Who’s Afraid of the Budget Deficit?

Democrats shouldn’t put themselves in a fiscal straitjacket.

On Thursday, the best House speaker of modern times reclaimed her gavel, replacing one of the worst. It has taken the news media a very long time to appreciate the greatness of Nancy Pelosi, who saved Social Security from privatization, then was instrumental in gaining health insurance for 20 million Americans. And the media are still having a hard time facing up to the phoniness of their darling Paul Ryan, who, by the way, left office with a 12 percent favorable rating.

There’s every reason to expect that Pelosi will once again be highly effective. But some progressive Democrats object to one of her initial moves — and on the economics, and probably the politics, the critics are right.

.. The issue in question is “paygo,” a rule requiring that increases in spending be matched by offsetting tax increases or cuts elsewhere.

You can argue that as a practical matter, the rule won’t matter much if at all. On one side, paygo is the law, whether Democrats put it in their internal rules or not. On the other side, the law can fairly easily be waived, as happened after the G.O.P.’s huge 2017 tax cut was enacted.

But adopting the rule was a signal of Democratic priorities — a statement that the party is deeply concerned about budget deficits and willing to cramp its other goals to address that concern. Is that a signal the party should really be sending?

.. Furthermore, there are things the government should be spending money on even when jobs are plentiful — things like fixing our deteriorating infrastructure and helping children get education, health care and adequate nutrition. Such spending has big long-run payoffs, even in purely monetary terms.

Meanwhile, the federal government can borrow money very cheaply — the interest rate on inflation-protected 10-year bonds is only about 1 percent. These low borrowing costs, in turn, reflect what seems to be a persistent savings glut — that is, the private sector wants to save more than it’s willing to invest, even with very low interest rates.

Or consider what happened after Democrats enacted the Affordable Care Act, going to great lengths to pay for the additional benefits with tax increases and spending cuts. A majority of voters still believed that it increased the deficit. Reality doesn’t seem to matter.

.. Anyway, the truth is that while voters may claim to care about the deficit, hardly any of them really do. For example, does anyone still believe that the Tea Party uprising was a protest against deficits? From the beginning, it was basically about race — about the government spending money to help Those People. And that’s true of a lot of what pretends to be fiscal conservatism.

.. In fact, even the deficit scolds who played such a big role in Beltway discourse during the Obama years seem oddly selective in their concerns about red ink. After all those proclamations that fiscal doom was coming any day now unless we cut spending on Social Security and Medicare, it’s remarkable how muted their response has been to a huge, budget-busting tax cut. It’s almost as if their real goal was shrinking social programs, not limiting national debt.

.. So am I saying that Democrats should completely ignore budget deficits? No; if and when they’re ready to move on things like some form of Medicare for All, the sums will be so large that asking how they’ll be paid for will be crucial.

A Vice President With Few Virtues

A tough new Dick Cheney biopic is triggering some conservatives. Have they learned nothing?

So instead, I am summoned to a more urgent, if distasteful, task: to try and explain why anyone in the conservative movement (or anywhere else) would want to normalize Dick Cheney—let alone flat-out cheer for him. After all, this was a man who left office with an approval rating as low as 13 percent.

.. That’s lower than Richard Nixon when he resigned, lower than Jimmy Carter when he was replaced by Ronald Reagan. It’s as low as Herbert Hoover during the Great Depression and as low as Barack Obama among Republicans and conservatives.

Even today, Hillary Clinton and Donald Trump both have triple the approval ratings that Cheney left office with.

.. To plagiarize what Andrew Sullivan famously said about Hillary, anyone with Cheney’s destructive track record towards his own movement should have been drummed out “under a welter of derision.”

.. We don’t have to be “ordered” to remember and revere historical figures like Reagan, MLK, and JFK, or be shamed into doing so. But who the heck did Dick Cheney ever benefit outside of the corporate-crony one percent?

  • What small, non-monopoly business did he ever give a chance to grow?
  • What did he do to improve our schools and police?
  • What did he do for balanced-budget conservatism, as he overruled Alan Greenspan and his own treasury secretary, gloating that “deficits don’t matter”?
  • How did Cheney make us more secure, with Iraq and Afghanistan all but ruined, Iran and Syria feeling stronger every day,
  • and ISIS having wrought its destruction—and with Osama bin Laden still livin’ large for two-and-a-half years after Cheney retired?
  • How do you defend someone who literally went to the Supreme Court to keep the minutes of his infamous 2001 energy task force meetings secret (they were co-chaired by Kenny-Boy Lay during the height of Enron’s rape of California’s power grid),
  • while at the same time suggesting the outing of a truly top secret CIA agent (Valerie Plame) just to get revenge on her journalist husband?
  • How did Cheney uphold Ronald Reagan’s mantra of curbing big government excesses when he justified warrantless surveillance and straight-up torture?
  • And what lasting benefit did Dick Cheney bestow on the conservative or Republican brand, with Barack Obama winning the biggest landslides since Reagan and Bush Senior?

It was my respected colleague Kelley Vlahos who solved the mystery of why some members of the Beltway press just can’t quit Cheney: “because they still won’t admit that the war was wrong.” Bingo. Expecting the U.S. to export insta-democracy to decidedly non-Western cultures? Putting overwhelmingly Christian and Jewish “viceroys” in charge of historically Muslim nations? Gee, what could possibly go wrong…

.. As chilling and thrilling as Christian Bale is as Dick Cheney, perhaps no scene in Vice is as squirmy as Richard Dreyfus’s impersonation of Cheney in Oliver Stone’s W., when he stands in front of a CGI map in the War Room and smirkingly announces, “There is no exit strategy. We STAY!” (If that scene didn’t actually take place, it might just as well have.)

