Friday, June 25, 2010
The deficit or unemployment--tackle which first?
The Republican Party leadership and nearly all of its members in Congress don't care about the deficit. They're only using "The Deficit" as a tool to defeat Democrats. They'll abandon it as soon as they regain power.
I'm not reading minds. Just relying on what they did when they were in power.
The Republicans in Congress--especially their leadership--have no interest in deficit reduction, except as a propaganda tool until the instant they regain power.
I don't have to be a mind reader to say this. I just have to remember what these amoral moralizers actually did--as opposed to what they said--when they controlled all three branches of government for six years.
And when they regain power, they've given us no reason to believe they won't take up where they left off: with as much government expansion as Democrats like (only in different areas), enormous tax cuts for the rich, inconsequential tax cuts for the middle class (offset by all the hidden forms of taxation Republicans have become adept at levying), and major belt-tightening for the poor--all adding up to a big ramp-up of the deficit.
They're done this pretty much every time they've gotten into power, justifying it by claiming that if we give the rich what they need to become the ultra-rich, these Masters of the Universe will deign to toss us a few crumbs.
Only they don't. In the recovery from the 2000 downturn, middle class real wages didn't go up--the ultra-rich appropriated pretty much all the increase brought about by the recovery. Turns out feeding greed doesn't satiate it--it just ramps up to take the present largesse for granted as it lusts for more...always more.
So now they're lying. Unless you believe they've had a spiritual awakening as cataclysmic as St. Paul had on the road to Damascus.
None of this means the Democrats in Congress and the White House are angels with halos. It just means that putting the Republicans back in power--even if you believe that deficits are the problem, rather than unemployment--won't get you what you want.
The problem is that cutting spending now is what our intuition tells us to do, and what Professor Krugman advocates is counterintuitive.
But we can't depend on our intuition any more than we can depend on Republican leaders (as opposed to Republican rank and file, of whom I know many, including my spouse, who I would and do trust with my life).
See, our intuition evolved to keep us safe and happy as nomadic hunters and gatherers in the highlands of East Africa 100,000 years ago. It hasn't changed since we started adapting our environment to us instead of adapting to our environment.
Go back to living as a nomadic hunter/gatherer and you'll be able to rely on your intuition. Otherwise you have to take it with a grain of salt.
And here we have to remember that no one is saying "deficits don't matter." You remember who actually said that, right? President Obama is just saying we should be spending now--in specific ways--to get us out of this slump. He never said we could or should do that indefinitely.
The Achilles Heel of the Democrats is that--even accepting liberal economists Paul Krugman's position (tackle unemployment now, then the deficit when the economy has recovered), which I generally do--government employees are generally overpaid relative to their employers in the private sector--us. And that includes unfunded pension time bombs that are starting to bankrupt cities, counties and state governments.
Democrats would do a lot to gain credibility for their position if they tackled this issue aggressively.
Oh, and to those who blame this downturn on Obama--it takes a lot less time to rob a bank than to build such an institution. And the Republicans had six years to loot the treasury, which they did with a vengeance. It will take vastly longer than that to rebuild all the regulatory mechanisms they destroyed as they looted and pillaged--like bank robbers blowing up the alarm system and the safe locks.
They may well persuade enough people that Obama did this to us instead of the Republican leadership. After all, money talks, and the Republicans' paymasters have literally billions to spend on black-is-white up-is-down propaganda.
Limitless campaign spending puts the bullhorns in the billionaires' hands. Obama was able to overcome this in 2008 through adroit campaigning, but a repeat performance will be dicey at best.