Bruce Bartlett on Debt Default
Tamny is not an isolated crackpot; reputable conservative economists have been writing sympathetically about the idea of default for decades. These include Nobel Prize-winning economist James M. Buchanan, whose 1987 essay, “The Ethics of Debt Default,” defended the morality of default on the grounds that deficits weren’t financing public capital but current consumption, with the bills being passed on to future generations.
Other prominent conservatives who have been favorable, even enthusiastic, about debt default include Murray Rothbard, Dan Pilla, Jeffrey Rogers Hummel, and Christopher Whalen. In 1995, then House speaker Newt Gingrich publicly warned the Public Securities Association that he was prepared to default on the debt unless Bill Clinton acceded to Republican demands for budget cuts. “I don’t care what the price is,” Gingrich said.
Where to start? I can see Bruce’s claiming Jim Buchanan as a conservative. But anarchists Murray Rothbard and Jeff Hummel? The term “conservative anarchist” doesn’t exactly roll off the tongue. More important, though, is that by calling Tamny a crackpot, and then saying he’s not isolated, Bruce seems to hint that the rest of the people he cites are crackpots too. He doesn’t quite say it and so preserves deniability. Incidentally, Jeff Hummel has made his case at Econlib for why there’s a substantial probability of default.
Notice something else. By focusing on the sanity, or lack thereof, of those with whom he disagrees, Bruce avoids saying whether default is good or bad. He writes:
My purpose today is not to make the case against default or explain all of its ramifications.
But shouldn’t it be? Some of us see default as one of the few ways left of reining in federal spending. Indeed, Bartlett quotes Tamny’s claim that it would reduce federal spending. Is Bartlett denying this? He doesn’t say. Bartlett has argued elsewhere that, however desirable it might be to cut government spending, the large federal government is here to stay. That’s why he advocates higher taxes. But if Bartlett is willing to call people “crackpots” for advocating default, shouldn’t he at least make somewhat of a case against default?