There must be something in the local water that leads Missouri Democrats to wail and figuratively rend their garments over the question of deficits and the national debt. It also often leads them to support what can only be described as stupid policies. Claire McCaskill worked hard to establish her me-too, “bipartisan” fiscal credentials by embracing the very bad idea of a balanced budget amendment. Jason Kander, who hopes to join her in the Senate next year, drew gasps of horror from many potential Democratic supporters when he jumped on that same bandwagon. We’ll soon see how far it will carry him.
Showing that he’s on the cutting edge of Missouri deficit thinking, Chuck Raasch, a political columnist at the St. Louis Post-Dispatch, revived the Oh-dear-me-the-deficit-is-looming! refrain in a column published today (9/3), which dealt with the responses of the two presidential candidates when asked to describe what they would do to reduce the deficit (yearly overspending) and manage the nation’s debt (the sum of past years’ deficits).” Raasch was disturbed by what he considered the failure of either to adequately address the issue. In the case of Donald Trump, who, as Raasch points out seemed to confuse the trade deficit with the federal spending deficit, most rational people would agree.
As for Hillary Clinton, Raasch seems to think that while she proposes tax reform to generate new revenue, she fails to address what he calls the “eat-your-peas challenges,” presumably spending cuts to programs like social security and Medicare, the necessity of which Raasch seems to think has been indisputably established. He also gives short shrift to Clinton’s implicit claim that directing the new tax revenue to infrastructure and education spending would generate deficit-shrinking growth. In short, Raasch evaluates her answer on the basis of the bill of goods Republicans have been hawking since the dawn of modern political time.
First off we should get our facts straight. Deficit spending is not necessarily the problem alarmists want us to think it is. Lots of economists, liberal and otherwise, are emphatic that our current yearly deficits are not excessive when viewed as a percentage of GDP, nor is the national debt potentially unmanageable.
Among those who hold these views are widely respected economists like the Nobel prize winner Paul Krugman who is actually arguing that now is the time to increase the deficit. Nobel prize winner Joseph Stiglitz believes that there is a long-term debt problem although he has definitively rejected the “eat-your-peas” solution. (He famously described anti-debt, European austerity programs as a “suicide pact” – a description that seems prescient as austerity-raddled EU economies stall.) Neither are industry economists inclined to worry about current deficits. Business Insider notes that Scott Brown, chief economist at the investment firm Raymond James has argued that the current deficit rate of %2.5 of GDP is easily sustainable and goes even further, asserting that warnings about the long-term dire effects of the national debt are overstated.
Many of these same economists would also endorse the deficit reducing effect of the proposed Clinton program of progressive tax reform combined with economic programs designed to lessen economic inequality. Although this program leaves Raasch unimpressed, it is very suggestive of the remedies proposed by economists like Stiglitz and Brookings economist Henry Aaron who remarks that:
Many analysts, from both political parties, agree that the federal government should do more now to spur economic growth and that it should simultaneously take steps to lower projected long-term deficits. Republicans and Democrats often don’t agree on the details. But here is one illustrative strategy that economists from both parties have endorsed. The first element is increased investment in what is called ‘infrastructure’—meaning roads, bridges, tunnels, harbors, and airports. Many are in need of repair, replacement, or expansion. Furthermore, interest rates are abnormally low just now, which means that borrowing is unusually inexpensive. When interest rates are low is the best time to undertake long-lived investments. Carrying out those repairs and improvements would put people to work now and improve productive capacity in the future. So would increased support for scientific research and increased spending to support post-high-school education of those who cannot now afford it. These measures would promote economic recovery right now and boost U.S. productivity in the future.
Hillary isn’t necessarily evading the “eat-your-peas” issues, she just has a different perspective than the false economic orthodoxy sold to journalists like Raasch.
Raasch, like our other Missouri Democratic Sistren and Brethren mentioned above, is a victim of what Greg Sargent has described as the “Beltway Deficit Feedback Loop” in which “the relentless bipartisan focus on the deficit convinces voters to be worried about it, which in turn leads lawmakers to spend still more time talking about it and less time talking about the economy” – the real economy, that is, the economy in which the deficit is a rather minor consideration and the growth of the national debt is an easily managed problem.
And why is this feedback loop so prevalent? To paraphrase Mount Holyoake College professor Douglas J. Amy, it has provided the GOP with an issue to help fan resentment against government and against their Democratic opposition. Additionally, it is a tool that can be used to fight progressive programs that the GOP has long opposed such as Medicare and Social Security.
What’s sad is the fact that the deficit chorus is endlessly echoed by otherwise competent journalists like Raasch and that otherwise astute politicians like McCaskill and Kander have so easily succumbed. But we can still be happy that we have a presidential candidate who declines to sing the same, sad old song.
*Edited slightly for clarity, 9/4, 10:29 am.
[This article has been cross-posted to Occasional Planet under the title, “Hillary has a progressive view of the deficit and national debt. [They’re different, by the way.]”]
[For a more comprehensive discussion of Hillary’s economic policies and the concomitant debt reduction strategy see my later post, “More on Hillary Clinton’s approach to federal spending and debt.”]