Most Democrats agree that President Obama’s biggest mistake during his presidency was attempting to get a deficit-reducing "grand bargain" with Republicans in 2011. This not only set the precedent of negotiating with an extremist party taking the nation’s full faith and credit hostage, but Obama also put sweeping cuts to Social Security and Medicare on the table. It was a bad tactic with a bad objective, and at a bad time to boot—unemployment in July 2011 was still 9 percent. The only reason the cuts didn’t go through is the extreme right of the House GOP caucus wouldn’t accept even a slight concession of small tax hikes on the rich.

Obama deserves most of the blame for this mistake. But the national political discourse was also a major contributor. As someone who was a cub reporter in Washington at the time, current complaints about the national debt don’t remotely compare to the absolute frenzy of debt hysteria that gripped elite conventional wisdom inside the Beltway after the Great Recession. After the official recession ended in early 2009, but a decade before anything like full employment was reached, analysts, reporters, and pundits from across the political spectrum had a yearslong meltdown about borrowing.

One of the pre-eminent scold organizations was the Committee for a Responsible Federal Budget (CRFB). Throughout the 2010s, they got wide play as a supposedly bipartisan organization earnestly worried about "too much" borrowing. During the 2016 election, for instance, they got four different questions put before the candidates. But today, things have changed. We still hear President Biden talking about the need to cut down on borrowing, but not with anything like the vehemence of President Obama—and he’s speaking at a time when unemployment is low and interest rates are high, rather than the reverse.

Partly as a result, the CRFB has moved into more of an open alliance with the far right, to the point where the organization is tacitly endorsing the legislative terrorism of House Speaker Kevin McCarthy and his right-wing extremist allies—deemed a "reasonable proposal," per a statement from CRFB President Maya MacGuineas.

It’s hard to exaggerate the damage CRFB-style deficit scolding has inflicted on the United States. This ideology was a core reason why the Recovery Act stimulus in 2009 was so undersized, and why practically no additional stimulus was passed. As a result, unemployment was chronically high for a decade. Growth was cut roughly in half, and as of 2019 U.S. GDP was 15 percent below where it would have been on its pre-crisis growth trajectory—meaning output greater than that of California and Virginia put together was thrown in the trash. Viable careers and economic ecosystems were ended permanently, with dire effects on social cohesion, opioid addiction and alcoholism, and no end of other social ills.

For Democrats, the failure to fix the Great Recession was politically disastrous as well, which is one reason why even many centrist liberals have wised up to the CRFB routine. It is now widely agreed in Democratic policymaking circles that the Recovery Act being way smaller than it should have been—which meant that unemployment was 10 percent on Election Day 2010 instead of 5 to 6 percent—badly worsened the ensuing Democratic defeat, which in turn helped cement a decade of Republican victories through gerrymandered district boundaries.

The Dems corrected course with the gigantic American Rescue Plan in 2021, which despite being accused of fueling inflation somewhat (the jury is very much out on that relative to supply shocks caused by pandemic and war), helped ensure full employment was restored in two years instead of a decade. This led to a much more satisfactory midterm performance.

So even while Biden mouths the usual clichés about cutting the deficit (which in fact is coming down quite fast), the CRFB must look elsewhere for a friendly hearing for their brand of extreme austerity. MacGuineas found one recently on Fox News, where she had a friendly chat with former conservative congressman Trey Gowdy about House Republicans’ debt ceiling ransom note, the Limit, Save, Grow Act, which she called "a serious plan, a solid plan." She offered that it wasn’t a "pie-in-the-sky" plan because it didn’t try to balance the budget in ten years.

This is blatantly dishonest. The House debt ceiling list of demands is a right-wing wish list. They would cut federal spending to 2022 levels and impose a nonsensical 1 percent per year growth cap (except at the Pentagon, of course), stop forgiveness of student loans, add work requirements to Medicaid and food stamps, and repeal the green-energy tax credits that are the core of the Inflation Reduction Act—not only Biden’s greatest accomplishment but the only major action the U.S. has taken to confront climate change. I guess drowning Florida is a small price to pay to make a number on a spreadsheet go down.

We see the same dishonesty in MacGuineas’s initial statement mentioned above. "The Limit, Save, Grow Act is a reasonable proposal to raise the debt limit and begin addressing our nation’s severe fiscal challenges," it reads, only to quickly backtrack: "We must not threaten default or play chicken with the full faith and credit of the U.S. dollar." This is like saying, "The Joker’s Make the Schools Laugh plan is a reasonable proposal to address fiscal imbalances in the Gotham City school district. We must not threaten to gas the children or play chicken with Batman." The entire point of the House GOP move here is to try to extract concessions by threatening national default and playing chicken with the dollar.

As a closing comment, if the budget deficit were actually a problem, then the appropriate way to solve it would be through the normal budget process (coming up in just a few months) in which the House, Senate, and president negotiate over funding levels for agencies and programs, not by one party taking the full faith and credit of the government hostage to shove their agenda through by force.

But in truth, there is no evidence that America is borrowing too much. The deficit is coming down, debt service costs as a share of GDP are only at modest levels, and in any case it’s equally dangerous to borrow too little as too much. Because the dollar is the global reserve currency, the world needs a large supply of dollar-denominated assets to lubricate the flows of world trade. If those aren’t available in the form of U.S. government debt, then market forces will work to create them by pushing up the trade deficit, which kills American jobs. America does not have "severe fiscal challenges," and there’s no reason to think it will have them anytime soon.