Thursday, October 25, 2018

No, the Deficit is Not Suddenly an Important Issue; but Yes, the Republicans are Hypocrites (at Best)

by Neil H. Buchanan

The federal budget deficit is one of those handy political issues that never stays out of sight for very long, because it is too tempting for demagogues to exploit it.  It has the simultaneous advantage of seeming to be self-evidently important yet too difficult to truly understand, making it easier simply to say that "borrowing is bad, and deficits are hurting our children and grandchildren."  If ever there were a political Q.E.D., there you have it.

To make matters worse, this is the go-to subject that ignorant pundits use to prove that they are not merely political hacks.  "Hey, I know that we argue about political issues, but every serious person knows that at some point we must all come together to deal with those horrible deficits.  Debt will destroy us all!"  There are so many examples of that kind of statement by people who know next to nothing (or literally nothing) about economics -- but who have positive reputations among liberals, such as Fareed Zakaria -- that I stopped collecting links to such nonsense years ago.  Such talk is usually little more than background noise.

Because of all of that, and even though I wrote my dissertation on fiscal deficits, I try to avoid talking about the subject as much as possible.  There are still times when it is necessary to write about it, of course, such as then-candidate Trump's appearance on Stephen Colbert's show three years ago.  There, apparently referring to gross federal debt, Trump said: "You know, when you get up to the 24 trillion . . . 23 . . . 24, that’s like a magic number. ... They say it’s the number at which we become a large-scale version of Greece, and that’s not good."

Other than Trump's typical "they say" deflection, the standard-issue response from Very Serious People is to point out that the gross debt has gone from $18.2 trillion to $21.7 trillion in the three years since Trump displayed his ignorance about that issue. See?  It's out of control!  Again, that is based on nothing more than the vague certitude that debt is bad, but who cares when a pundit is having fun sounding sober-minded?  (And please do not get me started down the road of explaining again why gross debt is a meaningless number, even if one were to assume that debt is important.)

Occasionally, Democrats try to call out Trump and the Republicans for hypocrisy on debt/deficit issues, but because the Republicans are always willing to be hypocrites and voters are worried about other things, that has gone nowhere.  Recently, however, Senate Majority Leader Mitch McConnell said something revealing about Republicans' political uses of the deficit.  Even more surprisingly, there was some interesting commentary in response.

Responding to the news that the deficit had gone up after the 2017 Trump/Republican tax cuts (thus once again disproving the zombie claims about tax cuts paying for themselves), McConnell immediately (and predictably) tried to shift the subject to those dreaded "entitlements": Social Security, Medicare, and Medicaid.  McConnell knows that this will get the attention of all self-serious chin strokers, and he made the most of it.

McConnell said: "[I]t’s not a Republican problem.  It’s a bipartisan problem: unwillingness to address the real drivers of the debt by doing anything to adjust those programs to the demographics of America in the future."  This led to an understandable outcry by non-Republicans, who correctly noted that McConnell had revealed his party's deep desire to cut or eliminate these essential social insurance programs.

E.J. Dionne, a Washington Post columnist, provided an accurate take on McConnell's political agenda, referring to Republicans' "deficit two-step."  Step one is to run up the deficit with tax cuts. Step two is to use that as an excuse to cut social insurance programs.  (Dionne would hardly claim to be the first to notice this, of course.)

But of course the Post's fact-checker engaged in his puzzlingly persistent defense of Republicans (and McConnell in particular) by calling Democratic Senator Sheldon Whitehouse a four-Pinocchio liar for saying that Republicans are trying to "get rid of Medicare, Medicaid and Social Security."  The fact-checker wrote that Republicans have never literally proposed to repeal those programs, so Whitehouse is lying.  "That’s not what McConnell said. In fact, he did not even say the Republicans hoped to cut those programs."

Right, and the Republicans' history of trying to begin to privatize Social Security under George W. Bush, Paul Ryan's proposal to convert Medicare into a voucher program (but still call it Medicare), and Republican governors' refusal to accept the Medicaid expansion in the Affordable Care Act -- which Republicans came within one vote in the Senate of repealing outright, which would have taken Medicaid away from about 20 million people -- means nothing.  McConnell did not in that interview say that he wants to eliminate the three programs completely, so Whitehouse is a big fat liar.   Yeesh.

