On last Thursday's Wall Street Journal op-ed page, Daniel Henninger penned a piece titled "It's the Spending Stupid," in which he touted that slogan as a sign of the times. And sure enough, that very day I saw two bumper stickers with that slogan on them. According to Henninger, tea partiers and Americans more broadly have been concerned for a long time about "the federal-spending balloon," with the concern boiling into rage quite recently. I think Henninger is probably right--at least superficially--about most of the tea partiers but quite wrong about the broader point.
Here's the heart of Henninger's case:
The most important and startling number in American politics today is Congress's approval rating: 23%. This is a no-confidence vote. The second branch of government is losing the country. Surely it's about the spending. What else? That Congress hasn't spent enough?In a word: Yes. When it mattered most, Congress didn't spend enough. In order to get to 60 votes in the Senate in 2009, the Obama Administration proposed a stimulus package that was substantially smaller, and contained less in the way of direct government spending, than leading Keynesians thought necessary. They warned at the time that this could be the worst of both worlds: A stimulus too small to jump-start the private sector would through its inadequacy be used as evidence that stimulus doesn't work. And this is indeed more or less what happened, leaving the White House and Congressional Dems to argue that things would have been much worse without the stimulus, which is probably true, but not a great political selling point.
If Congress had enacted a larger stimulus in early 2009, and if it had worked in the way that Krugman, Stiglitz, et al thought it would, then the public would not be in a throw-the-bums-out mood. How do I know? Because there is actually good evidence for the original aphorism that "Spending Stupid" uses for its riff. That, of course, was the reminder Bill Clinton set for himself and his staff in 1992: "It's the Economy, Stupid." Based on a mountain of data, Clinton knew that what voters care about above all else is their economic wellbeing. That was true in 1992 and there's no reason to think it's not still true in 2010.
So why do people say they care about spending as such? I would divide public opinion into two groups: 1) Some substantial fraction of the core of the tea party movement are long-time conservative ideologues who simply oppose government spending. 2) The great mass of the American public, including those who think they are angry about government spending, are understandably angry about having lost or fearing loss of jobs, nest eggs, and homes, but have seized on spending as the butt of their anger, without any clear understanding of what exactly TARP, the stimulus, healthcare, and various other measures adopted in the late Bush Administration and the Obama Administration do or why. Both the Obama Administration and the news media share some of the blame for this state of affairs--the former for not clearly and repeatedly explaining their economic policy, and the latter for not reporting on these matters in a way that makes them accessible to the public.
The wonder of it all is not that so many people are currently in a state of confusion. That's understandable because Keynesianism is quite counter-intuitive: We got into the Great Recession as a result of a decade of personal and national spending that we couldn't afford, subsidized through low interest rates made possible by borrowing from abroad. It's odd that the way out of the resulting downturn is more of the same, except that it's true--up to a point anyway. But when demagogues and ideologues suggest that a stimulus bill in 2009 and a health care bill in 2010 (which they deliberately conflate with TARP and bailouts in late 2008) caused the economic bust that preceded these legislative events, they are saying something at once preposterous (absent time travel) and appealing to those not paying close attention: borrowing to spend is unsustainable.
Against this backdrop, the true wonder is that American voters appear to be quite sensible over the long run: They may express a preference for reduced spending or for lower deficits but their revealed preferences are for modest, sustainable deficits. But of course that is over the long run, and as long as we're talking about Keynes, it's worth recalling what he said about the long run.