-- Posted by Neil H. Buchanan
In my FindLaw column this week, I describe the worrisome opportunism of some of the leading progressive commentators regarding the politics of deficits. With the Obama-Republican tax bill becoming law, it has become all too tempting for people like Rachel Maddow and Keith Olbermann to become committed deficit hawks. And really, if you were looking for a good situation in which to oppose a policy's effect on the deficit, the tax cuts for the rich (both income taxes and estate taxes) are Exhibit A. There really are bad ways to increase the deficit, and this is a great example.
My problem is that this short-term fun -- not only attacking the bad policies, but pointing to the Republicans' utter hypocrisy about deficits -- feeds the narrative that deficits are bad, bad, BAD. Not just these deficits, but all deficits. And that is not just false, but it is false in a way that completely undermines the progressive agenda. Public investment and counter-cyclical policies require deficit spending. Saying, "Look, everybody! The Republicans are doing a bad thing by increasing deficits," is self-defeating.
It is not, however, always a bad idea to point to the other side's hypocrisy. The idea of "judicial activism" has been effectively defanged by pointing out that Republicans love judicial activism, as long as it is hyper-conservative judicial activism. Saying as much does not feed a narrative that uniquely undermines the Democrats' long-term interests. A good liberal can defend Roe v. Wade and condemn Alden v. Maine with equal vigor, and there is nothing lost in that debate by all sides agreeing that there is something bad about judicial overreach. Those who like Roe can argue that it was not overreaching, and those who like Alden can make their arguments. Calling the other guys hypocrites is fun, and it does no strategic damage to either side.
Not so with deficits. In my FindLaw column, I mention a recent segment on Rachel Maddow's show, in which she tied the Chinese government's boycott of the Nobel Peace Prize ceremonies (a boycott currently being joined by something like 18 other countries) to China's supposed power over countries that owe money to China. She concluded that it was "intolerably gross" for the U.S. to owe money to China. The next night, after I wrote my FindLaw column, Keith Olbermann had a segment on his show in which he also talked about how bad it is that we are running deficits financed by the Chinese government. (Apparently, there is also a move afoot to determine how much of the debt is held by the Saudis. Yeesh.)
Much to my surprise and delight, however, Olbermann's interviewee Chris Hayes (of The Nation) pointedly disagreed with that narrative, pointing out that China holds less than one trillion dollars of the thirteen trillion in gross debt. Wall Street banks, in fact, hold the largest chunk of the federal debt. This is still not the real point, but it was at least nice to see someone put the numbers in perspective. The bigger issue is that owing another country a trillion dollars does not give them power over us. They can threaten to dump bonds on the open market, but the Fed could buy them up and stabilize the market overnight. The Fed would not even have to buy the entire amount of bonds held by the Chinese government, because the Chinese would have no reason to continue to dump the bonds if their putative goal of destabilizing the US economy was not being achieved. Even more importantly, the Chinese have no good reason to harm our economy: We are their best customers.
But back to the issue of lefty commentators going astray on economic policies. "The Daily Show" recently ran a piece on the evils of creating money "out of thin air," and all that nonsense. Keith Olbermann also sat attentively through an interview with David Stockman in which Stockman made the same ridiculous argument.
I realize that Jon Stewart claims not to be in the same game as Olbermann and Maddow, but he is frankly deluded about that. His show does exactly what the MSNBC shows do; but he has better jokes. When he peddles patently inane arguments about economics -- like the idea that creating money is illegitimate -- that is a problem. (He also has a blind spot about federal spending, with a peculiar inability to say the world "trillion" without making it seem like an unimaginably large -- and dangerous -- number.)
In the past, I have criticized Democratic politicians for this very sin. Listening to Obama talk about the importance of "fiscal responsibility" -- and making it clear that he is using that phrase as a synonym for deficit reduction -- makes my skin crawl. Yet the pundits are different from the politicians. Obama and his party need to worry about re-election, after all. (These days, Obama really needs to worry about re-election.) As much as I find it regrettable, political reality does require Democrats to make anti-deficit noises. I do believe that they could do so in a more careful way, identifying the problem as "bad deficits," not all deficits. Still, they clearly have strong reasons to be worried about violating the conventional wisdom.
This is also true of the pundits, I suppose. They need to be seen as credible; so they would risk something if they were to adopt positions that are viewed as simply loopy. That constraint, however, does not require anyone to do what Stewart, Maddow, et al. are doing. There is nothing forcing them to make stupid comments about China, or to attack the new tax bill from an orthodox perspective. They could easily take the time to deal with nuance, or at least to avoid bumper-sticker arguments that are simply embarrassing.
Part of the problem is that none of these people actually know what they are talking about, when it comes to most economic issues. Smart non-economists like Stephen Colbert and Keith Olbermann are ultimately flailing when they get to these issues. Economics training is neither a necessary nor sufficient condition to get these things right. (Former Senator Phil Gramm, after all, had a Ph.D. in economics.) Still, one cannot help but suspect that economics coverage from these progressive commentators suffers from their presumption that they can fake it. Clearly, they cannot.