Saturday, April 28, 2012

Deficit spending--the Answer to Everything?

Every day in every way from today to Election Day you'll be hearing something like the following pitch.

This one came from a commentor on a previous entry in this blog. It advances the core GOP election message succinctly, wrapping noble patriotic language around a screed against deficit spending:

"...the one thing, the one word, that creates, or destroys, value [is] Confidence. Or the lack of it.

"It is the one thing that creates, or destroys, value in every conceivable financial instrument, from homes and real estate, certificates of deposit, 401Ks, bonds, T-Bills, and shares of stock. It creates or eliminates jobs throughout the economy.

"It is the actions of the President with regard to deficit spending and the national debt that creates or destroys global confidence in the U.S. economy. Successfully establish that confidence and every investable dollar on the planet will flood into the U.S. economy, fail and the results are obvious.

"Barack Obama has demonstrated fully, as far back as his days in the Senate, that deficit spending is what he is best at, he is incapable of anything else, and incapable of engendering confidence in his ability to be a responsible and competent steward of the public treasury. And, contrary to what you imply, this can be done overnight, with the first budget he delivered to Congress... but he failed.

"He MUST be turned out of office."


Wow. This is such effective propaganda. Meaning that it may well succeed.  Let's see how it works its magic.

The essence of the argument is that deficit spending is always bad, no matter what. And President Obama is a deficit spender. Therefore Mitt Romney must be elected, because Republicans are not deficit spenders. That's what they say at least.

Of course this is grotesque. First, the Republican Party is a titanic deficit spender.
 Tax cuts without corresponding spending cuts are the essence of deficit spending, and Republicans can't not do it. Look at the Ryan/Romney/GOP budget. Huge tax cuts and not remotely enough spending cuts to pay for those tax cuts, with a promise to kill tax loopholes--only without the uncomfortable specificity of actually naming a single one (while actually adding loopholes in the fine print).

The Republicans put their tax cuts for the rich (mostly), two wars & an unconditional Wall St. bailout on the national credit card, and left it to the next administration--President Obama's--to figure out how to pay for it all.

Typically, partisans point out the other side's hypocrisy in order to deflect attention from their own hypocrisy--assuming, apparently, that two wrongs make a right. Not here. One side's hypocrisy doesn't justify deficit spending. However, it does tell you that if you let them regain control of the public purse, the odds of them reining in deficit spending are small. Really, really, small. What you can be sure of is that they'll label their deficit spending "tax cuts." Along with the feds telling the states they're now on the hook for something the feds used to fund, then the states tell the counties and cities the same thing, and you're left holding the bag one way or another.

And then what if the factory chicken farm next to your farm poisons your well by letting chicken poop get into the water table? Everything you saved in the portion of the taxes you saved in the tax cut will be dwarfed by the cost of dealing with your wells no longer delivering safe water to your farm. Libertarians would say you're free to sue the chicken farm. And they're free to countersue you for harassment, and to pit their platoon of legal sharks against your Barney Local Guy working on contingency.

But even if that doesn't happen to you, the religious belief that deficit spending is bad is loony. You will have the devil of a time finding a corporation that doesn't utilized deficit spending as a business tool Ditto most American families. You bought your house and your car with deficit spending.

Ford--the company that didn't take a government bailout--borrowed $26 billion by going in hock up to its eyeballs. And that only succeeded because it has been in better shape than GM and Chrysler, both of which would have gone Chapter 7 if Mitt Romney had had his way.

Reputable economists say countries need to engage in deficit spending (within reason) in hard times, and pay back their debts in good times. They add that failure to do so--or to do so sufficiently--prolongs recessions, as has happened in Japan.

Of course well-run businesses don't splurge in down times. They do what Ford did and put their money into better products and services, not on recession-proof compensation for the executive suite. Same goes for government deficit spending.

The public expects governments to do the exact opposite: to spend like drunken sailors in good times, then tighten their belts in bad times. This feels god intuitively but it's idiotic--the equivalent of the stock trading philosophy of buying high, selling low.

So if Paul Ryan's budget were a doctoral thesis in economics at a major university, it would flunk big time.

Deficit spending is a tool, not a moral proposition. Like all tools it can be misused. Just as reflexive opposition to deficit spending misuses it.

Start at the end: "He MUST be turned out of office." This is great because it makes Mitt "Etch-A-Sketch" Romney irrelevant, which the GOP needs him to be. Independent voters MUST become convinced that it doesn't matter who the GOP's candidate is--that any GOP candidate would be preferable to President Obama. That way people don't need to pay attention to his record (apart from him having been a very financially successful businessman but pay no heed to his term as governor for some reason), or to what he actually says.

GOP eminence gris Grover Norquist put it best: he said, basically, that the only talent the next GOP president needs is the ability and willingness to sign everything a Republican Congress puts on his desk--no questions asked. No independent thinking required.

He's confident he'll get that with Governor Romney because it's evident that his only real belief is that he deserves to be the President of the United States. His religion teaches that we must be honest and aboveboard in our dealings with others, and if you read or you'll quickly realize that he doesn't think this applies to him--not in the political sphere at least.

Because the Mittster is the generic candidate: the always smiling but strangely humorless (especially when he's trying to joke) copier salesman who always looks you right in the eye and addresses you by your name over and over and over and always shakes your hand firmly but not too firmly, does his darndest to simulate being your friend and (nearly) always sticks to his canned spiel...and always asks for the sale.

Most importantly, he looks and sounds presidential--much as Warren G. Harding did, only smarter (to be honest). Especially if you don't pay close attention to what he's saying. His cadences and vocal timbre are just fine, and in broad outlines he invokes

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