Early Groundhog Day for Democrats: Deficit Pandering

-- Posted by Neil H. Buchanan

The big news of the week is the special election in Massachusetts to fill the late Edward M. Kennedy's seat in the United States Senate. It would not have been big news if a Democrat had held that safe seat; but a Republican won the seat in a shocking upset. The early consensus is that independents in the commonwealth are outraged by out-of-control government and thus sent a message to Obama and the Democrats to stop doing what they are doing. Chances are good that this is nonsense, but for the purposes of the argument here, it only matters that D.C. insiders think that it is true.

One of the most prominent items on this much-discussed "government out of control" list is budget deficits. Budget deficits are proof, we are told, that Washington cannot get its house in order. Budget deficits are bad. Budget deficits harm our children and grandchildren. Budget deficits weaken our international competitiveness. Budget deficits give us dandruff and fallen arches. If our politicians will not stop the deficits, then we must get new politicians. It's pitchfork time again!

It does not matter at all that none of those indictments of deficits are true, or that budget deficits are necessary and in general better than balanced budgets. Everyone believes that deficits are bad, so they must be bad. How long has "everyone" known this? Actually, only for about 16 years. Until Bill Clinton decided to stop defending the value and importance of deficits, it was still respectable in Washington to note that fiscal responsibility is not in any way correlated to balanced budgets.

Regular readers of this blog know that this is familiar territory for me. (Among many examples, see this FindLaw column from last summer and my Dorf on Law posts discussing that column, here and here). The Democrats seem unable to stop themselves from trying to use the balanced budget mantra in their favor, even though doing so prevents them from doing what they really should be trying to do in governing the country. When they have not only failed to make the case for deficit spending but have enthusiastically castigated deficits as the root of all evil, what do they expect people to do when deficits go up?

On Wednesday, I happened to watch a post mortem on the special election on The Rachel Maddow Show. The guest was Debbie Stabenow, a liberal Democratic U.S. Senator from Michigan (a state that currently is clinging to life only because of deficit-financed federal spending). Stabenow's first talking point was that George W. Bush and Republican Congresses had run up huge deficits, so Democrats should not be blamed for this bad situation. Maddow did not challenge Stabenow's presumption that deficits are bad.

Will they never learn? Rather than finally realizing that they have helped Republicans build a faux-populist bonfire against truly responsible economic governance, Democrats go straight to blaming Republicans for this "bad" thing called budget deficits.

This is even worse than the first presidential debate in the Fall of 2008, in which John McCain announced that he would respond to the then-accelerating economic free-fall by cutting government spending. As I argued at the time, McCain's proposal would be the economic equivalent of "bleeding out the excess humors" from a human patient, as was common medical practice through the beginning of the 19th century. (Unsurprisingly, a lot of people died from blood loss.) Barack Obama merely smiled serenely and failed to challenge the premise.

Now, rather than simply agreeing silently with a crazy Republican talking point, the Democrats are reinforcing the craziness. As always, this has its short-term appeal. Trying to tell people that deficits are not per se evil -- and are, in fact, an important part of both short-term and long-term strategies for economic prosperity -- is outside of the current (and always narrow) realm of "thinkable thought" in Washington. The pundits would go crazy.

Similarly, when Bill Clinton rolled over regarding deficits in 1994, I spoke with an economist friend who frequently advised Democratic politicians. He agreed that it was unfortunate that Clinton had felt it necessary to embrace a bad idea, but he pointed out that the Democrats were still spooked by Ross Perot's surprisingly successful anti-deficit populist appeals in the 1992 election. The Democrats were simply inoculating themselves against being seen as pro-deficit.

And here we go again.