Episode 117 - Aida Ramos on Debt and Spending

1. Aida Ramos, Ph.D., is an associate professor of economics at the University of Dallas. She returns to TSSM, in this episode recorded early in the week of January 4, 2021, to discuss Catholic perspectives on United States policy efforts to stimulate the economy.
2. During the discussion, Bill recalled a class he took at the Princeton School of Public and International Affairs that outlined a rigorous process of federal budget management. It included multiple annual authorization and appropriations bills covering various agencies and governmental functions. He could not remember immediately the name or previous budget-leadership role of his professor from those years as a student, but he commented in general that, over time, the discipline planned for maintaining quality control over program specifics via this legislative routine gave way to habits of less regular and detailed Congressional oversight on specifics of spending.
3. Ramos noted that the Citizens United case decided by the US Supreme Court in 2010 had a major effect on campaign finance which in turn greatly increased the influence of corporate lobbyists over Congressional decision-making and thereby contributed to changes in legislative practices regarding federal budget management. The multi-trillion-dollar spending bill passed by Congress in late 2020 offers examples of how management rigors, at least as they maintain a focus on common-good and fiscal-responsibility duties, changed in ways that lessened Congressional and White House priorities integrating social justice into year-end spending plans; concerns about the primacy of addressing broad, basic needs of the population, as described by goals of solidarity and subsidiarity in Catholic social thought, have not been served by enactment of policies like tax deductions for the so-called “three-martini lunch.” That policy, which economists judged to be primarily a benefit for the wealthy, favors spending practices seen in corporate and lobbying circles, Ramos said.
4. The need for responsible approaches to economic management within government is an area of profound moral concern that has arisen consistently present and past policy-making. Different policy actions, including the Covid-19 relief legislation, which is separate from the aforementioned multi-agency spending bill, represent differing approaches to deficit spending in the federal budget. Deficit spending can be justified during an economic crisis if it is limited and focused fairly on necessary remedies and investments. But the US has run up deficits in various years when they were not necessary, and the national debt has exploded. The need to pay interest on the national debt to investors squeezes out spending that could go toward meeting urgent needs such as food and poverty relief in the general population. This again raises concerns through the lens of Catholic values about human dignity and the preferential option for the poor.
5. The major tax cut passed during the Trump administration had components that added hugely, unnecessarily, and unfairly to the deficit, Prof. Ramos said. A morally informed discussion about taxation has to be conducted among Americans to help influence government decision-making in legislation like this.
6. An absence of responsive and responsible fiscal policy, legislated by Congress, has required more action by the Federal Reserve in recent years, taking the form of quantitative easing. This is monetary policy, whose technicalities can stir misguided fears among people. One bottom line in the different forms of policy-making is the need to serve the common good and human dignity; actions which support the economic stability and participation of families and households at the local level are an example of the Catholic call to respect subsidiarity as a means toward solidarity, Prof. Ramos said.
7. Pope Francis has been outspoken about the need for populations to respect Catholic social values like these in policies and relationships widely and consistently. Certain budgetary responses to Covid-19 relief for people  are in keeping with the Pope’s call. The application of a moral lens to budget management that meets public needs is nothing new; indeed, the field of political economy arose out of moral philosophy, a connection personified by Adam Smith, according to Prof. Ramos.