
ability. Poverty is a relative concept and depends on the overall standard of living in this
society. According to experts, not getting decent wages for their work, young people
gradually lose the desire to marry, marry, have children – they are full of fear for
tomorrow, not sure that tomorrow they will not be fired because of another financial
crisis. In addition, low wages and lack of jobs, experts say, are pushing young people
to commit crimes in order to get rich quickly. It is, therefore, among criminals,
increases the number of adolescents, aged 18 to 25 years. Poverty is a consequence of
diverse and interrelated reasons, which combine into the following groups:
Warrant: Lack of economic growth increases crime
Kathena, Ignatius. THE RELATIONSHIP BETWEEN ECONOMIC GROWTH AND CRIME
RATES IN NAMIBIA. Namibia University of Science and Technology, 2017,
www.idpublications.org/wp-content/uploads/2016/12/Full-Paper-THERELATIONSHIP-BETWEEN-ECONOMIC-GROWTH-AND-CRIME-RATES-INNAMIBIA.pdf.
The research conducted in the United States, in 2007 indicates that, there have been
more than 23 million crimes committed in the country which resulted in economic
losses of nearly 15 billion US dollars paid to the victims and 179 billion US dollars in
government expenditures on legal and judicial activities, police investigation, protection
and corrections (McCollister, French and Fang, 2010). These economic losses present an
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opportunity cost, because the money spent could yield tangible and intangible returns if
invested with care. As such, it seems reasonable to believe that crime has a negative
impact on the economic growth of a country (Gaibulloev & Sandler, 2008). According to
Roman (2010), criminologists tend to say that tough economic times drives more
people to commit crime. Bad economies at times lead to more property crimes and
robberies as criminals steal popular items that they cannot afford. The study also
posits that bad economic times result in more domestic violence and greater
consumption of mindaltering substances such as drugs and alcohol, leading to more
violence in general and in return more crime.
Impact: Incarceration increases poverty
Tierney, John. “Prison and the Poverty Trap.” The New York Times, The New York Times,
19 Oct. 2018, www.nytimes.com/2013/02/19/science/long-prison-terms-eyedas-contributing-to-poverty.html.
“Prison has become the new poverty trap,” said Bruce Western, a Harvard sociologist.
“It has become a routine event for poor African-American men and their families,
creating an enduring disadvantage at the very bottom of American society.” Among
African-Americans who have grown up during the era of mass incarceration, one in
four has had a parent locked up at some point during childhood. For black men in their
20s and early 30s without a high school diploma, the incarceration rate is so high —
nearly 40 percent nationwide — that they’re more likely to be behind bars than to
have a job. No one denies that some people belong in prison. Mr. Harris, now 47, and
his wife, 45, agree that in his early 20s he deserved to be there. But they don’t see what
good was accomplished by keeping him there for two decades, and neither do most of
the researchers who have been analyzing the prison boom.
Impact: Incarceration ruins lives
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Schrager, Allison. “In America, Mass Incarceration Has Caused More Crime than It's
Prevented.” Quartz, Quartz, 22 July 2015, qz.com/458675/in-america-massincarceration-has-caused-more-crime-than-its-prevented/.
High recidivism rates are not unique to Texas: Within 5 years of release more than
75% of prisoners are arrested again. Why does prison turn people into career
criminals? Prison obliterates your earnings potential. Being a convicted felon
disqualifies you from certain jobs, housing, or voting. Mueller-Smith estimates that
each year in prison reduces the odds of post-release employment by 24% and
increases the odds you’ll live on public assistance. Time in prison also lowers the odds
you’ll get or stay married. Being in prison and out of the labor force degrades
legitimate skills and exposes you to criminal skills and a criminal network. This makes
crime a more attractive alternative upon release, even if you run a high risk of
returning to prison. You could argue prison is still worth it if long sentences discouraged
people from committing crime in the first place. Mueller-Smith estimates a one-year
prison sentence would only be worth it (in terms of prison cost and forgone economic
potential) if it deterred at least 0.4 fewer rapes, 2.2 assaults, 2.5 robberies, 62 larcenies
or prevented 4.8 people from becoming a habitual drug user.
Analysis: This is a good argument because it is clean and concrete. It directly affects people on
the ground by ensuring that they do not fall victim to crime and that people who commit crimes
do not have their lives ruined by jail time. This can easily outweigh pro arguments with
nebulous impacts to debt because this argument affects real people in a direct way.
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A/2: Economic Growth Decreases Crime
Response: Economic growth increases crime
Warrant: Better economic times mean there is more to steal
Roman, John. “The Puzzling Relationship Between Crime and the Economy.” CityLab, 23
Sept. 2013, www.citylab.com/life/2013/09/puzzling-relationship-between-crimeand-economy/6982/.
Economists tend to argue the opposite, that better economic times increase crime.
More people are out and about flashing their shiny new smartphones and tablets,
more new cars sit unattended in parking lots, and there are more big-screen TVs in
homes to steal. Better economic times also mean more demand for drugs and alcohol,
and the attendant violence that often accompanies their consumption. But as the
figures below show, the relationship between crime and the economy is not as obvious
as it seems, and focusing on that relationship obscures more important
predictors.Looking at the relationship between GDP and crime back to the earliest
reliable crime data from 1960 supports both positions, suggesting there is no
relationship between economic growth and crime. In the first part of the series, rising
GDP is associated with rapidly increasing crime. In the second part, it is associated with
declining crime. In the middle, there is no relationship at all.
Warrant: Higher GDP increases crime
Northrup, Benjamin. Effects of GDP on Violent Crime. Georgia Tech, 2014,
smartech.gatech.edu/bitstream/handle/1853/51649/Klaer&NorthrupEconometr
icsReport.pdf.
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Several conclusions can be drawn from this study on the nature of violent crime. The
main dependent variable, GDP per capita, was proven to be significant, but in a way
contrary to the original hypothesis. Considering that violent crime rates, to the 1%
level, are positively dependent on GDP per capita, it would seem that the growth of
individual wealth would have negative impacts on society, but a less cursory look at the
models presented show this to be otherwise. The coefficient for GDP per capita is very
low, less than 0.01, which makes sense, as GDP per capita has a mean value of
43096.75, and a 1 dollar increase or decrease has little bearing on an individual’s
decisions. When looking at the other variables, all of which are percentages except for
the dummy variable of death penalty (which only takes values of 1 or 0), and their coeff
cients, it’s easy to see that the variable dominating the total crime rate is GDP per
capita. Even knowing this, GDP per capita affects certain variables, in ways that cannot
be accounted for in this linear regression model.
Analysis: This is a good response because it makes the argument a reason to vote for the pro
by turning it at the link level. If more growth creates more crime, then that means that the pro
will win the crime voting issue, making it impossible for the con to win their own argument.
Response: Poverty is not the root cause of crime
Warrant: Poverty does not cause crime
Prager, Dennis. “Poverty Doesn't Cause Crime.” National Review, National Review, 18
Nov. 2014, www.nationalreview.com/2014/11/poverty-doesnt-cause-crimedennis-prager/.
When people say this, there are only two possibilities. One is that, on some level of
consciousness, they think that if they were poor, they would commit violent crimes. My
hunch is that this is often the case. Just as the whites who say all whites are racist are
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obviously speaking about themselves, those who claim that poverty leads to violence
may well be speaking about themselves, too. The other possibility is that they are not
speaking about themselves, in which case they would have to admit that poor
Americans who rob, rape, or murder are morally inferior to themselves. Which, of
course, happens to be true. People (of any income level) who rob, rape, and murder do
so because they lack a functioning conscience and moral self-control. It is not material
poverty that causes violent crime, but poor character. But the “poverty causes crime”
advocates refuse to acknowledge this, because such an acknowledgment blames
criminals — rather than American society — for poor peoples’ violent crimes.
Warrant: Crime is multifaceted
Roman, John. “The Puzzling Relationship Between Crime and the Economy.” CityLab, 23
Sept. 2013, www.citylab.com/life/2013/09/puzzling-relationship-between-crimeand-economy/6982/.
Again, the consumer confidence data show no relationship between consumer
sentiment and crime rates. That, however, is because the relationship was strongly
negative prior to 1992 (meaning more confident consumers=less crime). After 1992, the
pattern reverses, and the better the economy, the more crime there is. The bottom
line: Crime is episodic and there is no singular effect of the economy on crime. In order
to understand and prevent crime, it is therefore necessary to understand what type of
period we are in. It’s also necessary to understand what forces are at work locally,
rather than focus on the national picture. Next week, I will address that point.
Analysis: This is a good response because it shows that even if growth were to reduce crime, it
would only do so marginally because there are so many other factors that influence crime. This
means that the impact will be marginal at best and does not justify a negative ballot.
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CON: Economic Growth Increases Tax Revenue
Argument: More economic growth means that the government can collect more taxes from
businesses as they make more money and people as their incomes increase. These taxes can
be used for reducing the debt.
Warrant: Tax rates do not influence revenue as much as growth
Lundeen, Andrew. “Economic Growth Drives the Level of Tax Revenue.” Tax Foundation,
Tax Foundation, 16 Jan. 2017, taxfoundation.org/economic-growth-drives-leveltax-revenue/.
People often think of tax revenue as a function of tax rates. If you want to raise more
tax revenue, raise tax rates. If you don’t want to lose revenue, don’t cut tax rates.
Reality isn’t so simple. Instead, economic growth is often the key driver of tax
revenues. The U.S. and UK Experience A recent article in The Economist pointed out
that since 1965 tax revenue in the United States and the United Kingdom have
remained fairly stable, despite multiple significant tax increases and tax cuts: “Britain
has seen the introduction of VAT under Edward Heath, a slashing of top rates under
Margaret Thatcher and most recently, an attempt to take lower-paid people out of the
tax net. Through all this, the tax take has never fallen below 30.5% or risen above 38.5%.
The smallest tax take was back in 1965, and the peak, surprisingly, was in 1982 under
Margaret Thatcher. Since the start of the millennium, the range has been very narrow –
between 34.4% and 36.4%.
Warrant: Recent increases in tax revenues are because of growth
Merline, John. “Income Tax Revenues Are Up 9% As Trump's Pro-Growth Tax Cuts Kick
In.” Investor's Business Daily, Investor's Business Daily, 11 July 2018,
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www.investors.com/politics/editorials/income-tax-revenues-trump-tax-cutseconomic-growth/.
Supply-Side Economics: Democrats scoffed at Republicans who said the Trump tax
cuts would at least partially pay for themselves through higher economic growth. But
it looks like the GOP had it right all along, as revenues climb. The latest monthly
budget report from the nonpartisan Congressional Budget Office finds that revenues
from federal income taxes were $76 billion higher in the first half of this year,
compared with the first half of 2017. That's a 9% jump, even though the lower income
tax withholding schedules went into effect in February. The CBO says the gain "largely
reflects increases in wages and salaries.” For the fiscal year as a whole — which
started last October — all federal revenues are up by $31 billion. That's a 1.2% in
increase over last year, the CBO says. The Treasury Department, which issues a
separate monthly report, says it expects federal revenues will continue to exceed last
year's for the rest of the 2018 fiscal year. But wait a minute. According to Democrats,
the Trump tax cuts were supposed to blow a massive hole in the deficit.
Warrant: Higher growth reduces the federal debt
Summers, Lawrence. “Could Faster Growth Solve Our Debt Woes?” Committee for a
Responsible Federal Budget, 24 May 2016, www.crfb.org/blogs/could-fastergrowth-solve-our-debt-woes.
A number of commentators have suggested recently that our budget problems could
be solved if only we focused more on promoting economic growth. Economic growth,
they argue, would generate more revenue and thus make painful tax increases and
spending cuts unnecessary. We've taken on this claim before, demonstrating that
even a significant improvement in long-term growth would not be enough to prevent
debt from growing faster than the economy. Over the medium term, the story is
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similar. Still, while faster growth cannot solve our medium-term debt problems, it
certainly can help. Rules of Thumb for Growth and Deficits The actual impact of
economic growth on budget deficits will depend on the source of the growth, but a
broad rule of thumb suggests that every dollar increase in GDP will produce 20 to 25
cents more in revenue. For 2023, when GDP is projected to be nearly $27 trillion, a one
percent increase in the size of the economy will yield about $60 billion in revenue.
Impact: High debt is bad for the economy
Davenport, David. “Five Reasons Why You Should Worry About The Federal Debt.”
Forbes, Forbes Magazine, 28 Feb. 2018,
www.forbes.com/sites/daviddavenport/2018/02/28/five-reasons-why-youshould-worry-about-the-federal-debt/#5583c97b4932.
Second, an economic reckoning will come from the explosive growth in federal
spending and debt. No one really knows how much federal debt is too much.
Unfortunately some kind of major economic correction will be the signal that we have
gone too far. Other countries will quit buying our debt, or will discount it heavily. The
stock and bond markets will lose confidence in our reckless fiscal policy and send
prices plunging. We are creating our own bed of instability when the government
spends a lot more than it takes in (nearly $1 trillion this year), and one day the bed
will begin to collapse. Third, spending today and putting it on the tab of the next
generation is immoral. Baby Boomers have already made a huge generational transfer
of the costs of college, weighing their children down with decades of student debt. Now
we are also asking them to pay for our Social Security and Medicare benefits, along with
the cost of our collapsing infrastructure and our national defense. Presidents Calvin
Coolidge and Herbert Hoover of the 1920s understood that public debt was a moral
question, but today it’s just a tool of economic policy. It’s a way to open the faucet and
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try to get more bounce in the economy. But the tab goes forward to our children in a
way that is simply wrong.
Analysis: This is a good argument because you can simply outweigh by saying that economic
growth is the best way to solve a high debt in the long term. Thus, you access all of the pro’s
impacts but better than they do.
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A/2: Economic Growth Increases Tax Revenue
Response: Spending is wasted
Warrant: We waste 1 billion dollars a year
Dicker, Rachel. “10 Ways the Government Flushed Your Money Down the Toilet in
2015.” U.S. News & World Report, U.S. News & World Report, 2015,
www.usnews.com/news/slideshows/rand-pauls-festivus-reveals-1b-in-wastefulgovernment-spending.
For the third consecutive year, Kentucky Sen. Rand Paul aired his grievances in honor of
Festivus, the satirical holiday popularized by TV's “Seinfeld." The 2015 edition of the
"Waste Report" from the Federal Spending Oversight Subcommittee - which Paul
chairs - highlights "over 30 examples of wasteful spending, misplaced priorities, and
bad management in the federal government that have cost the taxpayer more than
one billion dollars," according to a press release. In total, the committee found more
than $1 billion in wasteful projects, including these 10 outrageous, ridiculous and
infuriating examples.
Warrant: Waste does not help the debt
Persons, Sally. “Sen. James Lankford's Government Waste Report Totals over $400
Billion.” The Washington Times, The Washington Times, 27 Nov. 2017,
www.washingtontimes.com/news/2017/nov/27/james-lankfords-governmentwaste-report-totals-ove/.
Sen. James Lankford released his annual federal government waste and solutions report
on Monday detailing the arguably ridiculous things the government spent money on.
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“Our $20 trillion national debt will continue to increase until we implement spending
cuts, government reforms, and create a healthy economy. This Federal Fumbles report
provides commonsense examples of ways to limit our spending and fix government
inefficiency,” Mr. Lankford, Oklahoma Republican, said in a statement. There is over
$473 billion in wasteful spending listed in the report. The items on this year’s “Federal
Fumbles” list include $2.3 million researching forms of exercise that best led to weight
loss in seniors, $20,000 for adult summer art camp focused on climate change and $2.6
million spent on chimpanzees that were previously used for biomedical testing. The
National Institute for Health recently stopped the testing on chimpanzees and created a
National Center for Chimpanzee Care to continued to take care of the animals.