Unlike the fact-checker, Dionne is not naive, and the larger point in his column was that inequality (driven in large part by regressive tax cuts) is bad for the economy.  Good for him.  Even so, he addressed his final comments to "honest deficit hawks":
"Please face up to how right-wing policies are doubly damaging to national solvency. They raise deficits by reducing revenues. But they also endanger us by aggravating inequalities that themselves imperil sustainable budgets and a growing economy."
This, again, is that old familiar safe-centrist approach.  Dionne concedes what he takes to be an obviously true point, which is that deficits are "damaging to national solvency."  But it is not even clear what that he thinks that means.  The U.S. government can never be insolvent so long as it issues debt in its own currency (which it continues to do, and savvy financial players buy it up eagerly, even though they are being paid historically low rates of return).  There is no sign of a "debt crisis," but a liberal columnist at least implicitly says that there is.

Dionne's fellow Post columnist Paul Waldman (one of the few op-ed writers who is always worth reading) wrote a much more insightful response, pointing out that McConnell did not not merely reveal a two-step but actually laid out a more diabolical plan.  In saying that those horrible deficits were the fault of Social Security, Medicare, and Medicaid, McConnell then said that Republicans are nonetheless not willing to cut them because voters like them.  So any attack on those programs can only be "bipartisan."

As Waldman explained, this means that McConnell is literally not currently proposing any cuts (which is where the credulous fact-checker takes solace) but is instead saying that total control by Republicans is not sufficient for them to do what they think is right for the country.  They will only do unpopular things if Democrats put their fingerprints on them, too.

But of course, Democrats should never do that, and not for crass political reasons.  In New York magazine, Eric Levitz wrote one of the best articles that I have seen in a long time about these issues, pointing out that there is simply no reason to buy McConnell's Very Serious claim that the aging population will force us to impoverish more of our senior citizens or take away what little we provide to poor people.

Levitz provides a fascinating graph showing that this year's combined costs of the Trump tax cuts, the extended Bush tax cuts, spending on wars, and defense spending above Clinton-era levels add up to more than this year's total budget deficit.  He also notes that if demographics are the issue, the U.S. can attract young, hard-working people to support all of those retirees.  (Even that is not necessary, due to increased worker productivity, but that is not pertinent here.)  We call that immigration.

We can, in other words, easily deal with the costs of the three important social insurance programs.  But as Waldman points out, McConnell's real message was that, if Republicans ever lose another election, they will immediately put pressure on Democrats to cut "out of control spending" on both discretionary programs and on Social Security, Medicare, and Medicaid.  If Democrats foolishly agree, the Republicans will immediately run attack ads saying that Democrats "want to take away your Medicare," or whatever.

To be clear, the Republicans really are hypocrites about the deficit and debt.  They also truly do hate Social Security, Medicare, and Medicaid, precisely because those programs show that Big Government can effectively deliver some measure of financial security to large numbers of people.  McConnell did not say that Republicans will immediately introduce legislation to cut or eliminate those programs.  He said that he and his partisans will continue to pretend that those programs are the reason that the debt is rising but that they will only deal with the supposed deficit problem by entering in bad faith into a death pact with Democrats.

The Democrats include too many people like Dionne, who concede too much.  But I still have reason to hope that they are not foolish enough to fall for McConnell's gambit.

1 comment:

  1. If you are a fiscal conservative -- if that actually is your thing, not something else -- the Democrats are the party for you. Obviously, imperfect, but at least nationally (state practice probably is split though willing to accept it leans this way too) the Democrats have been the sound economy party here. In fact, people think they are too conservative in some ways (e.g., concern of the "pay as you go" principle).

    If you support social conservative policies or less regulations or tax cuts for the wealth etc., economically, the Democrats might not be for you. But, though money was never my thing (including having it tbh), from my understanding for years now Democrats have been the sane ones here. I don't know how long this has been going on though probably (given the realities of the situation -- Reaganomics fiscally was unsound; voodoo in fact) at least from the 1980s probably.

    Sanity and truth-telling, however, sadly are only so useful in winning elections.

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