Deficit Hawks Skew Fiscal Debate
By Michael Kaufman
More than a year has passed since Tea Party members of Congress and fellow Republicans forced the deal that some say has now brought the country to the edge of a fiscal cliff. That was when House Speaker John Boehner (R-OH) smiled like the Cheshire Cat and said, “When you look at this final agreement that we came to with the White House, I got 98 percent of what I wanted. I’m pretty happy.”
Boehner and the Republicans turned a deaf ear to a plea by 300 economists and policy analysts who had warned months earlier that the U.S. economy is at a crucial juncture. While acknowledging that public debt is mounting, they posed a choice of two different paths to address the country’s economic woes: imposing fiscal “austerity” (in the midst of the most serious downturn since the Great Depression), or investing in the economy with public spending over the short term to help grow our way out of the red ink.
“This is about a high road to recovery versus a low road to fiscal balance,” said Robert Kuttner, a senior fellow with Demos, a New York-based think tank dedicated to “a more equitable economy” with opportunity for all. “All of us want reduced deficits at some point. The question is: what is the proper sequencing, and what is the proper analysis of cause and effect?
“You get the recovery first,” he continued, and that requires increased public investment, and then the road to fiscal balance is much less arduous because people are working, businesses are investing and tax revenues go up because you’re in recovery.”
Robert Borosage, co-director of the Campaign for America’s Future, agreed. “We live with falling bridges, collapsing sewers, decrepit schools, aged gas lines and much more,” he noted. “Everyone agrees we have to rebuild an aging and outmoded infrastructure, and there’s no better opportunity to do so than now—interest rates are low, construction workers are idled, and anyone with a whit of business sense would grab this moment to launch a major project to rebuild America.” Borosage might well have added that if business is not up to the task, there is precedent for the government doing so….and with great success at that. It was called the New Deal.
Borosage contrasted his view with Boehner’s goal of cutting billions of dollars in discretionary spending at a time when consumers are already “too maxed out” to create the demand needed to get the economy back on track. “There can be no clearer statement of the divorce between ideology and basic good business sense.”
Kuttner pointed out that the public discourse around these issues has been skewed by conservative ideologues. “There’s been a huge investment in influencing public opinion on the part of fiscal conservatives who are also long-standing philosophical opponents of social insurance,” he explained.
Dean Baker, co-director of the Center for Economic and Policy Research, agrees. The common storyline, he said, is that “we have an out-of-control government and out-of-control government spending.” But, according to Baker, “it’s very easy to show that this has almost no plausible relationship with the deficits we’re facing.” He attributed the deficits to President George W. Bush’s unfunded tax cuts, bloated defense budgets and an economic downturn that has the American economy operating at a level 10 percent beneath its potential capacity. That view, presented in September 2010, was repeatedly echoed by President Obama during his 2012 campaign for re-election. Why do we even have to be talking about this now?
(Thanks to Joshua Holland, editor and senior writer at AlterNet, for the information presented here. Holland is the author of The 15 Biggest Lies About the Economy (and Everything else the Right Doesn’t Want You to KnowAbout Taxes, Jobs and Corporate America.)
Michael can be reached at michael@zestoforange.com.
Tags: Center for Economic Policy Research, Dean Baker, Demos, John Boehner. Robert Kuttner, Joshua Holland, Michael Kaufman, Robert Borosage