Analysis: This is a good response because it shows that even if growth increases tax revenue, it
doesn’t mean that there will be any affect on the debt if it is simply wasted through more
inefficient spending. This takes out the impact of the argument.
Response: Federal debt is unimportant
Warrant: Rising debt has not caused any harms
Tamny, John. “Ignore The Endless Talk Of Doom, Budget Deficits Really Don't Matter.”
Forbes, Forbes Magazine, 24 Sept. 2017,
www.forbes.com/sites/johntamny/2017/09/24/forget-the-protests-ofconservatives-deficits-really-dont-matter/#24590f9a3707.
U.S. federal debt added up to $908 billion in 1980, but today, nearly 40 years later, the
number comes in around $20 trillion. That the amount owed by U.S. taxpayers has
soared over twenty-fold would, in a static world, correlate with a huge increase in
borrowing costs for the U.S. Treasury. Except borrowing costs haven’t risen. While the
yield on 10-Year U.S. Treasuries was 10.8 percent in 1980, as of today the yield has
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declined to 2.27%. Yes, you read that right, amid soaring federal debt the cost of
government borrowing has plummeted. Up front, low yields are not an endorsement of
more government waste. Not at all. Government spending is always and everywhere
the principal tax on the U.S. economy simply because it amounts to federal control of
precious resources always and everywhere created in the private sector. It can’t be
stressed enough that the federal government doesn’t take in dollars as much as its
taxing and borrowing powers are its way of arrogating to itself the right to control the
direction of goods and services (things like trucks, tractors, computers, desks, chairs,
buildings, massages, restaurant meals, haircuts, automobiles, airplanes), but most
problematic of all, crucial human capital.
Warrant: Debt is not an indicator of how good our economy is
Lastrapes, William D. “Why the National Debt Doesn't Matter – or How I Learned to Stop
Worrying and Love Treasuries.” The Conversation, The Conversation, 19 Nov.
2018, theconversation.com/why-the-national-debt-doesnt-matter-or-how-ilearned-to-stop-worrying-and-love-treasuries-38775.
To be sure, $18 trillion is a large number. But that number is essentially irrelevant to
proper thinking about the economic role of the US government, or about responsible
fiscal policy. Government debt simply reflects the timing of taxes. The face value of
debt will be large if, for given past and future levels of government spending, taxes are
collected later rather than sooner. But regardless of when taxes are collected, what
ultimately matters is the quantity of the economy’s scarce resources the federal
government commands and controls, which mostly depends on the level and path of
government spending. Government debt is not necessarily a good indicator of such
control – the government can be wildly intrusive in the economy even if it never
borrows, or it can be fiscally effective and efficient with high levels of debt.
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Analysis: This is a good response because even if the con can prove the entirety of their impact,
it doesn’t matter if our level of debt is meaningless. That being said, it would be a bad idea to
read this response if you are impacting to debt. Only read it if you are reading arguments that
have other impacts on the pro.
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CON: Economic Growth Improves Health
Argument: Economic growth indicates that the economy overall is doing better, which should
mean that there is more money being spent at hospitals, people have more disposable income,
the government can spend more on healthcare, etc. This means people’s health overall should
improve.
Warrant: Economic growth helps living standards
W, Thomas. “What Is Economic Growth and How Can It Improve Living Standards?” How
Does the Social Learning Theory Explain Aggressive Behaviour? | MyTutor, 2017,
www.mytutor.co.uk/answers/6338/GCSE/Economics/What-is-economic-growthand-how-can-it-improve-living-standards/.
Economic growth is defined as an increase in the productive potential of an economy. It
is measured in percentage growth of GDP (Gross Domestic Product), year on year.
India's rate of economic growth is 7.1% in 2016 Q1. Growth can lead to higher living
standards because if GDP rises, there is more money in the domestic economy. This
means that business can make more profits, and therefore can pay employees higher
wages, or even hire more employees. This means that GDP per capita/ household
rises. Therefore the disposable income of workers rises. This means that they can
purchase more goods and services with their income, leading to a rise in living
standards.
Warrant: Economic growth makes it easier to afford healthcare
Nguyen Thi Minh Thoa, et al. “The Impact of Economic Growth on Health Care
Utilization: a Longitudinal Study in Rural Vietnam.” International Journal for
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Equity in Health, BioMed Central, 16 Mar. 2013,
equityhealthj.biomedcentral.com/articles/10.1186/1475-9276-12-19.
We analysed a panel data of 11,260 households in a rural district of Vietnam. Of the
sample, 74.4% having an income increase between 2003 and 2007 were defined as
households with economic growth. We used a double-differences propensity score
matching technique to compare the changes in health care expenditure as percentage
of total expenditure and health care utilization from 2003 to 2005, from 2003 to 2007,
and from 2005 to 2007, between households with and without economic growth.
Households with economic growth spent less percentage of their expenditure for
health care, but used more provincial/central hospitals (higher quality health care
services) than households without economic growth. The differences were statistically
significant. The results suggest that households with economic growth are better off
also in terms of health services utilization. Efforts for reducing inequalities in health
should therefore consider the inequality in income growth over time.
Warrant: Economic growth makes diets healthier
Doan, Dung. Does Income Growth Improve Diet Diversity in China? University of
Minnesota. 2014, ageconsearch.umn.edu/bitstream/165836/2/Doan%20SP.pdf.
Recent studies on income and nutrition suggest that income growth plays either a small
or even a negative role in influencing diet quality in China, especially for low income
households. Such arguments cast doubt on the conventional reliance on income as a
policy tool to improve public health through better diets. They, however, have been
drawn mostly from analysis of income effect on nutrient intakes and diet adequacy. No
research has been done on how income affects diet diversity in China, despite its
unambiguous health benefits. This paper tests if income growth improves diet
diversity, and, thus, can enhance public health in China, using data from the China
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Health and Nutrition Survey 2004-2009. For the first time, potential endogeneity of
income, most likely due to omitted variables, is addressed in the estimation of income
effect on diet diversity by instrumental variables. This study finds that, regardless of
estimation methods, income effect is significant and positive, but diminishes along the
income distribution and over time. When endogeneity of income is controlled in 2SLS
estimation, estimated income effect is considerably larger than the corresponding OLS
estimate. OLS regression shows that education has significant and positive effects on
diet diversity, with larger effects at higher education levels. Nevertheless, education
effects diminish in terms of both magnitude and statistical significance in the 2SLS
estimation. The stark differences between OLS and 2SLS estimates suggest that it is
important to account for endogeneity of income. The OLS estimation seemingly
understates income effects and overstates education effects. It, therefore, might
mislead resource allocation in designing food and health policies.
Impact: Economic growth increases life expectancy
Mahumud, Rashidul Alam, et al. “Impact of Life Expectancy on Economics Growth and
Health Care Expenditures in Bangladesh.” Civil Engineering and Architecture,
Horizon Research Publishing, 1 Dec. 2013,
www.hrpub.org/journals/article_info.php?aid=822.
Life expectancy is one of the major key indicators of population health condition and
economic development of a country. The main objective of this study was to find
determine the impact of the life expectancy on changes of economic growth and health
care expenditure, and also to find examine the sex difference trend of life expectancy
according to the sex difference. Using We used multiple regression models are fitted to
estimate the impact of the life expectancy on economic growth and health care
expenditure and also to estimate elasticity of life expectancy on health care expenditure
and economic growth. Results shows female life expectancy was more than male over
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the past 15 years. The higher Gross Domestic Product (GDP) per capita was seen in a
longer life expectancy. i.e., one dollar increasing in GDP per capita will change in an
average the life expectancy by 33 days, and also one unit increase in per person
Health Expenditure Per Capita (HEPC) will increase the life expectancy in an average of
8 days in a year. one dollar increasing in GDP per capita by 33 days will also increase
life expectancy, for Health Expenditure Per Capita (HEPC), by 8 days by one year on
average.
Analysis: This is a good argument because of how many links you can put into it. This means
that it should be hard for the pro to respond. On top of that, the weighing is really compelling
because it links into life, which is always the most important impact.
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A/2: Economic Growth Improves Health
Response: Rising incomes hurt health
Warrant: Rising incomes lead people to do unhealthy things
Gordon, Lydia. “Does Economic Growth Raise Life Expectancy?” Euromonitor
International Blog, Euromonitor International, 25 Jan. 2018,
blog.euromonitor.com/economic-growth-and-life-expectancy-do-wealthiercountries-live-longer/.
Meanwhile, in today’s developed countries, the negative side effects of income
growth – namely its detrimental impact on health after personal affluence reaches a
certain level – can partially outweigh wealth-facilitated improvements. Physical
inertia, increased consumption of automobiles, alcohol, tobacco, sugar and animal
fats are all features of Western society today, mainly because high per capita income
has made such consumption possible. In particular, smoking, alcohol consumption and
obesity are the major risk factors with biological effects on health and demographic
patterns.[5] Studies have shown that on average smokers experience a higher mortality
rate than their similarly aged non-smoking counterparts[6], while the obese, especially
the morbidly obese, experience much greater risk of mortality from cardiovascular
disease[3] and ischemic stroke[4].
Warrant: Rising income in developed countries empirically reduces health
Guo, Jeff. “Researchers Have Debunked One of Our Most Basic Assumptions about How
the World Works.” The Washington Post, WP Company, 14 Oct. 2016,
www.washingtonpost.com/news/wonk/wp/2016/10/14/researchers-have-
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debunked-one-of-our-most-basic-assumptions-about-how-the-worldworks/?utm_term=.6b90b516f8c0.
Christopher Ruhm, an economics professor at the University of Virginia, was one of
the first to notice this paradox. In a 2000 paper, he showed that when the American
economy is on an upswing, people suffer more medical problems and die faster; when
the economy falters, people tend to live longer. “It’s very puzzling,” says Adriana
Lleras-Muney, an economics professor at the University of California, Los Angeles. “We
know that people in rich countries live longer than people in poor countries. There’s a
strong relationship between GDP and life expectancy, suggesting that more money is
better. And yet, when the economy is doing well, when it’s growing faster than
average, we find that more people are dying.” In other words, there are great benefits
to being wealthy. But the process of becoming wealthy — well, that seems to be
dangerous.
Analysis: This is a good response because it makes the con’s argument a reason to vote pro. It
may be true that in the developing world, an increase in income allows people to afford more
food and medical care, but once basic needs are met, larger income is only directed toward
unhealthy behaviors.
Response: The US already spends too much on healthcare
Warrant: The US spends the most on healthcare
Brink, Susan. “What Country Spends The Most (And Least) On Health Care Per Person?”
NPR, NPR, 20 Apr. 2017,
www.npr.org/sections/goatsandsoda/2017/04/20/524774195/what-countryspends-the-most-and-least-on-health-care-per-person.
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The United States spends the most on health care per person — $9,237 – according to
two new papers published in the journal The Lancet. Somalia spends the least – just
$33 per person. The data covering 184 countries was collected and analyzed by the
Global Burden of Disease Health Financing Collaborator Network, a network of
investigators from around the world with expertise in various aspects of health care.
In between those two extremes, the spending is quite literally all over the map. And
the amount of spending doesn't necessarily translate into better health care. For more
insights, we spoke to Dr. Joseph Dieleman, assistant professor at the Institute for Health
Metrics Evaluation at the University of Washington. He authored the two papers, one
looking at health financing from 1995 to 2014, and the other estimating future health
financing to 2040.
Warrant: Thirty percent of healthcare spending is wasted
O'Neill, Daniel. “Wasted Health Spending: Who’s Picking Up The Tab?” The Physician
Payments Sunshine Act, 2018,
www.healthaffairs.org/do/10.1377/hblog20180530.245587/full/.
As the debate over health care costs continues, wasteful spending—outlays for health
services that could be eliminated without harming consumers or care quality—deserves
unflagging attention from researchers, clinicians, and policy makers. The Institute of
Medicine estimated that waste consumed 30 percent of US health dollars in 2009.
Donald M. Berwick and Andrew D. Hackbarth, working from a 2011 baseline, pegged
the midpoint of reasonable waste estimates even higher, at 34 percent. A crude
extrapolation of these figures, given the steady rise in overall health expenditures,
implies that wasted spending now comfortably exceeds $1 trillion annually (see
Exhibit 1), a sum that could fund the entire Medicaid program twice over. These and
similar studies often critique health care as if it were a single $3.3 trillion industry.
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However, the health sector is a mosaic of smaller markets for particular services or
products, each further subdivided by the varying rules, pricing models, and
administrative mechanics of a particular provider-payer pair.
Analysis: This is a good response because even if the entire argument is true, and the judge
does not buy the turn, the impact is marginal at best. Given how much we already spend on
healthcare, it seems that adding to the pie should not affect very much at all.
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CON: Economic Growth Creates Jobs
Argument: When the US economy produces more goods and services, this means that
producers need to hire more people in order to provide these goods and services. This creates
more job opportunities for people.
Warrant: Millions of people are currently unemployed
Politifact Correspondent. “Donald Trump Says U.S. Has 93 Million People 'out of Work,'
but That's Way Too High.” @Politifact, 31 Aug. 2015, www.politifact.com/trutho-meter/statements/2015/aug/31/donald-trump/donald-trump-says-us-has-93milion-people-out-work/.
The official number of unemployed Americans is 8.3 million -- less than one-tenth of
what Trump says. But to give Trump the benefit of the doubt, it’s possible to expand this
number using more credible economic thinking Gary Burtless, an economist at the
Brookings Institution, says it’s not unreasonable to include: The 6.4 million people who
haven’t looked for work recently enough to qualify as being "in the labor force," but
who say they "currently want a job.” And the 6.5 million people working part-time who
would prefer to have a full-time job. This would mean that upwards of 21 million
Americans could be described with some justification as "out of work" involuntarily,
either fully or partially. But that’s not even one-quarter of the number that Trump
offered. Most of Trump’s 93 million "don’t want to work and are not in the job market,"
said Tara Sinclair, chief economist at Indeed and associate professor at George
Washington University. Burtless added that a large chunk of those suffering the plague
of being "out of work" can actually be seen as benefiting from their membership in an
affluent, technologically advanced society.
Warrant: Economic growth will help small businesses
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Office of the Press Secretary. “Job Creation And Economic Growth.” Forbes, Forbes
Magazine, 19 June 2013, www.forbes.com/2009/12/08/barack-obama-jobcreation-business-washington-full-text.html#4366876b7c20.
Small business, infrastructure, clean energy: these are areas in which we can put
Americans to work while putting our nation on a sturdier economic footing. That
foundation for sustained economic growth must be our continuing focus and our
ultimate goal. For even before this period crisis, much of our growth had been fueled
by unsustainable consumer debt and reckless financial speculation, while we ignored
the fundamental challenges that hold the key to our economic prosperity. We cannot
simply go back to the way things used to be. We cannot go back to an economy that
yielded cycle after cycle of speculative booms and painful busts. We cannot continue to
accept an education system in which our students trail their peers in other countries,
and a health care system in which exploding costs put our businesses at a competitive
disadvantage. And we cannot continue to ignore the clean energy challenge or cede
global leadership in the emerging industries of the 21st century. That's why, as we strive
to meet the crisis of the moment, we are laying a new foundation for the future.
Warrant: Economic growth empirically leads to an increase in employment
imfDirect. “The Evidence That Growth Creates Jobs: A New Look at an Old Relationship.”
IMF Blog, 14 Apr. 2017, blogs.imf.org/2016/11/09/the-evidence-that-growthcreates-jobs-a-new-look-at-an-old-relationship/.
