MAGAfy the Debt

The sarcasm starts when I say it starts.

[Reminders: I am doing two events at the University of Chicago on Friday, and another event in Fitchburg, Wisconsin on Sunday. All free and open to the public. RSVP here.]

I was happy to sign the Manhattan Statement on Higher Education. Yes, I oppose all government support for education. But if government is going to fund education, it has a fiduciary responsibility to taxpayers to get good value for their money. And the Manhattan Statement is a careful effort to do precisely that.

The Trump administration’s proposed Compact for Academic Excellence is considerably less careful. Most egregiously, two of its provisions directly contradict each other. Its first provision sensibly upholds meritocratic admissions:

Therefore, no factor such as sex, ethnicity, race, nationality, political views, sexual orientation, gender identity, religious associations, or proxies for any of those factors shall be considered, explicitly or implicitly, in any decision related to undergraduate or graduate student admissions or financial support, with due exceptions for institutions that are solely or primarily comprised of students of a specific sex or religious denomination. [emphasis mine]

Its eighth provision, however, explicitly requires schools to discriminate on the basis of nationality.

[N]o more than 15 percent of a university’s undergraduate student population shall be participants in the Student Visa Exchange Program, and no more than 5 percent shall be from any one country. For schools presently over the 15 percent population, incoming matriculating classes should meet the 15 percent cap.

The rationale for the 15% foreign student admissions quota is an incoherent hodgepodge. But it starts with simple-minded protectionism: “Universities that rely on foreign students to fund their institutions risk, among other things, potentially reducing spots available to deserving American students.” On reflection, however, this is a weird form of protectionism. Normal protectionism focuses on the need to boost exports for the benefit of American workers. The Compact eccentrically focuses on the need to restrain exports for the benefit of American consumers.

An optimist might imagine that protectionists are on the cusp of finally realizing that their policies are never actually “good for Americans.” Instead, protectionist policies chaotically favor some Americans at the expense of other Americans, wreaking havoc all the while. But since I’m not optimistic about protectionists’ epiphanies, my imagination went in a more Swiftian direction.

Right now, foreigners hold about 23% of U.S. federal debt. If a 15% quota for foreign student admissions makes sense, why not a 15% quota for federal debt ownership, too? In short, why not MAGAfy the national debt? If we can say “Universities that rely on foreign students to fund their institutions risk, among other things, potentially reducing spots available to deserving American students,” why not add “Governments that rely on foreign creditors to fund their institutions risk, among other things, potentially reducing debt available to deserving American investors”?

Granted, imposing a 15% cap would require a massive sell-off of foreign-owned U.S. debt. But think of the gains to Americans, who could scoop up the world’s leading low-risk asset at rock-bottom prices. Orthodox arithmetic would lament that American taxpayers are suddenly borrowing at a correspondingly higher interest rate. Orthodox economics would add that this is a highly inefficient transfer, because the losses for the losers far exceed the gains for the winners.

Especially if you tank global financial markets with this bold move.

But are you really going to let orthodox arithmetic and orthodox economics veto a policy designed to secure dignified retirements for your fellow citizens?

Lest I be misunderstood, let me close with a quote from Homer Simpson: “Oh, look at me! I’m making people happy! I’m the magical man from Happyland in a gumdrop house on Lollipop Lane! Oh, by the way, I was being sarcastic.” MAGAfying the national debt is a inane idea. If adopted, it would probably make the Liberation Day stock market crash look like a blip. But intellectually speaking, MAGAfying the debt makes as much sense as any other cap on sales to foreigners. And the fact that you can find some Americans who benefit from the latest piece of MAGA mayhem does not change the fact that you have impoverished Americans overall.