The day has come. In just a few hours, I and 15 of my classmates will take part in a public debate on President Obama and Governor Romney’s foreign policy strategies. We are split up into two teams of eight and have been studying their policies inside and out. This debate is also our midterm and is worth 30 percent of our grade. Two surrogates – one from each campaign – are coming down to moderate the debate and it will also be streamed online here. The debate runs from 5:30 – 7:30 and for those on campus, it’s in Von Canon in the Bryan Center.
Category 2012 Election
It’s Immoral NOT to Spend Money on Infrastructure Now
Here’s Mitt Romney on reducing the deficit from the debate last night:
I think it’s not just an economic issue, I think it’s a moral issue. I think it’s, frankly, not moral for my generation to keep spending massively more than we take in, knowing those burdens are going to be passed on to the next generation and they’re going to be paying the interest and the principal all their lives.
And the amount of debt we’re adding, at a trillion a year, is simply not moral.
President Obama didn’t object to this at all and instead demonstrated a commitment to reducing the deficit. They’re both wrong.
We need to spend a lot of money rebuilding our infrastructure across the country – $2 trillion in total. If we put it off, the next generation will have to pay for it. If we do it now, the next generation will have to pay for it too. Our deficits aren’t going down over night and the next generation is inevitable going to either face higher taxes or reduced spending on programs. Either way, the next generation will have to pay to redo our decaying infrastructure. But, they’ll pay less if we do it now.
Here’s why:
We have to repair our infrastructure soon.
Right now, the rate on U.S. Treasuries is really low. So low, in fact, that when you account for inflation, people are actually paying us to keep their money. The current rate for a 1-year Treasury is 0.18%. That means that if you buy a 1-year Treasury at a $100 face value, the U.S. will take the $100 now and pay you $100.18 next year. But that $100.18 really is worth less than that because a year has passed and its purchasing power has decreased because of inflation. The current CPI, the most commonly used measure of inflation, from the Bureau of Labor Statistics is 1.7%. Let’s be generous and call it 1.5%. That $100.18 in 2013 is the equivalent of $98.51 in 2012.
Now, if the U.S. government took $100, held on to it and then gave you back $100.18, that would be dumb. It would lose money there. But, what if the U.S. took that $100 and bought $100 in infrastructure improvements? In a year, those improvements are still worth $100 (2012 dollars). but the government is only paying $98.51 (2012 dollars again). The government just made a profit!
Normally, when the U.S. borrows money, the interest rate is greater than inflation. Imagine if the 1-year Treasury rate was 3%. Now, the U.S. government is paying out $103 in 2013, worth $101.48 in 2012 dollars. In that case, the government loses money.
That’s how the real rate of inflation works. Right now, most U.S. Treasuries have a negative real rate of inflation. In the future, this will almost certainly not be the case. If we delay these infrastructure improvements until the next generation, they will have to pay for them with Treasuries that have a positive real rate of inflation. Instead of profiting on the infrastructure improvements, the next generation will be losing money. But they won’t have a choice. Our roads and bridges will be deteriorating so much that we will have to make those improvements and accept the losses.
By not spending money on infrastructure repairs now, we are making the next generation spend more. That’s what is really immoral. (Image via)
Debate Reaction
Everyone basically agrees: Romney won last night’s debate convincingly and the poll numbers seem to show it.
If I had to sum up last night’s debate in one word, it’d be boring. Each candidate talked for 3+ minutes at a time, spouting out a long list of talking points and numbers, and moderator Jim Lehrer just had no control of the debate. But, I think that’s a big victory for Romney.
One of the biggest criticisms about Romney is that his policies are vague. Last night, his policies did not come off as vague. Instead, he offered just as many numbers and direct answers as Obama did, if not more. That’s a big win. For the many Americans there who keep hearing that Romney doesn’t have specific policies or his numbers don’t add up, he answered those questions.
On top of it, Obama just kind of gave up. As many people have said, he was on the defensive throughout and his body language from the beginning was poor. His head was down most of the time and he nodded as Romney listed off his rebuttal, even at times saying “yea.” In contrast, Romney was assertive, strong but didn’t come off as arrogant. Yes, his smirk when Obama spoke wasn’t great but I don’t think it was too bad.
But I really do think it was just a bad debate. The candidates spoke for way too long at a time and it was just impossible to follow. Lehrer challenged them on just about nothing and had no command over the conversation. Issues melted together. Just from watching it, I doubt that many people could truly follow Romney and Obama’s arguments. They were actually too wonky. But that was entirely a result of the structure of the debate. Each answer should have been much shorter. Lehrer should have butted in and asked for specifics or pushed the candidates on different topics. The incredibly broad questions allowed the candidates to go off on long tangents. He should have asked specific, fact-based questions that candidates responded to specifically and quickly. He could have facilitated a quick back and forth on something, like…housing! Of course, housing was never mentioned. Neither was immigration. Those are two pretty huge issues but there was nothing on them.
All and all, a big Romney victory. He has to keep the momentum going and tomorrow’s job numbers are extremely important. Obama really needs some good news to pivot away from his debate performance. We’ll see tomorrow.
Danny Vinik 