While Okun’s Law holds overall for the United States, the relationship between
unemployment and growth since 2011 did deviate from the historical pattern because
the depth and duration of the great recession—the period following the global crisis in
2008—led to so many more people losing their jobs. In South Africa, Australia, and
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Canada, a 1 percent increase in GDP is matched by an increase in employment of 0.6
percent or higher. In contrast, there is virtually no response of employment to growth in
China, Indonesia, and Turkey. The extent to which changes in growth account for
changes in unemployment and employment also varies across countries. GDP growth
accounts for over 70 percent of the variation in employment in Canada and the United
States, about 40 percent in Russia, the United Kingdom, and Australia, and very little
in many other countries. For the majority of countries around the world, taking account
of growth is an important part of understanding short-run changes in unemployment.
For other countries, there are several possible explanations for the weakness of the
jobs-growth link. In some cases, reported unemployment rates may not fully reflect the
true unemployment rate. Some countries are going through rapid structural change and
unemployment may be driven by this longer-run trend rather than short-run
fluctuations.
Impact: Being employed reduces risk of death
McKechnie, Alex. “How Is It Possible That Joblessness Could Kill You, But Recessions
Could Be Good For Your Health?” College of Nursing and Health Professions, July
2014, drexel.edu/now/archive/2014/July/Unemployment-Study/.
Using a nationally representative panel of individuals across the United States, the
researchers studied both processes concurrently, and found for the first time in the
same dataset these two facts that had previously been seen as inconsistent. The
investigators concluded that the two effects do co-occur and are consistent with studies
that examine them separately. The findings reveal that job loss is associated with a 73
percent increase in the probability of death – the equivalent of adding 10 years to a
person’s age. However, this increased risk affects only the minority of people who are
unemployed and is outweighed by health-promoting effects of an economic slowdown
that affect the entire population, such as a drop in traffic fatalities and reduced
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atmospheric pollution. The researchers found that each percentage-point increase in
the individual’s state unemployment rate reduces the hazard of death by approximately
9 percent, which is about the equivalent of making a person one year younger.
Analysis: This is a good argument because the link level is almost undeniably true. It is even a
law in economics that growth leads to a decline in unemployment. From there, it becomes a
weighing game, which is fairly simple as well because having a job allows people to access
better medical care, more food, shelter, etc, all of which increase the chance of living longer,
which is sure to outweigh any pro argument.
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A/2: Economic Growth Creates Jobs
Response: We do not need more jobs
Warrant: There is a record number of job openings
Bartash, Jeffry. “U.S. Job Openings Hit a Record 7.1 Million, Exceed Number of
Unemployed Americans.” MarketWatch, MarketWatch, 16 Oct. 2018,
www.marketwatch.com/story/us-job-openings-jump-to-record-71-million-201810-16.
The number of job openings in the U.S. rose slightly to a record 7.14 million in August,
reflecting strong growth in the economy and the best labor market in decades. Job
openings topped 7 million in July for the first time ever, revised figures show, and they
increased again in August. President Trump was quick to tout the record level of job
openings, though he actually cited a lower number: The jobs still waiting to be filled,
meanwhile, easily exceeded the number of people officially classified as unemployed.
The government previously said 6.23 million people were unemployed in August. Job
openings topped the number of unemployed for the first time in March based on
government records going back to 2000. The gap has now widened to a record 900,000.
Job openings declined slightly in retail, manufacturing and the restaurant business,
though they were still at high levels overall.
Warrant: The unemployment rate is very low
Kitroeff, Natalie. “Unemployment Rate Hits 3.9%, a Rare Low, as Job Market Becomes
More Competitive.” The New York Times, The New York Times, 4 May 2018,
www.nytimes.com/2018/05/04/business/economy/jobs-report.html.
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The Labor Department released its April hiring and unemployment report on Friday,
providing the latest snapshot of the economy. The unemployment rate was 3.9
percent, the lowest rate since 2000 and a sign that the job market has become even
more competitive. It had been 4.1 percent since October. 164,000 jobs were added
last month. Wall Street economists had expected an increase of about 193,000,
according to Bloomberg. The Labor Department revised the job figures for February
slightly downward, but revised the numbers for March sharply upward. The result was
a net increase of 30,000 jobs, compared with previous estimates. Average earnings
rose by 4 cents an hour last month and are up 2.6 percent over the past year.
American employers continue to find reasons to expand their payrolls. April marked the
91st consecutive month of job gains, far and away the longest streak of increases on
record. The average monthly gain has declined each year since 2014, but that’s normal
for an economy that’s been in recovery for such an extended period.
Analysis: This is a good response because it proves that even if the con can show that the
number of jobs available will increase, it doesn’t mean that more people will actually take those
jobs. in fact, given the current state of the economy it seems increasingly likely that they will
not, thus taking out the con argument.
Response: Economic growth does not guarantee jobs for the poor
Warrant: Income inequality has been on the rise
Bivens, Josh. “Inequality Is Slowing US Economic Growth: Faster Wage Growth for Lowand Middle-Wage Workers Is the Solution.” Economic Policy Institute, 2017,
www.epi.org/publication/secular-stagnation/.
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Income inequality in the United States has risen dramatically since the late 1970s, and
the issue has drawn heightened attention in recent years. In the past decade,
economic observers have also become increasingly worried about “secular
stagnation”—or a chronic shortfall of aggregate demand, fearing that this shortfall will
constrain American economic growth in coming years. These two phenomena—rising
inequality and chronic weakness of demand—are related. Specifically, rising inequality
transfers income from low-saving households in the bottom and middle of the income
distribution to higher-saving households at the top. All else equal, this redistribution
away from low- to high-saving households reduces consumption spending, which
drags on demand growth. This paper argues that a key lever for solving the problem of
secular stagnation is halting, or even reversing, the root cause of rising inequality: the
growing wedge between productivity and pay for typical American workers. Following
are our key findings:
Warrant: Most recent growth has been unequal
Reinicke, Carmen. “In the US, the Rich Are Getting Richer and the Poor Are Getting
Poorer, Study Concludes.” CNBC, CNBC, 19 July 2018,
www.cnbc.com/2018/07/19/income-inequality-continues-to-grow-in-theunited-states.html.
“Rising inequality affects virtually every part of the country, not just large urban areas or
financial centers,” said Estelle Sommeiller, a socio-economist at the Institute for
Research in Economics and Social Sciences in France and co-author of the paper. “It’s a
persistent problem throughout the country — in big cities and small towns, in all 50
states.” Between the years 2009 to 2015, the incomes of those in the top 1 percent
grew faster than the incomes of the bottom 99 percent in 43 states and the District of
Columbia. In nine states, the income growth of the top 1 percent was half or more of
all income growth in that time period. This trend is a reversal of what happened in the
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United States in the years during and after the Great Depression. From 1928 until 1973,
the share of income held by the top 1 percent declined in nearly every state. The report
from the EPI attributes that growth to a different atmosphere for workers, where the
minimum wage generally was steadily rising and they were able to join unions and
bargain for rights
Analysis: This is a good response because even if the con can prove the entirety of their
argument, that growth increases employment and that employment reduces mortality, that
doesn’t mean much if the jobs are going to people who are already wealthy and had jobs.
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CON: Economic growth reduces poverty
Argument: Economic growth means that there is more money to go to the poorest among us.
This means that it can alleviate drastic poverty in the United States.
Warrant: Millions are in poverty in the US
Stein, Jeff. “The U.N. Says 18.5 Million Americans Are in 'Extreme Poverty.' Trump's
Team Says Just 250,000 Are.” The Washington Post, WP Company, 25 June 2018,
www.washingtonpost.com/news/wonk/wp/2018/06/25/trump-team-rebukes-un-saying-it-overestimates-extreme-poverty-in-america-by-18-millionpeople/?utm_term=.4dd05f189bc5.
The Trump administration says the United Nations is overestimating the number of
Americans in “extreme poverty” by about 18.25 million people, reflecting a stark
disagreement about the extent of poverty in the nation and the resources needed to
fight it. In May, Philip G. Alston, special rapporteur on extreme poverty and human
rights for the U.N., published a report saying 40 million Americans live in poverty and
18.5 million Americans live in extreme poverty. But in a rebuke to that report on
Friday, U.S. officials told the United Nations Human Rights Council there only appear to
be approximately 250,000 Americans in extreme poverty, calling Alston's numbers
“exaggerated.” The rift highlights a long-running debate among academics over the
most accurate way to describe poverty in America, one with enormous implications for
U.S. policy-making and the nation's social safety net. It also sheds light on the ongoing
feud between Trump and U.N. officials over Alston's report on American poverty, with
U.S. Ambassador Nikki Haley last week calling the report “politically motivated” and
arguing it “is patently ridiculous for the U.N. to examine poverty in America.”
Warrant: Economic growth leads to job creation
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Staff. “Link between Economic Growth and Employment.” DCED, 2018, www.enterprisedevelopment.org/what-works-and-why/evidence-framework/link-betweenemployment-and-economic-growth/.
At the global level, Kapsos (2005) finds that for every 1-percentage point of additional
GDP growth, total employment has grown between 0.3 and 0.38 percentage points
during the three periods between 1991 and 2003. While economic growth is good for
job creation, it is important that growth occurs in sectors that have the potential to
absorb labour at a large scale. Some sectors and activities are more employmentintensive than others: A literature review by Basnett and Sen (2013) identifies an
extensive body of evidence which suggest that growth in manufacturing and services
have particulary positive impact on employment.The impact of GDP growth on
employment in agriculture is found to be limited overall, while value-added growth
agriculture sector has relatively a larger impact on employment. For textiles, the body of
evidence was low, but the studies suggest that growth positively contributed to job
creation. For agri-business/food processing, the authors find a positive impact of growth
on employment.
Warrant: Economic growth reduces poverty
Rodarte, Israel Osorio. “How Effective Is Growth for Poverty Reduction? Do All Countries
Benefit Equally from Growth?” Jobs and Development, 16 June 2015,
blogs.worldbank.org/developmenttalk/how-effective-growth-poverty-reductiondo-all-countries-benefit-equally-growth.
Economic growth has been vital for reducing extreme poverty and improving the lives
of many poor people around the world. This is an indisputable fact. However, does
economic growth affect poverty reduction equally in different countries? Contrary to
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conventional wisdom, we don’t think so. And here’s why. Using a country’s individual
income distribution, which tells us how many people are living in extreme poverty (i.e.
on less than $1.25 a day), we find that positive growth which is distribution-neutral
shifts the income distribution to the right, without changing its shape (see Figure 1, leftpane). The share of people that emerge from poverty due to this distributional-neutral
shift is depicted in yellow, which is the area between the two distributions and to the
right of the poverty line. The number of people who are lifted out of poverty depends
on the position of the poverty line across the distribution of income. So, for instance,
growth of 1 percent lifts relatively fewer people out of extreme poverty when the
poverty headcount rate is very high or low i.e. the extreme poverty line lies on top of
either one of the tails of the income distribution.
Impact: Poverty increases risk of death
Bakalar, Nicholas. “Social Ills Like Poverty Can Cause Death, Researchers Say.” The New
York Times, The New York Times, 4 July 2011,
www.nytimes.com/2011/07/05/health/05social.html.
Poverty is often cited as contributing to poor health. Now, in an unusual approach,
researchers have calculated how many people poverty kills and presented their
findings, along with an argument that social factors can cause death the same way
that behavior like smoking cigarettes does. In an article published online for the June
16 issue of The American Journal of Public Health, scientists calculated the number of
deaths attributable to each of six social factors, including low income. To estimate the
number of deaths caused by each factor, the scientists reviewed 47 earlier studies on
the subject, combining the data in a meta-analysis. The studies were generally based on
large national surveys like the National Health and Nutrition Examination Survey, a
continuing study by the Centers for Disease Control and Prevention.
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Analysis: This is a good argument because it is very straightforward and simple. With more
economic growth, more poor people will have money, and more of it. This means they won’t
have to live in poverty. This is sure to outweigh any pro argument on magnitude and clarity.
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A/2: Economic growth reduces poverty
Response: Inequality diverts growth away from the poor
Warrant: Inequality is rising
Reinicke, Carmen. “In the US, the Rich Are Getting Richer and the Poor Are Getting
Poorer, Study Concludes.” CNBC, CNBC, 19 July 2018,
www.cnbc.com/2018/07/19/income-inequality-continues-to-grow-in-theunited-states.html.
The rich are getting richer and the poor are getting poorer, at least in the United
States. The top 1 percent of families took home an average of 26.3 times as much
income as the bottom 99 percent in 2015, according to a new paper released by the
Economic Policy Institute, a non-profit, nonpartisan think tank in Washington, D.C.
This has increased since 2013, showing that income inequality has risen in nearly
every state. The paper looked at the income of families across the nation and assessed
inequality at the state, metropolitan area and county level using data from the IRS. The
incomes are averages of the IRS summaries of taxpayers in each income range.
Warrant: Inequality funnels growth to the rich
Sherman, Erik. “Income Inequality Hurts Economic Growth.” Forbes, Forbes Magazine, 9
Dec. 2014, www.forbes.com/sites/eriksherman/2014/12/09/income-inequalityhurts-economic-growth/#21721ce0591a.
According to a new study from the Organization for Economic Co-operation and
Development, the latter are right. There is and has been a reduction of economic
growth because of the growing concentration of income among a smaller portion of
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the global population. According to the OECD, the gap between the richest and poorest
in most member countries is at its highest in the last 30 years. In addition, a broader
measure of inequality called the Gini constant (0 when everyone has the same income
and 1 when a single person has all income) has been on the rise. The U.S. is at the top of
the scale except for Mexico, which has by far the worst income inequality of the OECD
states.
Analysis: This is separate from the other response because even if growth does not increase
inequality, it is still so high right now that nearly all benefits of growth go to the rich and not the
poor, meaning a reduction in poverty is unlikely.
Response: Inequality means that growth does not help the poor
Warrant: Inequality hurts growth
Bivens, Josh. “Inequality Is Slowing US Economic Growth: Faster Wage Growth for Lowand Middle-Wage Workers Is the Solution.” Economic Policy Institute, 2017,
www.epi.org/publication/secular-stagnation/.
What this report finds: Income inequality in the United States is suppressing growth in
aggregate demand (spending by households, businesses, and governments) by shifting
an ever larger share of income to rich households that save rather than spend. This
rise in inequality has been overwhelmingly driven by the failure of pay for typical
American workers to keep pace with economy-wide productivity growth. EPI
estimates that rising inequality has slowed growth in aggregate demand by 2 to 4
percentage points of GDP annually in recent years. Why it matters: For decades, the
drag on demand growth stemming from rising inequality has been compensated for by
other economic and policy developments—notably a long-running decline in interest
rates. Going forward, however, these compensating mechanisms are likely to fail, which
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means that the inequality-induced drag on demand would translate directly into slower
economic growth overall.
Warrant: Inequality reduces growth potential
Costa, Pedro Nicolaci da. “Extreme Inequality in the US Is Making a Major Economic
Problem Even Worse.” Business Insider, Business Insider, 14 Mar. 2018,
www.businessinsider.com/inequality-is-deepening-us-economic-weakness-byfracturing-society-2018-3.
US inequality has become so extreme that hyperbolic headlines about how much
wealth is in the hands of a few families in this country have ceased to shock But
economists are increasingly worried that inequality is not just hurting the poor but
also dampening the overall economy's growth potential. Three researchers at the
Federal Reserve Bank of Chicago reviewed the recent literature on issue to examine
whether "the changing distribution of wealth intensified and lengthened the effects" of
the Great Recession of 2007-2009 "It is important to ask whether the widening gap
between the rich and poor has any direct effects on macroeconomic aggregates and, in
particular, on the severity of the Great Recession, when output and consumption
dropped precipitously and were slow to recover," Gene Amromin, Mariacristina De
Nardi and Karl Schulze wrote in a Chicago Fed Economic Letter.
