Fiscal Policy and Governance: "No, No, No! First Loot, Then Burn..." Revisited
Greg Sargent sends us to Barack "Unraed" Obama, who is off message:
Obama makes his case to the left: If you are a progressive, you should be concerned about debt and deficit just as much as if you’re a conservative. And the reason is because if the only thing we’re talking about over the next year, two years, five years is debt and deficits, then it’s very hard to start talking about how do we make investments in community colleges so that our kids are trained. How do we actually rebuild $2 trillion worth of crumbling infrastructure.This is backward, and wrong.
If you care about making investments in our kids, and making investments in our infrastructure, and making investments in basic research, then you should want our fiscal house in order so that every time we propose a new initiative, somebody doesn’t just throw up their hands and say “more big spending, more government.”
It would be very helpful for us to be able to say to the American people: “Our fiscal house is in order. So, now the question is, what should we be doing to win the future, and make ourselves more competitive, and create more jobs, and what aspects of what government’s doing are a waste, and we should eliminate.” And that’s the kind of debate that I’d like to have.
What Obama should have said if he wanted to stay on message:
If you are a conservative, you should be even more concerned about reducing unemployment and speeding growth right now than if you are a progressive. And the reason is that rapid economic recovery is the only thing that could materially reduce the burden of the debt over the next one, two, or three years. Policies adopted to reduce the deficit will largely fail without a strong recovery.
So if you care about reducing the burden of the debt in the future, you should care very much today about making investments in our kids, making investments in our infrastructure, and making investments in basic research to boost the long-run growth rate of the American economy--and you should care most of all about using active expansionary fiscal, monetary, and banking policies to boost aggregate demand, because without strong demand growth we will not get the strong revenue growth needed to reduce the deficit.
It would be very helpful for us to be able to say to the American people: "We in Washington care most that you have jobs and have secure jobs. You have seen that we do so by our success in rolling up our sleeves and getting down to work and dealing with the unemployment and demand crisis in a bipartisan manner. Now that we have solved our short-run unemployment crisis, we can turn to dealing with the longer run problem of putting our fiscal house is in order.
It is true that right now Washington is talking about dealing with the deficit and not about boosting the recovery. In large part that is my fault: I made a premature pivot from fighting unemployment to fighting the deficit in early 2010 because I did not listen attentively enough to my economic forecasters and to the risks that they outlined. Those risks have come home to roost.
I am sorry.
I hereby pivot back. The state of the bond market and the extraordinary confidence that global investors have in the U.S. Treasury tells me that the major step we took in the Affordable Care Act to reduce our long-run health-spending government deficit problem was worthwhile, and that dealing with the rest of our long-run fiscal dilemma can wait until 2013. What cannot wait until 2013 is an unemployment rate stuck at 9%.
I hereby pivot back from dealing with the deficit to dealing with jobs.
Sunday, July 17, 2011
Brad DeLong on Barack "Unraed" Obama
Cited in full: