The Economy Links Debate: Pay Up, Uncle Sam

The next in my four-part series on Economics covers the economy link debate for the coming season, roughly will social services for people living in poverty help or hurt the US Economy?

Right up front, let me admit that I can't possibly cover every meaningful economics debate you are going to have this year, even as a novice. As the year progresses, smart negatives will find specific, nuanced stories of how affs ruin the economy, and affirmatives will develop specfic, nuanced link turn stories of how they save it. That being said, many debates this year will center around two negative link stories, so we'll start with the generics.

This year's topic calls on affirmatives to increase social services, which in most cases means increaed federal spending. The federal goverment as we know it needs to spend money to function, but for the past 10 years the federal government's debts (via spending) have grown faster than their ability to repay them (via taxes and other revenue), a situation we call a budget defecit.

If you or I want to spend money that we don't yet have, we have many different options. Depending on the situation we could take out a loan from a bank, borrow from family or friends, seek investor capital, or use a credit card. But when the federal government wants to spend more than it makes, it can't just reach for its American Express card. The government uses a more technical system called a Treasury Bill. Roughly, a treasury bill is a government I.O.U. given to an investor in exchange for cash up front. Treasury bills are usually very low interest loans, but they are useful because they are highly likely to be repaid. Uncle Sam is good for it.

The fact that Uncle Sam is good for it means that many investors are attracted to "buy" government debt, including businesses and governments in other nations. These foreign investors form a symbiotic relationship with our government for now. But there is some worry that if the federal government stretched its budget too far, it would scare these foreign investors off. If Uncle Sam suddenly doesn't seem so reliable, you might stop investing in new treasury bills or worse, try to "dump" them for less than you paid. The government would not be able to finance its current committments and would have to either raise taxes or make cuts to spending that is already promised. This would be disastrous for the US Economy.

So if you are a negative team, you might argue that there is an invisible threshold of spending that triggers this collapse, and that the aff's new spending pushes us over it. This is a popular story (often the first disad that new debaters learn) but it has some serious problems to overcome. The most glaring is that the government has just spent on the order of a Trillion Dollars in attempt to prevent an economic depression - if that didn't trigger an economic collapse, then a few billion here and there for social services shouldn't matter, should it? Coming up with answers to basic objectives like these are an important step for negatives that want to win on spending disads.

Though the behavior of government has a major effect on the economy, it is not the only economic factor worth considering. The majority of "the economy," after all, is made up by businesses. Though the decisions made by your local grocery store won't bring widespread success or ruin on their own, the aggregate behavior of the larger business community matters. Are businesses investing in new equipment, entering in new markets, and hiring more people? This is usually the key sign of economic success. Businesses only take these risks if they are likely to see a return on their investment. Debaters generally phrase the likelyhood of businesses to take risk on new investments as business confidence.

So, if you owned a business, what could the government do to make you less confident? That list will be different for different businesses, but "take away my market" would surely be high on the list for all of them. For example, if I made money by providing broadband internet access to individuals, I might not like it if the government started providing my product to people for free. Even if the government targets people who wouldn't otherwise be able to afford my services, the notion that net access is something you should get "for free" instead of paying your local cable company is surely detrimental to my long-term business model. This is the kind of policy that might make me reconsider hiring a bunch of people to lay new cable lines.

Regulation is another common point of contention between business and government. Right now, health insurance companies base their pricing model off of denying people with pre-existing conditions. If the government told all insurance companies that they had to cover anyone who wanted coverage, they might not like that.

Lucky for the aff, almost anything that hurts one business (or one type of business) helps another. Broadband companies might not be enthused if people got free broadband, but Google and Amazon would love it if a few million more people showed up on the internet tomorrow. Health insurance companies might not want to compete with the government to provide health care, but I can think of a few major companies that might like it if their employees had easier access to cheap healthcare. And the businesses that would have the largest effect on the US economy are not always the same ones that lobby the hardest to congress.

In addition to the tit-for-tat answers to the popular negative link scenarios, strategic affirmatives will come up with independent ways that their plan helps the economy. This year, many of those stories will revolve around the "hidden costs" of poverty. For example, even though many in the United States don't have adequate health care coverage, they still do occasionally show up at a hospital needing life-saving treatments. In fact, their lack of insurance makes them less likely to visit a doctor regularly and more likely to end up in the emergency room, where they receive expensive treatments for which they are unable to pay. There is some debate over exactly how large this problem is, but widespread health insurance would save costs, and might be a net positive for the economy.

These are the tools to get started, I look forward to writing a follow-up later in the season explaining all the new tricky link scenarios debaters have managed to craft.