Analysis: This is a good response because even if the pro can prove that growth will go up, it
will always stay relatively low due to inequality. Unless we solve this issue first, all attempts at
helping the poor through growth will fail.
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CON: Economic growth helps small businesses
Argument: Economic growth means that small businesses will see more money. This is good as
they represent the backbone of the US economy.
Warrant: There are millions of small businesses
Karellas, Andy. “Small Businesses Help Grow America’s Economy.” The Council of State
Governments | Home, 2017,
www.csg.org/pubs/capitolideas/enews/cs62_2.aspx.
In his declaration, Obama stated, “America’s small businesses are responsible for
creating nearly two-thirds of net new jobs in the United States each year and employing
more than half of all Americans; small businesses have always been a vital part of our
country’s economy.” According to the latest data from the SBA, there are 28.8 million
small businesses in the U.S., which employ more than 56.8 million individuals. That
represents 99.7 percent of total U.S. businesses or 48 percent of total U.S. employees.
In addition, small businesses created a net of 1.1 million new jobs in 2013, the latest
available data. The SBA provides an annual analysis of each state’s small business
profile and economic activity available at https://www.sba.gov/advocacy/smallbusiness-profiles-states-and-territories-2016. During this year’s National Small Business
Week, the SBA hosted events and training seminars to help entrepreneurs start or grow
their businesses, including: growing through international trade, developing mobile
applications and software development, opportunities in cybersecurity, assisting
veterans in starting a new business, and best practices in obtaining financing.
Warrant: Economic growth increases disposable income
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Khan, Mehreen. “What Does GDP Really Tell Us about Economic Growth?” The
Telegraph, Telegraph Media Group, 15 Oct. 2014,
www.telegraph.co.uk/finance/economics/11159277/What-does-GDP-really-tellus-about-economic-growth.html.
The chart shows that for the most part, disposable income levels have tracked GDP
per capita quite closely. But unlike the black line above, which has been relatively flat
since 2009, the population's net disposable income has been falling steadily since 2013.
It's also possible to take a closer look at how individual incomes have fared by examining
disposable cash at the household level. The yellow line below is a measure of Real
Household Disposable Income (RHDI) which takes into account the level of tax we pay
and benefits we receive. According to the ONS, this is a measure which "seems directly
relevant to assessment of households' economic well-being.” The trend shows that
households suffered a delayed impact from the recession in 2008 - as incomes held up
reasonably well in the immediate aftermath of the crisis. They have however gone
into steady decline since 2010, failing to pick up even as the recovery has generated
momentum.
Warrant: Economic growth is tied to small businesses
Blankfein, Lloyd, et al. “To Grow the Economy, Grow Small Businesses: Bloomberg &
Buffett.” USA Today, Gannett Satellite Information Network, 7 June 2016,
www.usatoday.com/story/opinion/2016/06/07/grow-economy-grow-smallbusinesses-bloomberg-buffett-column/85526778/.
The economy has experienced 75 straight months — more than six years — of private
sector job growth. Yet some areas still have not recovered all the jobs lost during the
recession, and nationally, under-employment exceeds pre-recession levels. How can we
increase the speed of job creation? A critical part of the answer lies with America’s
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small businesses, which create over 60% of net new private-sector jobs and employ
nearly half of America’s workforce. Helping them expand — to get their ideas off the
ground — is one of the best ways to support economic growth and needs the
continued focus of both elected officials and the private sector. Political debates on
economic growth tend to focus on taxes. But taxes are just one big issue facing small
businesses. A report released by Babson College — “The State of Small Business in
America” — underscores that fact. It provides a window into small businesses’ most
pressing needs, and it can serve as a blueprint for addressing them.
Impact: Small businesses create most jobs
Staff. “Facts & Data on Small Business and Entrepreneurship.” Small Business
Entrepreneurship Council Facts Data on Small Business and Entrepreneurship
Comments, 2016, sbecouncil.org/about-us/facts-and-data/.
According to data from the Census Bureau’s Annual Survey of Entrepreneurs, there
were 5.6 million employer firms in the United States in 2016. Firms with fewer than
500 workers accounted for 99.7 percent of those businesses. Firms with fewer than
100 workers accounted for 98.2 percent. Firms with fewer than 20 workers made up
89.0 percent. Add in the number of nonemployer businesses – there were 24.8 million
in 2016 (latest data) – then the share of U.S. businesses with less than 20 workers
increases to 98.0 percent. C-Corps: Among employer C corporations in 2015, according
to the Census Bureau’s Statistics of U.S. Businesses, 84.9 percent had fewer than 20
employees, 96.4 percent fewer than 100, and 99.0 percent had less than 500 workers. If
we add in nonemployer corporations, then those with fewer than 20 workers come in at
89.5 percent of all C corporations. Bulk of Job Creation Comes from Small Business
According to the SBA’s Office of Advocacy: “Small businesses accounted for 61.8% of
net new jobs from the first quarter of 1993 until the third quarter of 2016.” (See the
Office of Advocacy’s “Frequently Asked Questions” publication.)
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Analysis: This is a good argument because by tapping into the most important part of the
economy, it becomes easy to prove that economic growth will help those most in need. This
makes it easy to weigh this argument because the magnitude is so high.
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A/2: Economic growth helps small businesses
Response: Inequality hurts small businesses
Warrant: Income inequality is continuing to grow
Eidelson, Josh. “U.S. Income Inequality Hits a Disturbing New Threshold.”
Bloomberg.com, Bloomberg, 2018, www.bloomberg.com/news/articles/201803-01/america-s-wage-growth-remains-slow-and-uneven.
U.S. wage growth remains slow and uneven, with African-Americans and women still
at a clear disadvantage while the wealthiest are accumulating more money than ever,
a new analysis of census data shows. Median real wages grew only 0.2 percent over
the past year, according to a report released Thursday by the Economic Policy
Institute, a progressive think-tank. Wages for African-Americans declined in most wage
brackets, while women with graduate degrees made less money than men with only
college degrees. By contrast, those in the 95th wage percentile saw an average pay hike
of 1.5 percent over the past year. The report had some positive news, however. The
strongest wage growth came among workers in the bottom tenth of the distribution,
where minimum wage hikes in some states helped average pay climb 3.7 percent. That’s
a departure, however, from the overall trend since 2000. Generally, wages have risen
fastest for those already paid the most, further exacerbating broad income inequality
in the U.S.
Warrant: Inequality helps big businesses
staff. “The Rise of Big Business and Wage Inequality.” Equitable Growth, 25 Apr. 2018,
equitablegrowth.org/rise-big-business-wage-inequality/.
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Firms on average in the United States are getting bigger. The underlying reason for this
shift toward bigness isn’t clear yet, but we have evidence in a decline in the start-up rate
in the United States. For workers, this trend may be a positive one. Research shows that
employees at larger employers receive a wage premium compared to those working
at smaller firms. Consider a recent paper that looked at wages at retail stores.
Workers at large box retailers make more than similar workers at smaller mom-andpop retailers The new paper looks at the distribution of wages as a firm increases in
size. The authors, Holger Mueller of New York University, Paige Ouimet of the University
of North Carolina, and Elena Simintzi of the University of British Columbia, use a
proprietary data set on wages inside firms in the United Kingdom. They divide workers
within a firm into 9 groups by skill level, which also corresponds with wage levels inside
the firm What they find is that inequality, measured by wage ratios, increase as the
firm grows in size, but this trend is driven entirely by an increasing gap between wages
at the top compared to those at the middle of the distribution. The ratio of middle
wages to bottom wages actually doesn’t increase as the firm size does.
Analysis: This is a good response because even if there is growth it doesn't mean it will go
toward small businesses. Maybe in an ideal world this is the case, but not with high inequality.
This takes out the impact of the con argument.
Response: Small businesses are not as important as big businesses
Warrant: Big businesses reduce inequality
Lind, Robert D. Atkinson Michael. “Is Big Business Really That Bad?” The Atlantic,
Atlantic Media Company, 12 Mar. 2018,
www.theatlantic.com/magazine/archive/2018/04/learning-to-love-bigbusiness/554096/.
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However dearly the Framers may have held the idea, it has long since been left behind
by history. More than a century ago, most Americans became urban wage earners, not
farmers or small-town shopkeepers and artisans; by World War II, just 20 percent of
workers were self-employed, a figure that is down to 10 percent today. Working
Americans face many challenges, but transforming them by the millions into
shopkeepers and artisans is not the answer to improving their lot. In fact, today the
richest regions in the United States and abroad are those in which self-employment is
lowest—and the poorest are those with the most self-employed inhabitants. The reason
is simple: As a rule, the smaller the firm, the lower the productivity level. Richest and
fairest: Economies led by large firms also tend to have less income inequality. The antimonopoly school identifies many genuine problems, ranging from low wages to the
massive influence of money in politics. But the solution to low wages is not to break up
big, productive firms that pay higher wages. Public policy should encourage start-ups
that have the potential to scale up into dynamic national or global firms. Helping a
robotics or biotech firm that can boost national productivity and competitiveness will
benefit everyone. Why should Ashley and Justin get tax breaks and exemptions from
regulations to help realize their dream of opening a brick-oven pizzeria?
Warrant: Big businesses pay more than small businesses
Harrison, J.D. “Big Firms Pay 50 Percent Higher Wages than Small Businesses, Study
Shows.” The Washington Post, WP Company, 29 Nov. 2012,
www.washingtonpost.com/business/on-small-business/big-firms-pay-50percent-higher-wages-than-small-businesses-studyshows/2012/11/28/e24a1f58-3970-11e2-a263f0ebffed2f15_story.html?utm_term=.77f2839d37e6.
Small business owners are finding it increasingly difficult to match the wages offered
by their larger competitors, according to new research, which could make it harder to
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find and retain talent on Main Street. A new Kauffman Foundation study shows that
small businesses have historically paid workers significantly less than large firms, with
small firms closing the gap to its slimmest margin in 2001, when their employees
earned on average 78 percent of the salaries paid to workers at large firms. But the
gap has been growing steadily ever since, and by 2011, that figure dropped to 66
percent. Over the same period, a similar trend was reported between young and old
companies, as the percentage earned by employees of start-ups compared to those of
established companies dipped from 85 percent to 70 percent.
Analysis: This is a good response because it means that small businesses are not as important
as the con is making them out to be. This not only mitigates the impact, but effectively does
weighing for the the pro as well by making your impact look larger by comparison.
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CON: Economic growth increases standard of living
Argument: More money being made in the economy means that people have more of an
opportunity to improve their lives by spending money on their wellbeing.
Warrant: Economic growth increases consumption
Increasing the rates of economic growth has long been the holy grail of conventional
economics and politics. To a large extent, most developed economies have been highly
successful in increasing economic output. But, has such an impressive increase in
national output actually improved people’s standard of living? To decide whether
economic growth has increased happiness is highly subjective, and it is difficult for
economists to make concrete arguments. However, it is worth noting the various side
effects of growth and consider there impact on general living standards. Benefits of
economic growth. 1. Increased consumption Consumers can benefit from consuming
more goods and services. An assumption of economics is that consumption is related
to utility, so in theory, with higher consumption levels, there is greater prosperity.
Warrant: Economic growth improves public services
Staff. “Does Economics Growth Bring Increased Living Standards? - Economics Help.”
Economics Help, 2018, https://www.economicshelp.org/essays/economicsgrowth-happiness/.
With increased tax revenues the government can spend more on important public
services such as health and education. Improved health care can improve quality of
life through treating diseases and increasing life expectancy. Increased educational
standards can give the population a greater diversity of skills and literacy. This enables
greater opportunity and freedom. Education is seen as an important determinant of
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welfare and happiness. Economic Growth helps to reduce unemployment by creating
jobs. This is significant because unemployment is a major source of social problems such
as crime and alienation. However, despite rapid increases in economic growth since the
Second World War, areas of high unemployment in the EU remain. For example, in
France and Spain, there are currently high levels of structural unemployment. This kind
of unemployment may not be reduced by economic growth. Even in past two decades,
economic growth has led to reduction in ‘absolute’ low income It is important to look at
economic growth over a long period of time. At the turn of the Twentieth Century, in US
and Europe, there was widespread poverty amongst the working classes – with poor
people experiencing malnutrition. Even since 1945, absolute poverty levels have
significantly fallen. S.E. Asia has also seen significant decreases in absolute poverty – due
to high rates of economic growth in past few decades. Economic growth will be
important for reducing absolute poverty and increasing life expectancy in Africa.
Warrant: Economic growth coincides with wage boosts
Staff. Economic Growth Has Gained Momentum, Wages Are Rising Faster. 2018,
https://www.lb.lt/en/news/economic-growth-has-gained-momentum-wagesare-rising-faster.
The economy is projected to expand by 3.2% in 2018 and 2.7% in 2019, while the
unemployment rate will moderate to 6.7% and 6.6% respectively. The forecast for
wage growth in 2018 has been revised upwards – from 6.7% to 7.6%. Given the
decline in unemployment and the still high demand for workers, the domestic
business sector may take one of the following routes to tackle labour shortages:
increase wages, boost investment in production modernisation and development, or
attract workers from third countries. Statistics show that in the last few years wage
growth has been broad-based across sectors. In 2017 the highest rise in worker pay was
recorded in trade, agriculture, information and communication, construction and
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manufacturing, where wages increased by roughly 9–11%. Since last year mounting
tensions have been eased by recovering investment, which boosts production capacity.
Part of investments, however, is directed towards construction, which, in turn, spurs
demand for the already scarce labour force. With emigration leaving a noticeable gap in
the labour market, the country tries to alleviate at least some shortages with thirdcountry labour force.
Impact: Economic growth improves standard of living
W, Thomas. What Is Economic Growth and How Can It Improve Living Standards? |
MyTutor. 2018, https://www.mytutor.co.uk/answer.html.
Economic growth is defined as an increase in the productive potential of an economy. It
is measured in percentage growth of GDP (Gross Domestic Product), year on year.
India's rate of economic growth is 7.1% in 2016 Q1. Growth can lead to higher living
standards because if GDP rises, there is more money in the domestic economy. This
means that business can make more profits, and therefore can pay employees higher
wages, or even hire more employees. This means that GDP per capita/ household
rises. Therefore the disposable income of workers rises. This means that they can
purchase more goods and services with their income, leading to a rise in living
standards.
Analysis: Improved standard of living is perhaps the most concrete and direct impact you could
ask for. All impacts eventually boil down to people living better lives— this immediately cuts to
the chase and provides a more direct link than any pro argument could, outweighing on
strength of link.
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A/2: Economic growth increases standard of living
Response: Income inequality limits the benefits of economic growth
Warrant: Inequality has been rising for decades
CILLUFFO, Anthony. Income Inequality in the U.S. Is Rising Most Rapidly Among Asians |
Pew Research Center. 12 July 2018,
http://www.pewsocialtrends.org/2018/07/12/income-inequality-in-the-u-s-isrising-most-rapidly-among-asians/.
Income inequality, a measure of the economic gap between the rich and poor, has
risen steadily in the United States since the 1970s. More recently, the issue burst into
public consciousness with the Occupy Wall Street movement in 2011 and subsequent
calls for a $15 minimum wage. An important part of the story of rising income
inequality is that experiences within America’s racial and ethnic communities vary
strikingly from one group to the other. Today, income inequality in the U.S. is greatest
among Asians. From 1970 to 2016, the gap in the standard of living between Asians near
the top and the bottom of the income ladder nearly doubled, and the distribution of
income among Asians transformed from being one of the most equal to being the most
unequal among America’s major racial and ethnic groups. In this process, Asians
displaced blacks as the most economically divided racial or ethnic group in the U.S.,
according to a new Pew Research Center analysis of government data. While Asians
overall rank as the highest earning racial and ethnic group in the U.S., it is not a status
shared by all Asians: From 1970 to 2016, the gains in income for lower-income Asians
trailed well behind the gains for their counterparts in other groups.