.. Still, there are scenes in Vice that come close. For a biopic about a man who defined the adage “personnel is policy,” it’s fitting that director Adam McKay, who has a strong comedy background, chose actors who are known for being funny just as much as for their work in dramas. Those include Sam Rockwell as George W., Tyler Perry as Colin Powell, and Steve Carell as Donald Rumsfeld. (Reuniting Bale and Carell also indicates that McKay rightly sees Vice as an unofficial prequel to his financial meltdown dark farce The Big Short.) Like the aforementioned W., McKay’s Vice is a sometimes frenetic, sometimes eerily calm black comedy satire. And like Josh Brolin in W., Sam Rockwell plays George Jr. as an easily played and comical doofus. There’s no doubt in this film as to who the real president was from December 2000 to the end of 2008

.. Watching Bale as a terse, leering, manipulative young reactionary as he grindstones and plays people against each other from the late ‘60s to his Bush-Cheney heyday, one is struck by his shameless entitlement. Cheney uses movement conservatism and old boy connections as his own Uber. If Christian Bale is a slim and athletic man trapped in a fat and ugly body, Cheney sees himself as the Richelieu or Machiavelli of his own real-life movie, trapped just one step behind the real decision-makers—until he finally gets that chance to ride his horse from Aqueduct to Santa Anita.

.. The other key role among these garbage men is Amy Adams’ take-no-prisoners performance as Lynne Cheney. Mrs. Cheney had the straight-A brains and Ph.D.-level drive to be a powerful judge or executive in her own right, and was, according to Adams, a better “natural politician” than her husband. But as a card-carrying member of the Phyllis Schlafly/Anita Bryant/Beverly LaHaye-era Right from rural Wyoming, Lynne had less than zero plans to transform herself into another bra-burning icon. Instead, “she lived her [considerable] ambitions through her husband,” as Adams said. Adams even added that compared to the iron-fisted Lynne, her husband Dick might have been the “velvet glove”!

.. And as these Cheney-rehabilitating articles prove, Lynne wasn’t the only one who got off on Dick’s raw exercise of power and privilege. Watching Dick Cheney at work must have been intoxicating for a Dwight Schrute or Montgomery Burns in his small pond, for someone who coveted the kind of vulgar bullying power that Cheney wielded. It was no accident that Stephen Bannon famously and semi-humorously put Dick Cheney in his own hall of heroes, behind only Darth Vader and Satan, citing Cheney’s peerless talent at “disrupting” established orders.

.. Sorry, I’m just not there for conservative writers infantilizing Cheney and going all triggered snowflake at what big meanies the Hollywood libr’als are being to him. Christian Bale said it himself: “[Cheney’s] a big boy…he says himself he has no remorse, no regrets, he’d do everything again in a minute.” Exactly.

The Trump Boom Is No Mere ‘Sugar High’

The latest liberal spin is that the economy is on a “sugar high” from deficit-financed tax cuts and spending hikes. When the rush wears off, they warn, watch out for a crash landing. It’s true that in fiscal 2018 the budget deficit swelled to nearly $800 billion, or about 4.2% of gross domestic product. But the Bureau of Economic Analysis estimates that the economic “contribution” from extra government spending added only 0.23 percentage point to growth in 2018. So even without all the budget bloat, the economy would still be growing well above 3%.

.. The same BEA data confirm that this year’s growth comes predominantly from a boom in production and investing—particularly in construction, manufacturing, and oil and gas development. While the housing market is weak, consumers are spending more as their wages rise.
.. The real contradiction in the “sugar high” argument is that it ignores the slow growth of the Obama years, which featured an avalanche of debt spending. Deficits as a share of GDP were 9.8% in 2009, 8.6% in 2010, 8.3% in 2011 and 6.7% in 2012. Where was the sugar high then? Instead of the expected burst in output coming out of the 2008-09 recession, borrowing more than $1 trillion a year for four years yielded the worst recovery since the Great Depression. Even excluding 2009, Mr. Obama’s deficits averaged more than 5% of GDP throughout the rest of his presidency but produced less growth than Mr. Trump has with lower deficits.

This wasn’t what Keynesians expected. Mr. Obama’s economic team predicted 4% growth every year coming out of the recession. Instead the “sugar high” from record peacetime deficits produced measly 2% growth. By 2016 GDP was running about $2 trillion below the trend line of a normal recovery.

The fastest growth rate over the past three decades was recorded in Bill Clinton’s second term, when federal government spending fell from 21.5% to 18% of GDP and deficits disappeared into surpluses. So much for the idea that deficit spending is a stimulant.

Mr. Trump’s fiscal policies have produced more growth than Mr. Obama’s because they were designed to incentivize businesses to invest, hire and produce more here at home. The Obama “stimulus,” by contrast, went for food stamps, unemployment benefits, ObamaCare subsidies, “cash for clunkers” and failed green energy handouts.

.. Massive government spending blitzes don’t produce “sugar highs” or anything like them. Even some conservatives erroneously argue that military spending stimulates the economy. But as Milton Friedman said, the government can only put money into the economy that it first takes out.

.. Those pushing the “sugar high” fallacy also don’t realize that the Trump tax cuts aren’t going away soon. The 2017 business tax cuts can’t cause a recession in 2019 or 2020 because they don’t expire until 2025. They aren’t sugar pills.

The biggest threats to the economic boom and financial markets today are a deflationary Federal Reserve and the specter of a global trade war. Solve those problems and the American economy can keep flying high on its own power. And Mr. Trump’s critics will be proved wrong again.