John Maynard Trump

How the next White House could justify a debt-driven Keynesian stimulus.

- Brendan Greeley

In the James Room of the Renaissance Baltimore Harborplace Hotel, Erick Sager is demonstrating what happens when you admit that people die. Half-lit by PowerPoint, he explains that a seminal 1998 paper on the ideal level of government debt relies on an infinitely lived agent—it assumes that people are immortal.

This isn’t as crazy it sounds. A lot of macroeconomic predictions still rest on this assumption. It makes the math easier. Packed in the room with Sager are 19 Ph.D. economists from universities and government agencies, taking turns at the lectern. They’ve gathered for the annual conference of the National Tax Association. Infinitely lived agents certainly don’t sound crazy to them.

Sager, an economist for the Bureau of Labor Statistics, speaks in surprisingly plain English. He’s added to that 1998 paper, he says, “by relaxing the assumption that people are infinitely lived.” Economists call this a “life cycle” approach, and it produces a dramatically different result. Rather than hold debt, his life cycle analysis suggests governments should hold savings. For the U.S., that’s a swing on the order of $20 trillion.

William Gale from the Brookings Institution rises to respond. When you go home to your families for Thanksgiving, he says, you really ought to be able to talk with authority about the ideal level of sovereign debt. But, he laments, the research just isn’t there yet. “Better to talk about Trump,” says another economist. There’s a short bark of nervous laughter.