Warrant: Growth has not coincided with wage increases
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Rachel, Premack. 7 Reasons Why Wage Growth Has Been Slow, According to Economists
- Business Insider. 2018, https://www.businessinsider.com/why-wage-growth-isslow-2018-9.
The US economy is growing at its fastest pace in four years. Unemployment recently
sank to an 18-year low. That's all led President Donald Trump to deem America as
"the economic envy of the entire world.” But, you wouldn't know that by looking at
your pay stub. Wage growth has been "sluggish," as Business Insider's Rich Feloni
recently reported. Even our nation's top economists are baffled. Such low
unemployment should mean that employers are kicking up pay in order to lure in
workers. Yet, they're not. There's no single reason for why wage growth has been
dismal. Business Insider spoke to three economists to shed light on their theories on the
conundrum: Jake Rosenfeld of the University of Washington in St. Louis, Economic Policy
Institute senior economist Heidi Shierholz, and Brookings Institution senior fellow Jay
Shambaugh.
Analysis: This is a good response because even if growth should help people in concept, in
reality it does little t help because it is all diverted toward the rich. This takes out the con’s
impact.
Response: Economic growth does not improve living standards in developed countries
Warrant: Economic growth hurts health
Guo, Jeff. “Researchers Have Debunked One of Our Most Basic Assumptions about How
the World Works.” The Washington Post, WP Company, 14 Oct. 2016,
www.washingtonpost.com/news/wonk/wp/2016/10/14/researchers-havedebunked-one-of-our-most-basic-assumptions-about-how-the-worldworks/?utm_term=.6b90b516f8c0.
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A booming economy spurs death in other ways too. People start to spend more time
at their jobs, exposing them to occupational hazards, as well as the stress of overwork.
People drive more, leading to an increase in traffic-related fatalities. People also drink
more, causing health problems and accidents. In particular, the economists’ data
suggest that alcohol-related mortality is the second-most important explanation, after
pollution, for the connection between economic growth and death rates. This is
consistent with other studies finding that people are more likely to die right after they
receive their tax rebates. More income makes it easier for people to pay for health care
and other basic necessities, but it also makes it easier for people to engage in risky
activities and hurt themselves.
Warrant: Economic growth increases crime
Roman, John. “The Puzzling Relationship Between Crime and the Economy.” CityLab, 23
Sept. 2013, www.citylab.com/life/2013/09/puzzling-relationship-between-crimeand-economy/6982/.
Economists tend to argue the opposite, that better economic times increase crime.
More people are out and about flashing their shiny new smartphones and tablets,
more new cars sit unattended in parking lots, and there are more big-screen TVs in
homes to steal. Better economic times also mean more demand for drugs and alcohol,
and the attendant violence that often accompanies their consumption. But as the
figures below show, the relationship between crime and the economy is not as obvious
as it seems, and focusing on that relationship obscures more important
predictors.Looking at the relationship between GDP and crime back to the earliest
reliable crime data from 1960 supports both positions, suggesting there is no
relationship between economic growth and crime. In the first part of the series, rising
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GDP is associated with rapidly increasing crime. In the second part, it is associated with
declining crime. In the middle, there is no relationship at all.
Analysis: This is a good response because it actually makes the con’s argument a reason to vote
pro. Because developed countries like the US already have their basic needs met for the most
part, adding more money simply means that people will spend it on things that hurt them.
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CON: Economic growth increases wages
Argument: When there is more being produced in the economy, there is a higher demand for
labor which gives leverage to workers to bargain for higher wages.
Warrant: Economic growth generally leads to wage increases
Herper, Matthew. “Trump’s Comments Are Big Pharma’s Nightmare.” Forbes, 11 Jan.
2017, https://www.forbes.com/sites/matthewherper/2017/01/11/trumpscomments-are-big-pharmas-nightmare/.
In a period of positive economic growth, usually, you would expect a rise in real wages
and higher pay. However, it is not guaranteed. GDP measures wages, but also profit,
interest and rent. Therefore, it is possible for GDP to increase but average wages to
stagnate and even decline. – e.g. if profit takes a bigger share of GDP. Economic growth
means an increase in real GDP (Gross Domestic Product) GDP is a measure of National
Income / National Output / National Expenditure. National Income measure of GDP
Wages and Salaries (compensation of employees) Rent Interest Profit Economic growth
and real GDP per capita Another issue is that we could see a rise in real GDP caused by
an increase in the population. If real GDP increases 2%, but the population increases 2%,
then there will be no increase in GDP per capita and average real wages will stay the
same.
Warrant: Affect of inequality on wage growth is often overstated
Kelly, Gavin. Policy Network - Will the Return of Economic Growth Mean Rising Wages
for Workers? June 2014, http://www.policynetwork.net/pno_detail.aspx?ID=4692&title=Will+the+return+of+economic+gro
wth+mean+rising+wages+for+workers%3f.
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For some on the left, it is near axiomatic that we face a long-term decline in the labour
share of GDP. This argument follows that more of our national income is being sucked
up into corporate profit due to a mix of technology, financialisation and de-regulation
spurred in no small part by the impact of big money on democratic politics. From a UK
perspective, there has been a slight shift in this direction over time, though it is often
overstated: changes in the UK’s labour share accounted for only a fifth of the cleavage
that had opened up between GDP and median pay since the early 1970s. But the
decline in labour’s share has been far more marked over recent years in some countries
(like the US) than others; overall the labour share declined in the majority of OECD
countries from 1990 to 2009. Another view, more often heard from those on the right,
is that workers' wages have primarily been under pressure because of rising burdens on
employers, such as higher national insurance contributions, which have borne down on
pay. In the UK, along with a number of countries, these costs have certainly risen. But
again, this can be overdone: in the British context it accounts for a bit over a quarter
of the gap between GDP and median wage growth since the 1970s.
Warrant: Economic growth is positive sum and can’t be controlled from the top
Payne, John. “Why Do Wages Increase?” Show-Me Institute, 2010,
https://showmeinstitute.org/blog/economic-opportunity-miscellaneous/whydo-wages-increase.
Thanks to the profit and loss system, businesses have an automatic incentive to do
more with less, because in the short run this will increase their profits. However, as their
competitors also adopt the same innovations, those profits are competed away and
instead translate into both higher wages for workers and lower prices for consumers,
which also contributes to an increased standard of living. It's important to note that
this process of maximizing efficiency in order to produce more with less is a positivesum game, unlike the zero-sum (or negative-sum) game of redistribution through
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minimum wage laws or unions. That means that new wealth is created where there
was none before, rather than simply moving existing wealth from one person or group
to another. Only through this kind of positive-sum activity can the standard of living
increase throughout society over time. There are policies that government officials can
pursue that help to maximize productivity gains, but there is no magic wand that they
can wave to make everyone richer by fiat. Economic growth is a dynamic process that
cannot be planned or controlled from the top down.
Impact: Increased income reduces mortality
Rehkopf, David H., et al. “The Non-Linear Risk of Mortality by Income Level in a Healthy
Population: US National Health and Nutrition Examination Survey Mortality
Follow-up Cohort, 1988–2001.” BMC Public Health, vol. 8, Nov. 2008, p. 383.
PubMed Central, doi:10.1186/1471-2458-8-383.
We observed significant non-linear risks of all-cause mortality, as well as for certain
specific causes of death at different levels of income. Typically, risk of mortality
decreased with increasing income levels only among persons whose family income was
below the median; above this level, there was little decreasing risk of mortality with
higher levels of income. There was also some variation in mortality risk at different
levels of income by cause and gender. The majority of the income associated mortality
risk in individuals between the ages of 18–77 in the United States is among the
population whose family income is below the median (equal to $20,190 in 1991, 3.2
times the poverty level). Efforts to decrease socioeconomic disparities may have the
greatest impact if focused on this population.
Analysis: This is a good argument because increased wages link into many other important
impacts, like health, quality of life, crime, etc. This means that whatever the terminal impact of
the pro, you are likely to be able to link into it better by proving that higher wages allow people
to access whatever benefit the pro advocates for.
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A/2: Economic growth increases wages
Response: Wage increases only happen for the rich
Warrant: Rising growth has not been met with higher wages
Madowitz, Michael, and Seth Hanlon. “GDP Is Growing, but Workers’ Wages Aren’t.”
Center for American Progress,
https://www.americanprogress.org/issues/economy/reports/2018/07/26/45408
7/gdp-growing-workers-wages-arent/. Accessed 13 Dec. 2018.
President Donald Trump recently said that the U.S. economy is “stronger than ever
before” and points to his tax plan as one of the major reasons why.1 But the fact is
that workers are not getting ahead in the Trump economy. Official data released in
recent weeks have shown that workers’ wages are flat or even slightly down, in real
terms, over the last year.2 These data fly in the face of many tax plan boosters who
have claimed that the bill’s passage has already been a boon to middle-class workers.
This Friday, the U.S. Department of Commerce will release its first estimate of the
nation’s economic output in the second quarter of 2018. For a number of reasons,
second-quarter gross domestic product (GDP) growth is expected to be relatively
strong. But one quarter’s GDP estimates hardly indicate that the economy is
experiencing the sustained, broad-based growth that tax cut proponents promised
would happen. Indeed, as the wage data show, the economy’s gains have not trickled
down to regular workers. In fact, President Trump’s policies have only made it harder
for them to get ahead.
Warrant: Inequality has hurt poor wages
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Ingraham, Christopher. “Analysis | How Rising Inequality Hurts Everyone, Even the
Rich.” Washington Post, 2018,
https://www.washingtonpost.com/news/wonk/wp/2018/02/06/how-risinginequality-hurts-everyone-even-the-rich/.
In 2014 the Organisation for Economic Co-operation and Development, a collective of
the world's 35 wealthiest countries including the United States, found that rising
inequality in the United States from 1990 to 2010 knocked about five percentage points
off cumulative GDP per capita over that period. Similar effects were seen in other rich
countries. “The main mechanism through which inequality affects growth is by
undermining education opportunities for children from poor socio-economic
backgrounds, lowering social mobility and hampering skills development,” the OECD
found. Children from the bottom 40 percent of households (a huge chunk of the
population) are missing out on pricey educational opportunities. That makes them less
productive employees, which means lower wages, which means lower overall
participation in the economy. While that's obviously bad news for poor families, it
also hurts those at the top. If you're a billionaire owner of a retail or manufacturing
company, you want people to be able to afford the stuff you're selling. Henry Ford
offered his workers high wages not out of any altruistic impulse but because he wanted
them to buy his cars.
Analysis: This is a good response because even if growth should help people in concept, in
reality it does little t help because it is all diverted toward the rich. This takes out the con’s
impact.
Response: Rising wages only lead to inflation
Warrant: Growth causes inflation
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Pettinger, Tejvan. “Is Inflation Caused by Economic Growth? - Economics Help.”
Economics Help, 2018,
https://www.economicshelp.org/blog/3511/economics/is-inflation-caused-byeconomic-growth/.
A sustained rise in prices is known as inflation. A large rise in prices / higher inflation
rate is often caused by economic growth. However, there are also occasions, when we
can get inflation despite weak or negative economic growth. Inflation caused by
economic growth Typically, higher inflation is caused by strong economic growth. If
Aggregate Demand (AD) in an economy expands faster than aggregate supply, we
would expect to see a higher inflation rate. If demand is rising faster than supply this
suggests that economic growth is higher than the long run sustainable rate of growth.
For example, in the UK, the long-run trend rate of economic growth is around 2.5%. If
the UK economy expands very rapidly, e.g. economic growth of 5%, then you expect to
get inflationary pressures:
Warrant: Inflation means rising wages don’t mean anything
Smith, Noah. Everything Is Booming Except for Wages. 23 Feb. 2018.
www.bloomberg.com, https://www.bloomberg.com/opinion/articles/2018-0223/u-s-economic-growth-isn-t-translating-into-bigger-paychecks.
In other words, it’s time to stop calling this a recovery, and start calling it a boom. This is
very good news for President Donald Trump, whose 2020 re-election bid will be
strengthened by good economic times, even though the degree to which presidential
policies really affect the economy is dubious. But one important economic indicator
remains disturbingly subdued -- wages. In dollar terms, wage growth has been
superficially healthy -- in January, average hourly earnings rose 2.9 percent from a
year earlier. But consumer prices increased 2.1 percent during the same period. In
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other words, real hourly earnings grew by only 0.8 percent -- less than half the real
growth rate of the overall economy. Meanwhile, the NFIB survey reports that 31
percent of employers are paying their workers more. But this is also presumably
unadjusted for inflation. Because inflation is positive in most years, wages tend to go
up on average every year. But that doesn’t mean workers are actually getting more
purchasing power. In terms of real wage growth, 2017 wasn't a great year, and for
nonsupervisory workers it was especially slow:
Analysis: This is a good response because it makes the impact of higher wages moot. Inasmuch
as the cost of living rises, the rise in wages won’t help much. This means there is little reason to
vote for the con on this issue, and might even make it a pro argument.
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CON: Economic Growth promotes less Government
borrowing
Argument: If the economy is growing, investors will be keen to invest in the private sector, thus
forcing governments to drive down interest rates on bonds to remain competitive. Low interest
rates make it easier for businesses to borrow money, while bonds generate revenue for the
government.
Warrant: Economic Growth attracts private investment
Pettinger, Tejvan. “Reducing Government Borrowing during Economic Growth.”
Economics Help, 17 Jan. 2013,
<www.economicshelp.org/blog/6733/economics/reducing-governmentborrowing-during-economic-growth/.>
If the economy is growing strongly, then investors will be keen to invest in private
enterprise – loans to firms, buying shares on the stock market, buying commercial
bonds e.t.c. This is because during an economic boom with rising incomes, investors
feel that the private sector is going to give a relatively good rate of return. Therefore,
if the government wishes to borrow money in a period of economic growth, it will have
to work harder to attract private investors to buy government bonds. If the private
sector is giving a rate of return of say 5%, then, ceteris paribus, the bond yield on
government debt will have to be at least 5% to attract borrowing. If the government
wishes to borrow more during times of economic growth, it is competing with private
sector investment, and this competition to attract buyers will most likely push up bond
yields.
Warrant: This is known as the Accelerator effect
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Staff, Investopedia. “Accelerator Theory.” Investopedia, Investopedia, 6 Mar. 2018,
<www.investopedia.com/terms/a/acceleratortheory.asp..>
The accelerator theory is an economic postulation whereby companies' investments
increase when either demand or income increases. The theory also suggests that when
there is an excess of demand, companies can meet the demand in two ways; either
decrease demand by raising prices or increase investment to meet the level of demand.
The accelerator theory posits that companies typically choose to increase production,
thereby increasing profits. This growth, in turn, attracts additional investors who also
accelerate growth.
Warrant: In order to remain competitive, the government would have to lower interest rates
on bonds
Pettinger, Tejvan. “Reducing Government Borrowing during Economic Growth.”
Economics Help, 17 Jan. 2013,
<www.economicshelp.org/blog/6733/economics/reducing-governmentborrowing-during-economic-growth/.>
If the economy is growing strongly, then investors will be keen to invest in private
enterprise – loans to firms, buying shares on the stock market, buying commercial
bonds e.t.c. This is because during an economic boom with rising incomes, investors feel
that the private sector is going to give a relatively good rate of return. Therefore, if the
government wishes to borrow money in a period of economic growth, it will have to
work harder to attract private investors to buy government bonds. If the private
sector is giving a rate of return of say 5%, then, ceteris paribus, the bond yield on
government debt will have to be at least 5% to attract borrowing. If the government
wishes to borrow more during times of economic growth, it is competing with private
sector investment, and this competition to attract buyers will most likely push up
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bond yields. If the government cut spending and reduce the budget deficit, then rather
than buying government bonds, private investors may switch to buying commercial
bonds or investing in the stock market.
