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Republicans claiming to represent fiscal conservatives signed a pledge not to raise taxes, though even conservative economists such as Alan Greenspan are adamant that continuing the Bush tax cuts for the uber-wealthy is irresponsible and indefensible. Those who decry the national debt, and exaggerate its significance, have proven that they are also unwilling to maintain a revenue stream capable of paying it down.
Economist and Money Manager Zachary Karabell (http://en.wikipedia.org/wiki/Zachary_Karabell) writes in the November 8 issue of Time Magazine, echoing what 2008 Nobel Prize winning Economist Paul Krugman and many others have long maintained, that the populist Tea Party obsession with debt is not only misguided, but economically and fiscally self-destructive (http://www.time.com/time/magazine/article/0,9171,2028095,00.html). “Whatever the Tea Party says, we haven’t mortgaged our future. We’ve endangered our present.” The national debt “isn’t excessive. On a relative basis the federal debt burden has hardly changed over the past 20 years. In fact…, the percentage of the federal budget spent servicing the debt has actually decreased…. [I]n 2009, net interest payments on the debt decreased from the year before, and the overall percentage the U.S. pays to service the debt (currently less than 3% of GDP) is lower than it was in the late 1980s and most of the 1990s.”
Karabell also tackles the currently popular Right-Wing mythology that New Deal stimulus spending prolonged The Great Depression, another step in the gradual revisionism of historical fact, moving from the long-held accurate recognition that The New Deal stimulated enormous economic growth (see The Economic Debate We’re Not Having) but failed to end The Great Depression due to Roosevelt’s compromise with fiscal conservatives in 1937, sending the economy back into a downward spiral (rescued by the massive public spending project called “World War II”). Prior to The Great Depression, he notes, “the orthodoxy of austerity and budget cutting hobbled the world and led to a decade of deflation and depression.”
Ironically, despite the enormous success of stimulus spending in avoiding the complete economic collapse that we were teetering on the edge of two years ago (see How Do We Stop The Insanity? for a discussion and link to a graphic depiction of how effective the stimulus bill was at turning around the growth in unemployment from rising at an accelerating rate to rising at a decelerating rate), “rational argument about (debt and deficit) is as rare as levelheaded discussion of sex and religion” (see “Political Fundamentalism”, comprised of the unholy trinity of “Constitutional Idolatry”, Liberty Idolatry, and Small Government Idolatry, for a discussion of the reasons for the similarity).
Karabell goes on to describe how the “simple narrative” of the Tea Party, “as economic policy…is the 2010 version of what the blind, rigid bankers of the 1920s and ’30s offered –and it will sink an already leaking ship.” “Debt is simply a cost,” Karabell emphasizes, “a powerful tool when properly used…. [W]ise fiscal policy–focused on investment—is a spark plug when activity sputters…. [A]ny business leader will tell you that you can’t cut your way to prosperity.”
As I’ve frequently repeated, there are legitimate debates to be had. A minority of economists (adherents of The Chicago School, which has been eroding for decades due to accumulating countervailing evidence) disagrees with Karabell and Krugman, and their analyses should not be dismissed out of hand. But neither, certainly, should the majority view of economists and historians, whose narrative, better informed and better reasoned than the popular Tea Party narrative, insists that this populist push for austerity is going to cripple rather than save our economy. The risk that those who know what they’re talking about might be right, and those who don’t might be wrong, is not a risk that rational people should take lightly.
As Karabell writes, “our children and grandchildren will not praise us….” They will reproach us for “running scared,” echoing President Obama’s apt characterization of the choice we now face: “A Choice Between Our Hopes and Our Fears”.
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The none-too-liberal Denver Post reported today that “even conservative-leaning budget and policy analysts said the Republican blueprint, as drafted, would lead to bigger, not smaller, deficits and that it did not contain the concrete, politically difficult steps needed to alter the nation’s fiscal trajectory.” (http://www.denverpost.com/nationworld/ci_16159864). You know you’re in trouble when your pseudo-economic mantra to shrink government, lower taxes, and reduce regulation is rejected even by that minority of professional economists who are ideologically inclined in your favor.
Alan Greenspan, no mamsy pamsy nanny statist by any stretch, had already publicly said that the continuation of the Bush tax cuts to the super-wealthy is counterproductive and economically indefensible at this juncture. Not even Republican shills (at least those with an iota of integrity) can support the economically irresponsible, politically pandering and cynical attempt by the Republicans to wrest political power from those who, you know, are actually trying to govern the country.
Even by the narrow measure of short-and-medium-term economic efficiency and robustness, the Republican policy fails. Add in its complete indifference to long-term economic sustainability (by, for instance, mitigating global warming), distributional justice (by, for instance, ever-more insistently advocating policies which continue to concentrate ever-more wealth in ever fewer hands), and human welfare in general (by, for instance…, well, everything they stand for), and you have failure on an epic proportion, failure that will reduce our children and their children to suffering victims of a dumb ideology successfully imposed on a complacent and complicit society.
As I’ve said before on this blog (The Economic Debate We’re Not Having: http://coloradoconfluence.com/?p=247), there are legitimate and necessary debates to be had over how much and what kind of public spending, under what conditions, serves our long-term interests, and how much and what kinds harm our long-term interests, all things considered. And certainly, one of the principal things to consider is the effect it has on the robustness of the economy. I’ve linked to an op-ed piece by a Harvard economist and public policy expert who argued, in a remarkably balanced and level-headed analysis, that there’s little or nothing government can do to stimulate job creation (http://coloradoconfluence.com/?p=325); to an academic paper by another professor of economics at our own University of Colorado who argued that those public investments in public goods that are supplementary to private goods have the largest (non-keynesian) multiplier (http://coloradoconfluence.com/?p=247&cpage=1#comment-14); and to an op-ed piece by the 2008 Nobel Prize winner in economics, who railed against Republican Mitch McConnell for resorting to political extortion to hold much-needed middle-class tax relief hostage to clearly fiscally irrational tax breaks for the super-wealthy (http://coloradoconfluence.com/?p=415).
I’ve argued myself that few argue that The Great Depression wasn’t definitively ended by the most robust, public debt-creating public spending project in human history: America’s participation in World War II, as the arsenal of the free world. I’ve yet to hear anyone explain how public spending can be so inefficacious, when it was so resoundingly effective in that case.
Be that as it may, that’s the kind of debate responsible leadership should be having, rather than this economically, socially, and politically destructive sloganeering, spreading false certainties like a plague through the land, such that sweet old grannies are now spewing them today just as some sweet old grannies spewed racist epithets in generations past.
Even the free-market advocate Economist magazine noted in this weeks issue that the Tea Party “constitutional idolatry” which is paraded out as the political philosophical justification for this mantra, is “infantile” (http://coloradoconfluence.com/?p=525). When the most highly respected market oriented magazine in the world calls the ideological underpinnings of a movement that claims to be the defenders of liberty “infantile,” in a chorus accompanied by conservative economic and policy analysts stating that the GOP plain actually increases rather than reduces our deficit, you know that reason is in decreasing supply at that end of the ideological spectrum.
It’s time to grow-up, folks; or move aside, and let the grown-ups do the serious business of governing ourselves wisely.
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