Impact: Low interest rates are pivotal to attracting long term investment and reversing the
national debt
Smith, Lisa. “Successful Ways That Governments Reduce Debt.” Investopedia,
Investopedia, 5 Dec. 2018,
<www.investopedia.com/articles/economics/11/successful-ways-governmentreduces-debt.asp.>
Maintaining low-interest rates is another way governments seek to stimulate the
economy, generate tax revenue and, ultimately, reduce the national debt. Lowinterest rates make it easy for individuals and businesses to borrow money. In turn,
the borrowers spend that money on goods and services, which creates jobs and tax
revenues. Low-interest rates have been employed by the United States, the European
Union, the United Kingdom and other nations with some degree of success. That noted,
interest rates kept at or near zero for extended periods of time have not proved to be a
panacea for debt-ridden governments. Take, for example, the issuance of government
debt. Governments often issue bonds to get money. This enables them to avoid raising
taxes and provides money to stimulate the economy through public spending,
theoretically generating additional tax income from prosperous businesses and
taxpayers.
Impact: Government borrowing is really bad
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Richman, Sheldon. “End Government Borrowing.” Taylor Swift Knows Scarcity Drives the
Price, 26 Sept. 2018,
<www.aier.org/research/end-government-borrowing..>
Borrowing has at least three counts against it. First, it makes government look less
expensive than it is and therefore leads to more government. Imagine if Congress and
the president had to raise the full $4.147 trillion through taxation. Government
spending might come under scrutiny as never before, and that then might prompt a
radical reevaluation of the government’s role. Nothing concentrates the mind like
having to face the full cost of one’s choices. Second, borrowing permits a gross
injustice: the imposing of fiscal burdens onto generations too young to vote or even
unborn. Talk about taxation without representation! True, our descendants will be free
to repudiate the debt and repeal taxes, but the powers that be will hector them
endlessly about their obligation to pay the government’s debts. Environmentalists often
admonish us to leave our children the planet in better shape than we found it. By the
same token, we should leave the fiscal environment in better shape than we found it. In
both cases, it would be wrong to burden them with the consequences of our
irresponsibility. If for no other reason, we should get our fiscal house in order now.
Third, the taxpayers will bear the full burden of the government’s profligacy, which
today stands at well over $61,000 per citizen. To be sure, a mounting debt could
prompt the central bank, the Federal Reserve, to “monetize” it by creating money out
of thin air and robbing the people of purchasing power. And inflation can undermine a
society. However, monetizing the debt is harder than it once was because of changes
in the world financial system. As economist Jeffrey Rogers Hummel shows, inflation just
doesn’t benefit the politicians the way it used to.
Analysis: I think this argument has a lot of merit for two reasons. First, the warranting is really
airtight. A lot of the economics behind it makes fluid, logical sense that can be explained pretty
easily to lay judges. Second, it solves back for the harms of the national debt. By promoting long
term investment and driving down interest rates, it begins to solve back for some other harms
of the national debt.
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A/2: Economic Growth promotes less Government borrowing
Answer: Government borrowing is already decreasing in the status quo.
Warrant: The government has run out of places to borrow from
Davies, Antony, and James Harrigan. “Borrowing on Borrowed Time.” U.S. News &
World Report, U.S. News & World Report, 4 Jan. 2017,
<www.usnews.com/opinion/economic-intelligence/articles/2017-01-04/the-usis-running-out-of-sources-for-borrowing-money.>
“Gargantuan debt is old news though, and politicians know it. They are keenly aware
that voters have stopped paying attention, which means they can keep borrowing with
impunity. But there's a new financial problem looming that will soon gain people's
attention: The U.S. government is running out of places to borrow. The federal
government has borrowed so much that there are few places left on the planet where
it can borrow more. Take a look at who has loaned the most money to the U.S.
government. At the top of the list are the Social Security, Medicare and various federal
pension trust funds. For decades, these trust funds have collected more money than
they have paid out to retirees – in total, over $5 trillion more. But every time the trust
funds generated surpluses, the federal government would borrow and spend them. That
makes American retirees the government's largest creditor.”
Response: Borrowing is key to funding development
Warrant: The US is at a critical point, borrowing would help
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Krugman, Paul. “Debt Is Good.” The New York Times, The New York Times, 21 Aug.
2015, <www.nytimes.com/2015/08/21/opinion/paul-krugman-debt-is-good-forthe-economy.html..>
“One answer is that issuing debt is a way to pay for useful things, and we should do
more of that when the price is right. The United States suffers from obvious
deficiencies in roads, rails, water systems and more; meanwhile, the federal
government can borrow at historically low interest rates. So this is a very good time to
be borrowing and investing in the future, and a very bad time for what has actually
happened: an unprecedented decline in public construction spending adjusted for
population growth and inflation. Beyond that, those very low interest rates are telling
us something about what markets want. I’ve already mentioned that having at least
some government debt outstanding helps the economy function better. How so? The
answer, according to M.I.T.’s Ricardo Caballero and others, is that the debt of stable,
reliable governments provides “safe assets” that help investors manage risks, make
transactions easier and avoid a destructive scramble for cash.”
Warrant: Government borrowing creates a wealth effect
“Role of Government Borrowing for Financing Development | Economics.” Economics
Discussion, 2 Mar. 2018, <www.economicsdiscussion.net/economicdevelopment/government-borrowing/role-of-government-borrowing-forfinancing-development-economics/30291.>
“In our above analysis, we have not taken into account the wealth effect of debt
financing. When the government issues bonds to finance its budget deficit, it creates
private wealth. This is because bonds are considered as wealth by the people. Patinkin
and Friedman in their models include wealth in their money demand function. That is,
according to them, demand from money depends on the real value of wealth, apart
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from other factors. If this wealth effect of bond-financing of budget deficit is
recognised, then it exercises an important influence on the dynamic behaviour of the
economy. When through borrowing for financing budget deficit more bonds are issued
and sold by the government, the wealth of the people increases which will raise the
demand for money. The increase in demand for money, money supply remaining the
same, causes a leftward shift in the LM curve, for instance, from LM0 to LM1 in Fig. 51.2.
(Note that, on the contrary, financing of government expenditure through creation of
printed money, LM curve will shift to the right.)”
Analysis: The best way to respond to this argument is to try and turn the impacts. The crux of
the debate on this argument is going to come down to whether or not borrowing is a good way
to finance government projects and other policies. The second response leans along the lines of
what most teams would expect to hear if they were reading this argument. By illustrating that
the development created through these government projects are helping a large amount of
people, then the harms of borrowing could easily be outweighed.
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CON: Economic Growth is key to addressing Climate Change
Argument: As climate change worsens, more money will need to be spent on the environment,
which would increase the national debt. As countries grow richer, they have more resources
available to invest in cleaner technologies.
Warrant: Climate change is expensive
Leahy, Stephen. “Hidden Costs of Climate Change Running Hundreds of Billions a Year.”
National Geographic, National Geographic Society, 28 Sept. 2017,
<news.nationalgeographic.com/2017/09/climate-change-costs-us-economybillions-report.>
“Extreme weather, made worse by climate change, along with the health impacts of
burning fossil fuels, has cost the U.S. economy at least $240 billion a year over the
past ten years, a new report has found. And yet this does not include this past month's
three major hurricanes or 76 wildfires in nine Western states. Those economic losses
alone are estimated to top $300 billion, the report notes. Putting it in perspective,
$300 billion is enough money to provide free tuition for the 13.5 million U.S. students
enrolled in public colleges and universities for four years. In the coming decade,
economic losses from extreme weather combined with the health costs of air pollution
spiral upward to at least $360 billion annually, potentially crippling U.S. economic
growth, according to this new report, The Economic Case for Climate Action in the
United States, published online Thursday by the Universal Ecological Fund. “Burning
fossil fuels comes at a giant price tag which the U.S. economy cannot afford and not
sustain," said Sir Robert Watson, coauthor and director at the U.K's Tyndall Center for
Climate Change Research.”
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Warrant: Economic growth is key to fighting climate change
Everett, Tim, and Alex Rubin. “Economic Growth and the Environment.” Defra, Defra
Evidence and Analysis Series, Mar. 2010,
<assets.publishing.service.gov.uk/government/uploads/system/uploads/attachm
ent_data/file/69195/pb13390-economic-growth-100305.pdf..>
Despite short-term downturns and setbacks, the long-term trend in economic output
over the last 200 years has been unambiguously upwards. It has led to rising levels of
employment and income, and remains a key factor in generating the necessary level
of investment, both public and private, in technology and infrastructure to facilitate
the shift to a low carbon and resource efficient growth path. Economic growth has
also provided developing countries the opportunity to improve the quality of life of
their citizens, and to rise to meet the environmental challenges they face. Investment,
aid and demand for imports from advanced economies all have an important role in
supporting economic growth and development across the world.
Warrant: Businesses capitalizing on the opportunity to create growth in this sector and aid in
the efforts to fight climate change
Everett, Tim, and Alex Rubin. “Economic Growth and the Environment.” Defra, Defra
Evidence and Analysis Series, Mar. 2010,
<assets.publishing.service.gov.uk/government/uploads/system/uploads/attachm
ent_data/file/69195/pb13390-economic-growth-100305.pdf..>
The goods and services these industries produce enable reductions in the
environmental impact of production, through greater use of low carbon and
renewable energy, improvements in the resource efficiency of production, and a
reduction in the environmental impacts of manufacturing (such as air or water
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pollution). A recent study estimated that this sector will grow by between 4.7% and
7.7% between 2009 and 2020, even factoring in the effects of the recent recession,
suggesting an environmental goods and services sector worth between $1.2 and $1.9
trillion. With this international demand, UK businesses have an opportunity to become
market leaders, and for this sector to be a potential driver of UK productivity and
growth in the future.
Impact: Inaction on climate change will only increase debt in the future
Dyke, James. “Inaction on Climate Change Risks Leaving Future Generations $530 Trillion
in Debt.” The Conversation, The Conversation, 19 Sept. 2018,
<theconversation.com/inaction-on-climate-change-risks-leaving-futuregenerations-530-trillion-in-debt-81134.>
By continuing to delay significant reductions in greenhouse gas emissions, we risk
handing young people alive today a bill of up to US$535 trillion. This would be the cost
of the “negative emissions” technologies required to remove CO₂ from the air in order
to avoid dangerous climate change. They estimate costs between US$150-350 for each
tonne of carbon removed via negative emissions technologies. If global emissions are
reduced by 6% each year – a very challenging but not impossible scenario – then
bringing CO₂ concentrations back to 350ppm would cost US$8-18.5 trillion, spread over
80 years at US$100-230 billion a year. If emissions remain flat or increase at 2% a year,
then total cost balloons to at least US$89 trillion and potentially as much as US$535
trillion. That’s US$1.1 to US$6.7 trillion every year for eight decades. To give these
numbers some context, the entire US federal budget is about US$4 trillion, while
annual spending by all countries on military and defence is US$1.7 trillion.
Analysis: I really like this argument for two reasons. First, the costs of climate change are
almost undeniable. The fact that the costs are only going to keep increasing makes the
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argument that we should act now really convincing. Moreover, this can lead into some
interesting weighing in the later speeches.
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A/2: Economic Growth is key to addressing Climate Change
Answer: We are already past the point of no return for climate change
Warrant: We have already crossed the tipping point to have effective climate policy
McCarthy, Michael. “Environment in Crisis: 'We Are Past the Point of No Return'.” The
Independent, Independent Digital News and Media, 23 Sept. 2015,
<www.independent.co.uk/environment/environment-in-crisis-we-are-past-thepoint-of-no-return-6111631.html.>
“The world has already passed the point of no return for climate change, and
civilisation as we know it is now unlikely to survive, according to James Lovelock, the
scientist and green guru who conceived the idea of Gaia - the Earth which keeps itself fit
for life.In a profoundly pessimistic new assessment, published in today's Independent,
Professor Lovelock suggests that efforts to counter global warming cannot succeed, and
that, in effect, it is already too late.The world and human society face disaster to a
worse extent, and on a faster timescale, than almost anybody realises, he believes. He
writes: " Before this century is over, billions of us will die, and the few breeding pairs of
people that survive will be in the Arctic where the climate remains tolerable.”
Response: Slowing down Climate Change requires a global response, the US isn’t enough on its
own
Warrant: US growth isn’t enough
Reed, Stanley. “Shift to Lower-Carbon Energy Is Too Slow, I.E.A. Report Warns.” The
New York Times, The New York Times, 21 Dec. 2017,
www.nytimes.com/2015/11/10/business/energy-environment/shift-to-lowercarbon-energy-is-too-slow-report-warns.html.>
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“Even as the world shifts toward lower-carbon forms of energy, the changes are
happening to slowly to keep global temperatures from rising to dangerous levels in
the coming decades, an international research group warns in a report released on
Tuesday. And low oil prices could make the problem worse by slowing the planet’s
transition to cleaner and more efficient cars, trucks, and aircraft, according to the
report, by the International Energy Agency. The group represents nearly 30 countries
and aims to promote secure and environmentally sustainable global energy. “Now is
not the time to relax,” Fatih Birol, the agency’s executive director, said in a statement
accompanying the report. The group, based in Paris, said in its annual “World Energy
Outlook” that Asian countries like India and China could play a big role in determining
how successfully the world combats climate change.”
Warrant: Clean Air Act is reducing CO2 in the status quo, growth isn’t necessary
Walker, Reed. The Transitional Costs of Sectoral Reallocation: Evidence From the Clean
Air Act and the Workforce. Columbia University, Jan. 2012,
<economics.mit.edu/files/7515.>
“SP In no small part due to these regulations, pollution levels have declined
considerably from 1970 levels (Henderson 1996, Chay and Greenstone 2003a). More
recently, since 1990 pollution levels have declined even further despite GDP rising,
vehicle miles traveled increasing, population growing, and energy consumption rising
by more than 20 percent (Environmental Protection Agency 2008, Auffhammer, Bento,
and Lowe 2009). The combined evidence suggests that nonattainment designations are
effective at reducing pollution levels, and much of this reduction comes through
increased firm compliance. The following section presents a simple conceptual
framework designed to map these regulatory changes into worker outcomes and
motivate the empirical analysis methodology: I limit the sample to workers who worked
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in manufacturing and electric/ gas industries (i.e. 2 digit SIC 20-39, 49) in 1990.20 This
leaves me with a balanced panel of 3 million workers in 1990 that I track over the course
of their next 12 years irrespective of whether or not they remain with their employer,
transition outside of the manufacturing sector, or move across state lines. Earnings are
deflated by the national level CPI with the base year index as 1990.”
Analysis: I think that an easy way to respond to this argument is to simply go after the
uniqueness. If we are already seeing reductions in emissions, and we are already making strides
in green technology, then economic growth won’t have a significant impact on our efforts to
fight climate change.
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CON: Economic Growth is key to Global Leadership
Argument: Economic growth is the key to global leadership
Warrant: The U.S is again the soft power leader because its economic growth has outpaced
China and Europe in the aftermath of the great recession.
Geewax, Marilyn. “Can the U.S still lead in economic and soft power?” NPR. 10/22/12.
https://www.npr.org/2012/10/22/163387838/can-u-s-still-lead-in-economicand-soft-power
Now, with the Iraq War over and U.S. military involvement in Afghanistan winding
down, Nye says the focus may be shifting back to those other two pillars — economic
and cultural leadership.
"In the 21st century, the Iraq War caused a big drop in American soft power," Nye said.
That's because many people in other countries saw the United States as being too
aggressive, he said.
And then in 2008, when the subprime mortgage crisis hit, U.S. economic power
declined too. Before the financial crisis, "there was the idea that Americans really
knew how to run an economic system," he said. After the crisis, not so much.
But now, the wheel is turning again because both China and Europe are struggling
with economic growth.
"If you compare us with Europe's economic system, we're doing pretty well," Nye
said. "The dollar is still the safe haven."
And U.S college campuses are bolstering American soft power. "Most Chinese leaders
have a kid at a university in the United States," Nye said. At this point, America is again
the soft-power global leader "in everything from Hollywood to Harvard," he added.
Warrant: Decelerating growth can decrease soft power as demonstrated by China in 2012.
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Geewax, Marilyn. “Can the U.S still lead in economic and soft power?” NPR. 10/22/12.
https://www.npr.org/2012/10/22/163387838/can-u-s-still-lead-in-economicand-soft-power
"We still have the largest economy in the world; we are still the No. 1 export
destination; we still have lots of innovative companies, like Apple; we have the
world's reserve currency; we have a dynamic economy, with oil and gas production
increasing," Behravesh said. "We have a lot going for us," he said "We've got our
problems, but others have problems that are as bad or worse, and I include China in
that. They have had a huge deceleration in their growth."
Warrant: Recent growth has advanced U.S leadership, but the future is at risk.
Lew, Jacob. “Why US economic leadership matters.” The Council on Foreign Relations.
4/11/16. https://www.cfr.org/event/why-us-economic-leadership-matters
While the progress of the last year has helped to advance this important agenda, we
cannot take our global role for granted, and we must always think about how our
choices will affect our leadership in the future. With vision and foresight, previous
generations of Americans have provided a foundation on which to advance our values
and build a prosperous future for the United States and other countries.
Our task now is to strengthen that architecture and adapt it to new challenges. If we
come together and accomplish this, we’ll not only support today’s prosperity. We’ll also
ensure that the next generation of Americans inherits an even stronger platform for
navigating tomorrow’s economic landscape.
Analysis: For the U.S to maintain its position as a global leader, it must continue to grow in
order to avoid being overtaken by China, India, or another growing power. Economic growth
will empower the U.S. to regain the influence it may have lost over the past 20 years and
ensure our position at the table in global affairs.
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A/2: Economic Growth is key to Global Leadership
Response: The growing national debt is an even greater risk to U.S leadership.
Warrant: Debt crises have already weakened U.S leadership.
Taylor, Paul. “Analysis: U.S. ‘soft power’ takes a hit over government shutdown.”
Reuters. 10/17/13. https://www.reuters.com/article/us-usa-fiscal-worldanalysis-idUSBRE99G0QT20131017
For an administration that has focused its foreign policy on a “pivot” to Asia, the world’s
most economically vibrant region, this may be more than a momentary setback. And not
just in Asia.
Joseph Nye, the Harvard professor who coined the term “soft power” to describe a
nation’s ability to wield influence through its culture, values and governance rather
than by force, said the United States had suffered a serious blow from the shutdown.
“It’s clearly very damaging for American soft power in the sense that the reputation
for effective management of government and of the world’s reserve currency are
hurt,” Nye told Reuters.
Foreign governments and investors, from China to the Middle East, were bound to ask
whether they should hold so much of their reserves in U.S. Treasury bonds and
dollars, he said.
Obama and Congressional leaders agreed a temporary fix on Wednesday to keep the
government running until January and raise the national debt ceiling, hours before it
was set to lose the authority to borrow - a prelude to a potential default.
The president acknowledged on Thursday that the 16-day shutdown had hurt
Washington’s global position.
“Probably nothing has done more damage to America’s credibility in the world, our
standing with other countries, than the spectacle that we’ve seen these past several
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weeks,” he said in a speech at the White House. “It’s encouraged our enemies, it’s
emboldened our competitors, and it’s depressed our friends who look to us for steady
leadership.”
Warrant: The instruments of soft power are hampered by high levels of public debt.
Neu, C. Richard. “U.S ‘Soft Power’ Abroad is Losing its Punch.” US News. 1/31/13.
https://www.usnews.com/opinion/blogs/world-report/2013/01/31/us-softpower-abroad-is-losing-its-punch
This is a small example of what may be a troubling trend: America's fiscal predicament
and the seeming inability of its political system to resolve these matters may be taking a
toll on the instruments of U.S. "soft power" and on the country's ability to shape
international developments in ways that serve American interests.
The most potent instrument of U.S. soft power is probably the simple size of the U.S.
economy. As the biggest economy in the world, America has a lot to say about how
the world works. But the economics profession is beginning to understand that high
levels of public debt can slow economic growth, especially when gross general
government debt rises above 85 or 90 percent of GDP.
The United States crossed that threshold in 2009, and the negative effects are
probably mostly out in the future. These will come at a bad time. The U.S. share of
global economic output has been falling since 1999—by nearly 5 percentage points as
of 2011. As America's GDP share declined, so did its share of world trade, which may
reduce U.S. influence in setting the rules for international trade.
And it's not just the debt itself that may be slowing GDP growth. Economists at Stanford
and the University of Chicago have demonstrated that uncertainty about economic
policy—on the rise as a result of political squabbling over U.S. fiscal policy—typically
foreshadows slower economic growth.
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Investors may be growing skittish about U.S. government debt levels and the disordered
state of U.S. fiscal policymaking.
Analysis: The federal debt has already proven a substantial issue with regards to international
influence, as proven by the government shutdown during the Obama presidency. With debt on
the rise, soft power and influence are more threatened than they would be by a decline in
economic growth.
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CON: Economic Growth helps the working class
Argument: Economic growth creates beneficial conditions for lower and middle class Americans
Warrant: Economic growth alleviates poverty, increases the real wage.
Stevans, Lonnie. “The relationship between poverty and economic growth revisited.”
Journal of Income Distribution. 03/05.
https://www.researchgate.net/publication/39730431_The_Relationship_Betwee
n_Poverty_and_Economic_Growth_Revisited
From a policy perspective, as long as there is a strong negative correlation between
economic growth and poverty that is expected to last into the future, then there may be
less need for government programs that are intended to specifically reduce poverty.
Consequently, it is important to know whether past changes in the historical or longrun relationship between GDP and poverty will endure for the present and into the
future. Many of the early investigations into the “trickle-down” model of economic
growth in the U.S. have confirmed that economic growth alleviates poverty by
increasing employment and/or the real wage (Anderson (1964), Thornton, et al. (1978),
and Hirsh (1980)). Since past empirical studies have shown that growth and income
inequality are not related, sustained economic growth should have a large or more than
proportionate effect on the poverty rate by raising everyone’s income including the
poor. One of the discoveries of current research on this theme is that the economic
expansion of the 1980s did not reduce poverty significantly. Both Blank (1993) and
Formby, et al. (2001) found that poverty in the 1960s was more responsive to economic
expansion than it was in the 1980s. One explanation given was the sluggish growth of
U.S. real wages in the 1980s—real wages of low-income workers rose by only one half of
one percent during the 1980s expansion (Formby, et. al. (2001)). However, real wages
can remain stagnant while real incomes increase due to improved employment
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opportunities. Real wages increased in the 1990s expansion by only one tenth of one
percent, yet poverty declined by 3.7 percent.
Warrant: More workers are hired during periods of high growth, decreasing poverty.
Stevans, Lonnie. “The relationship between poverty and economic growth revisited.”
Journal of Income Distribution. 03/05.
https://www.researchgate.net/publication/39730431_The_Relationship_Betwee
n_Poverty_and_Economic_Growth_Revisited
An alternative hypothesis is that an increasing rate of economic growth has an
even greater influence on the reduction of poverty. The implication here is that some
workers may not be hired under normal growth conditions, but may find increased
employment opportunities during periods of high and sustained economic growth.
We have found that increases in economic growth are indeed significantly related to
reductions in the poverty rate for all families, ceteris paribus. In addition, by using an
appropriately specified error-correction model, we have shown that economic
growth has had a pronounced effect on poverty during the economic expansions of
the 1960s, 1970s, 1980s, and 1990s. This is in contrast to some previous studies that
have posited the effect of economic growth on changes in poverty to have either
declined or remained unchanged over time, e.g., the most recent being the
aforementioned analysis by Formby, et al. (2001). Our results also do not support the
contentions of previous analyses that the effect of substantial economic growth on
changes in poverty has moderated during the 1980s. During this period, the effect of
increased GDP growth on changes in poverty was 1.23 percent higher than during other
expansionary periods.
Warrant: Economic growth has reduced U.S poverty substantially throughout history.
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Ferrara, Peter. “Economic Growth, Not Redistribution, Most Benefits the Poor, Working
People, and the Middle Class.” Forbes. 11/15/12.
https://www.forbes.com/sites/peterferrara/2012/11/15/economic-growth-notredistribution-most-benefits-the-poor-working-people-and-the-middleclass/#143d134012e0
Such sustained, rapid economic growth is the ultimate solution to poverty. It was
economic growth in the last century that reduced U.S. poverty from roughly 50% in
1900, and 30% in 1950, to 12.1% in 1969. Among blacks, poverty was reduced in the
20th century from 3 in 4 to 1 in 4 through economic growth. Child poverty of 40% in
the early 1950s was also reduced by half. It was economic growth that made the
elimination of child labor possible as well.
The living standards of the poor in America today are equivalent to the living
standards of the middle class 35 years ago, if not the middle class in Europe
today. With sustained, vigorous economic growth, 35 years from now the lowest
income Americans will live at least as well as the middle class of today.
If real compensation growth for the poor can be sustained at just 2% a year, after just
20 years their real incomes will increase by 50%, and after 40 years their incomes will
more than double. If pro-growth economic policies could raise that real
compensation growth to 3% a year, after just 20 years their real incomes would
double, and after 40 years it would triple. That is the most effective anti-poverty
program possible.
Just imagine what 2100 will look like if we can keep this economic growth
going. Physicist Michio Kaku gave us an indication of that in a March, 2012 interview in
the Wall Street Journal, explaining, “Every 18 months, computer power doubles, so in
eight years, a microchip will cost only a penny. Instead of one chip inside a desk top,
we’ll have millions of chips in all of our possessions: furniture, cars, appliances,
clothes. Chips will be so ubiquitious that we won’t say the word ‘computer.’”
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Analysis: Economic growth can be the catalyst for poverty reduction. With growth comes more
hiring, increased wages, and technological breakthroughs that can dramatically improve quality
of life for the least well off. Living standards are where they are today in the U.S largely because
of the sustained periods of growth in the 20th century.
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A/2: Economic Growth helps the working class
Response: Growth won’t solve poverty, and sometimes makes inequality worse.
Warrant: Economic growth alone cannot solve poverty.
Causa, Orsetta. “Growth and Inequality: A close relationship?” OECD.
http://www.oecd.org/forum/oecdyearbook/growth-and-inequality-closerelationship.htm
While economic growth remains vital for reducing poverty, growth has its limits,
according to a new World Bank paper released today. Countries need to complement
efforts to enhance growth with policies that allocate more resources to the extreme
poor. These resources can be distributed through the growth process itself, by
promoting more inclusive growth, or through government programs, such as conditional
and direct cash transfers. In addition, the paper notes, it is imperative not just to lift
people out of extreme poverty; it is also important to make sure that, in the long run,
they do not get stuck just above the extreme poverty line due to a lack of opportunities
that might impede progress toward better livelihoods. “Economic growth has been vital
for reducing extreme poverty and improving the lives of many poor people,” said World
Bank Group President Jim Yong Kim. “Yet, even if all countries grow at the same rates as
over the past 20 years, and if the income distribution remains unchanged, world poverty
will only fall by 10 percent by 2030, from 17.7 percent in 2010. This is simply not
enough, and we need a laser like focus on making growth more inclusive and targeting
more programs to assist the poor directly if we’re going to end extreme poverty.”
Kim added: “To end extreme poverty, the vast numbers of the poorest – those earning
less than $1.25 a day – will have to decrease by 50 million people each year until 2030.
This means that 1 million people each week will have to lift themselves out of poverty
for the next 16 years. This will be extraordinarily difficult, but I believe we can do it. This
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can be the generation that ends extreme poverty.” Growth alone is unlikely to end
extreme poverty by 2030, says the paper, because as extreme poverty declines, growth
on its own tends to lift fewer people out of poverty. This is because, by this stage, many
of the people still in extreme poverty live in situations where improving their lives is
extremely difficult.
Warrant: GDP growth has been associated with growing income inequality.
“Ending poverty requires more than growth, says WBG.” The World Bank. 4/10/14.
http://www.worldbank.org/en/news/press-release/2014/04/10/endingpoverty-requires-more-than-growth-says-wbg
As OECD countries try to encourage recovery, how do growth enhancing policies affect
income inequality? Identifying the trade-offs between growth and inequality is no
simple task. True, in a majority of OECD countries, GDP growth over the past two or
three decades has been associated with growing income disparities. Recent OECD
work has shown that this increase to a large extent reflects skill-biased technological
change (OECD @ 100). However, the potential policy drivers of these changes in
income distribution–within and between countries–are less clear. To shed light on this
issue, one recent study by Causa et al. has investigated the long-run impact that
structural reforms have had on GDP per capita and household income distribution.
Analysis: Unchecked growth can be dangerous if the spoils aren’t distributed evenly across the
U.S. Over the past few decades, economic growth has not been associated with poverty
reduction because the benefits have largely been accumulated by the wealthy. As a result,
concerns of economic inequality have worsened, and the least well off in our society are even
more disempowered.
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CON: The National Debt is a Political Distraction
Argument: Debt is not a pressing issue, and it can distract from more important issues.
Warrant: Much more deserving problems are ignored because of the emphasis on the national
debt and deficits.
Krugman, Paul. “Debt, Diversion, Distraction.” The New York Times. 10/22/16.
https://krugman.blogs.nytimes.com/2016/10/22/debt-diversion-distraction/
There was a time, not long ago, when deficit scolds were actively dangerous — when their huffing and
puffing came quite close to stampeding Washington into really bad policies like raising the Medicare
age (which wouldn’t even have saved money) and short-term fiscal austerity. At this point their
influence doesn’t reach nearly that far. But they continue to play a malign role in our national discourse
— because they divert and distract attention from much more deserving problems, depriving crucial
issues of political oxygen.
You saw that in the debates: four, count them, four questions about debt from the
CRFB, not one about climate change. And you see it again in today’s Times, with Pete
Peterson (of course) and Paul Volcker (sigh) lecturing us about the usual stuff.
What’s so bad about this kind of deficit scolding? It’s deeply misleading on two levels:
the problem it purports to lay out is far less clearly a major issue than the scolds claim,
and the insistence that we need immediate action is just incoherent.
So, about that supposed debt crisis: right now we have a more or less stable ratio of
debt to GDP, and no hint of a financing problem. So claims that we are facing something
terrible rest on the presumption that the budget situation will worsen dramatically over
time. How sure are we about that? Less than you may imagine.
Yes, the population is getting older, which means more spending on Medicare and Social
Security. But it’s already 2016, which means that quite a few baby boomers are already
drawing on those programs; by 2020 we’ll be about halfway through the demographic
transition, and current estimates don’t suggest a big budget problem.
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Warrant: Debt forecasts are not as frightening as they once were.
Krugman, Paul. “Debt, Diversion, Distraction.” The New York Times. 10/22/16.
https://krugman.blogs.nytimes.com/2016/10/22/debt-diversion-distraction/
Why, then, do you see projections of a large debt increase? The answer lies not in a known factor — an
aging population — but in assumed growth in health care costs and rising interest rates. And the truth
is that we don’t know that these are going to happen. In fact, health costs have grown much more
slowly since 2010 than previously projected, and interest rates have been much lower. As the chart
above shows, taking these favorable surprises into account has already drastically reduced long-run
debt projections. These days the long-run outlook looks vastly less scary than people used to imagine.
Still, it’s probably true that something will eventually have to be done to bring spending
and revenues in line. But that brings me to the second point: why is this a crucial issue
right now?
Are debt scolds demanding that we slash spending and raise taxes right away? Actually,
no: the economy is still weak, interest rates still low (meaning that the Fed can’t offset
fiscal tightening with easy money), and as a matter of macroeconomic prudence we
should probably be running bigger, not smaller deficits in the medium term. So
proposals to “deal with” the supposed debt problem always involve long-term cuts in
benefits and (reluctantly) increases in taxes. That is, they don’t involve actual policy
moves now, or for the next 5-10 years.
Warrant: Debt distracts from more important issues like climate change.
Krugman, Paul. “Debt, Diversion, Distraction.” The New York Times. 10/22/16.
https://krugman.blogs.nytimes.com/2016/10/22/debt-diversion-distraction/
So why is it so important to take up the issue right now, with so much else on our plate?
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Put it this way: yes, it’s possible that we may at some point in the future have to cut
benefits. But deficit scolds talk as if they offer a way to avoid this fate, when in fact
their solution to the prospect of future benefit cuts is … to cut future benefits.
If you try really hard, you can argue that locking in policies now for this future
adjustment will make the transition smoother. But that is really a second-order issue,
hardly deserving to take up a lot of our time. By putting the debt question aside, we
are NOT in any material way making the future worse.
And that is a total contrast with climate change, where our failure to act means pouring vast quantities
of greenhouse gases into the atmosphere, materially increasing the odds of catastrophe with every year
we wait.
So my message to the deficit scolds is this: yes, we may face some hard choices a
couple of decades from now. But we might not, and in any case there aren’t any
choices that must be made now. Meanwhile, there are genuinely scary things
happening as we speak, which we should be taking on but aren’t. And your fearmongering is distracting us from these real problems. Therefore, I would respectfully
request that you people just go away.
Impact: Important policies shouldn’t be ignored due to the national debt.
Yglesias, Matthew. “Don’t worry about the debt.” Vox. 12/4/17.
https://www.vox.com/policy-and-politics/2017/12/4/16734856/taxes-debt-payfors
This adds up to a lot of good reasons to mostly pay for most stuff — reasons that hold
even if you're inclined to agree with Dick Cheney that Reagan proved deficits don't
matter.
But I do think it mostly supports what Republicans do with regard to the deficit (not
what they say, which is mostly nonsense) — namely that it's often good to pay for
things but lack of pay-fors is very rarely a reason to refuse to do something
worthwhile. A big green New Deal designed to massively boost the ecological
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sustainability of the American economy, for example, would be more effective if it were
paid for — through pollution taxes in the first instance, but secondarily through
general taxes — unless it were enacted in the middle of a recession. But if political
considerations or whatnot mean that the only way to get it done is to deficit-finance a
good chunk of it, that's not a reason to ignore a pressing environmental problem.
Analysis: The national debt is not the concern that it was once made out to be. While the debt
does eventually need to be addressed, placing a priority on paying it off could distract from or
potentially undermine solutions to more important issues like climate change, which obviously
has enormous impacts.
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A/2: The National Debt is a Political Distraction
Answer: Debt is a pressing concern, it can’t be pushed aside.
Warrant: It’s better to pay debts before the problem worsens or other troubles arise.
Worstall, Tim. “Paul Krugman’s Strange Argument That We Don’t Have to Worry About
the National Debt.” Forbes. 10/23/16.
https://www.forbes.com/sites/timworstall/2016/10/23/paul-krugmans-strangeargument-that-we-dont-have-to-worry-about-the-national-debt/#7131827749bc
Paul Krugman is offering a significantly strange argument about why we just don't have
to worry about the national debt. It's only projected to rise to 113% of GDP after all. The
problem here is twofold. Firstly, the projection is pretty rosy--there are a number of
assumptions which look pretty good but one that's rather missing, which is the idea that
we'll not have a recession for 30 years. The other is that Keynesian economics, and
Krugman definitely belongs in the group that favours that idea, does state that we don't
want to have an ever rising debt. Rather, fiscal stimulus is a very useful thing to be able
to do in the bad times, but we also want to do more than a bit of fiscal austerity in the
good times. No, not so that we pay back the debt, but so that we dampen out the
exuberance of the animal spirits when necessary as we also boost them when that is
necessary. The net effect being that we should be in a roughly stable position over the
business cycle with regards to the national debt.
The difficult thing now is that this is about as good as it gets. If people like Larry
Summers are to be believed that is, we've got secular stagnation. Even if we don't
want to go down that road we do know that economic growth isn't going to be stellar
into the future for demographic reasons. This is, now is, thus the time that we should
be fixing the roof while the Sun shines. And that's exactly what Krugman is
not recommending:
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Warrant: The debt crisis is not imaginary and will cause significant problems.
“Actually, Paul, the Debt is Still a Problem.” Committee for a Responsible Federal
Budget.” 8/25/14. http://www.crfb.org/blogs/actually-paul-debt-still-problem
The debt crisis is not imaginary. If left untouched, debt will reach World War II levels
within a quarter century, even assuming that policymakers turn over a new leaf of
fiscal responsibility. It would be a mistake to let that happen, and debt could be much
worse. The United States is not looking at a decade of balanced budgets and global
dominance as we did in 1946. Even though deficits are under control for the next few
years, they will not remain that way as demographic and health care pressures take
over. It would be wise to act now to phase in targeted tax and spending changes now to
put the nation's debt on a downward path over the long term.
Analysis: Debt concerns are not overblown given the long-term risk. While there are other
issues to focus on, it’s better to resolve the debt issue while the economy is strong than to wait
for a downturn or a recession to roll around and be stuck.
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CON: Economic Growth increases security
Argument: Economic growth is a crucial element of national security.
Warrant: National security and economic strength are inextricably linked.
Flournoy, Michele. Economic Growth is a National Security Issue. The Harvard Kennedy
School Belfer Center for Science and International Affairs. 5/26/15.
https://www.belfercenter.org/publication/economic-growth-national-securityissue
From the polls, one might think that a stark partisan divide has developed about which
issue is of greatest importance to the nation. Take The Wall Street Journal/NBC
News survey released earlier this month, which asked likely primary voters to name
their top two priorities for the federal government from seven options.
The top choice among Republicans was “national security and terrorism,” picked by
54%. That option placed only fourth with Democrats, who instead chose “job creation
and economic growth”—which placed third with Republicans.
The truth is that national security and economic strength are inextricably linked, and
Washington needs to pursue both. In siloed government agencies, though, they are
too often considered in isolation. America’s economy is the foundation of its military
and political power, and boosting growth helps relieve the downward pressure on
defense and foreign-affairs budgets that reduces Washington’s ability to shape
international events. With the world aflame from Syria to Ukraine, and tensions with
China rising, the demand for U.S. power is higher than it has been in decades. The
challenge today is supplying it. Perceptions of American retrenchment in recent years
stem partly from Obama administration policies and congressional dysfunction—the
sequester cuts, remember, were supposed to be so onerous that lawmakers would
never let them take effect. But equally important is that in the wake of the financial
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crisis, the country turned inward to focus on creating jobs and reducing income
inequality at home rather than sending aid and personnel abroad.
Warrant: History shows that economic growth bolsters U.S leadership and power.
Flournoy, Michele. Economic Growth is a National Security Issue. The Harvard Kennedy
School Belfer Center for Science and International Affairs. 5/26/15.
https://www.belfercenter.org/publication/economic-growth-national-securityissue
Until the rise of Islamic State in the Middle East and aggression from Russia in Ukraine,
the percentage of Americans saying that the country should mind its own business
internationally was 52%. This figure, from a December 2013 poll, was the highest ever
recorded. The sentiment was driven by pervasive war-weariness and the middle class’s
increased focus on its pocketbook. Indeed, throughout U.S. history, periods of
economic strife have coincided with America’s trimming its national sails overseas. An
internationally engaged U.S. must be an economically prosperous and confident one.
A bright economic outlook is a powerful counter to the narrative of American decline.
It boosts perceptions of U.S. leadership and thus Washington’s ability to shape and
enforce the international rules of the road, in domains as diverse as trade, maritime
security and cyberspace.
Hence the need for a bold and bipartisan international economic agenda, one that will
enhance national security in a world of growing turmoil. Such an agenda should include
several elements:
Warrant: U.S prosperity reduces threats abroad through investment and finance.
Brainard, Lael. Considering the Global Economy and Development in National Security.
The Brookings Institution. 7/24/08.
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https://www.brookings.edu/articles/considering-the-global-economy-anddevelopment-in-national-security/
Strategic leadership takes into account all the dimensions of national security—
economic and social as well as political and military. The interconnectedness of the
global economy has reached an unprecedented level, particularly with respect to
foreign direct investment and financial markets. Webs of interaction in many other
dimensions such as communications, transportation, civil society, and culture grow
denser by the day. Meanwhile, politics and policy have lagged behind, providing
insufficient focus, will and capacity to supplement and regulate market based forces
to achieve balanced and shared economic growth. This governance gap needs to be
narrowed by making relevant international institutions more effective, broadening and
deepening state-to-state collaboration, and working with the private and nonprofit
sectors on innovative partnerships and informal networks. These partnerships and
networks would provide a more balanced picture of the winners and losers from
globalization as presently structured, and would present a broader spectrum of costs
and benefits to policy makers charged with regulating the global economy.
Dramatically reducing global poverty is not just a matter of personal morality but also of
national and global security. With the global population projected to swell by one-third
in the next 20 years, with 90 percent of the increase concentrated in developing
countries, development warrants being on a par with diplomacy and defense in
overall U.S. national security strategy. Extreme poverty exhausts governing
institutions, depletes resources, weakens the social fabric, and crushes hope, fueling a
volatile mix of desperation and instability. Impoverished states are more prone to
explode into conflict or implode into chaos, imperiling their citizens, regional
neighbors, and the wider world as livelihoods are destroyed, investors flee, and
ungoverned territories become a breeding ground for terrorism, trafficking,
environmental devastation, and disease. In a vicious circle, these destabilizing effects
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of conflict as well as demographic and environmental challenges make it even harder for
leaders and institutions to promote human development.
Warrant: The U.S has the capability to use economic growth as a tool to fight terrorism.
Schramm, Carl. Litan, Robert. Stangler, Dane. “Economic Growth is Key to Our National
Security. 6/3/10.
https://www.realclearpolitics.com/articles/2010/06/03/economic_growth_is_ke
y_to_our_national_security_105818.html
We can and must do better, not just in Iraq and Afghanistan, but in countless other
poor, failed states that are already ideal petri dishes for terrorism. How?
We would modestly suggest that policy start by focusing on the formation and growth
of firms-economies, after all, are no more than the sum of the activities of the firms
that populate them. Surprisingly, Afghanistan now ranks 23rd in the world in how
quickly its citizens can incorporate a new business-it only takes a week, according to the
World Bank. This is remarkably promising, but Afghan entrepreneurs still face an array
of barriers to growth companies such as ineffective contract enforcement and the
absence of property registration (it takes 250 days to register property). Iraq fares even
more poorly in the barriers it erects to entrepreneurship-it takes 77 days to form a
business there.
We can help these and other countries fix such problems. But we need to recognize the
importance of the task and begin to have a long needed dialogue about what
Expeditionary Economics should look like.
In fact, as the conference keynote speaker, historian Niall Ferguson, reminded us, we
have no choice. China is already practicing its own brand of expeditionary economics by
buying land and mineral rights throughout Africa, giving menial jobs to Africans in the
process but not training or giving them the chance to be entrepreneurs.
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We have the most successful entrepreneurial economy in the world. One would think
that we can do better, not only by doing a more equitable job of promoting growth
and stability around the world, but in a way that is consistent with our values. That is
true national security.
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A/2: Economic Growth increases security
Response: Debt is a greater threat than economic growth in terms of national security.
Warrant: Robust defense spending will be impossible if our debt continues to rise.
Lieberthal, Kenneth. “The Real National Security Threat: America’s Debt.” The Brookings
Institute. 8/10/12. https://www.brookings.edu/opinions/the-real-nationalsecurity-threat-americas-debt/
Why is this situation so serious? First, we are headed for a level of debt that within a
decade could require us to spend the first trillion dollars of every year’s federal budget
servicing that debt. Much less money will be left for other things. That is a prescription
for a vicious cycle of underfinancing for our infrastructure, national education efforts,
science research and all the other functions of government that are crucial to long-term
economic growth. Robust defense spending will be unsustainable too. Once we get in
this rut, getting out will be very hard.
Warrant: Debt hampers our ability to respond to international threats.
Lieberthal, Kenneth. “The Real National Security Threat: America’s Debt.” The Brookings
Institute. 8/10/12. https://www.brookings.edu/opinions/the-real-nationalsecurity-threat-americas-debt/
Second, such a chronic economic decline would undercut what has been 70 years of
strong national political consensus in favor of an activist and engaged American
foreign policy. One reason the United States was so engaged through the Cold War
and the first 20 years of the post-Cold War world was fear of threats. But the other
reason was that the strategy was associated with improvements in our quality of life as
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well. America became even more prosperous, and all major segments of society
benefited.
Warrant: Debt fueled crises weaken leadership abroad.
Lieberthal, Kenneth. “The Real National Security Threat: America’s Debt.” The Brookings
Institute. 8/10/12. https://www.brookings.edu/opinions/the-real-nationalsecurity-threat-americas-debt/
Lastly, American economic weakness undercuts U.S. leadership abroad. Other
countries sense our weakness and wonder about our purported decline. If this
perception becomes more widespread, and the case that we are in decline becomes
more persuasive, countries will begin to take actions that reflect their skepticism
about America’s future. Allies and friends will doubt our commitment and may pursue
nuclear weapons for their own security, for example; adversaries will sense
opportunity and be less restrained in throwing around their weight in their own
neighborhoods. The crucial Persian Gulf and Western Pacific regions will likely become
less stable. Major war will become more likely.
Warrant: Debt has been a major national security threat for decades.
Barnett, Jamie. “The catastrophic threat to National Security: Exploding debt.” The Hill.
9/23/18. https://thehill.com/opinion/national-security/407885-the-catastrophicthreat-to-national-security-exploding-debt
The politics of division imposes an invisible cost to the Nation. Divisive politics
inherently mean that almost no common ground exists for action on issues of great
importance, and falling into the chasm between the two parties are calamitous dangers
to national security that make our actual headlines today pale in comparison. One such
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danger in the political no-man’s-land is not even being discussed, and so no one is
working on a solution: the national debt.
Almost ten years ago, Admiral Mike Mullen, then Chairman of the Joints Chiefs of
Staff, did not identify an adversary nation or terrorist organization as the paramount
threat to our country. He stated emphatically: “The most significant threat to our
national security is our debt.”
In the decade since then, the U.S. has continued to pursue two wars and other
conflicts, largely outside the budget process and with no war tax to ameliorate the more
than $5 trillion that has been spent. The Bush 43 administration had already pushed
through the Medicare Part D prescription drug program in 2003, and the Congress
declined to find the revenues to pay for it, so it was paid for by increasing the debt.
Later it was discovered that the Bush administration actually hid the real estimated
costs of $534 billion. The hidden estimate was actually low; Medicare D increased
the national debt by hundreds of billions dollars more than expected. And it was before
an unmitigated, unpaid for $1.5 trillion tax cut that will cause the deficit in 2020 to
spike, exploding the debt from the current high of $21 trillion to $33 trillion by 2028.
That’s 33 with twelve zeros behind it: $33,000,000,000,000.
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