Baker v. Brooks

As an update to my Valentine's Day post, here is Dean Baker on David Brooks' recent column .

By 11am, Baker was addressing the NYT article on the budget by Jackie Calmes, which really was a dozy.

The NYT ran a front page article claiming a "broad agreement broad agreement among critics about Exhibit A: The unwillingness of the two parties to compromise to control a national debt that is rising to dangerous heights." The article presents no evidence to suggest a broad agreement of any sort among critics, nor does it point out that every one of the "experts" cited failed to warn of the housing bubble, the collapse of which is projected to add close to $4 trillion to the national debt.

The article then throws in the utterly absurd statement: "After decades of warnings that budgetary profligacy, escalating health care costs and an aging population would lead to a day of fiscal reckoning, economists and the nation’s foreign creditors say that moment is approaching faster than expected, hastened by a deep recession that cost trillions of dollars in lost tax revenues and higher spending for safety-net programs."

The government has small deficits and then surpluses through the second half of the 90s and into the beginning of the last decade. Only people who completely ignored the data would at that point have been issuing "warnings that budgetary profligacy, escalating health care costs and an aging population would lead to a day of fiscal reckoning." There was no basis for this concern at that time.

Baker takes aim at what seems to be his personal peeve (an appropriate peeve), namely that the experts who missed the bubble continue to be in positions of intellectual and policymaking authority, and are actively obscuring the role of the housing bubble in creating the mess in which we are currently in. When times were good, they were rewarded. When they both failed to respond to a massive housing bubble and insisted that it wasn't, couldn't be there, they continued to be rewarded (although some were briefly humbled). And now that the pieces have fallen? Yep.... still banking it. But I'm going to stress a different aspect, namely the political aspect. As Baker notes, there is no evidence of any "broad agreement broad agreement among critics about Exhibit A: The unwillingness of the two parties to compromise to control a national debt that is rising to dangerous heights."

In fact, it seems to me to be entirely the opposite: any efforts at compromising put out by the Democrats have been rebuffed, rejected, and denied by Republicans. Why? Because with a few exceptions (Bruce Bartlett... but I think he no longer considers himself a Republican), Republicans don't actually care about the deficit. Or, more precisely, they care about it, but that's not a bug it's a feature. They think a sustained deficit is a terrible thing for the country. They think that it is such a terrible thing for the country that it necessitates drastic action. And they think that this drastic action should only affect Republican priorities. That is, they want to starve the beast. And the Republican leadership recognizes that the Democrats, who want to govern with a positive agenda (as in actually have the government provide functions, not necessarily positive in their effects) are eternally screwed, because wanting the government to actually be able to do anything requires having a government that is on sound fiscal footing, whereas shrinking the government is best accomplished by making sure that sound fiscal footing is achieved at a level that would have been modest prior to the New Deal.

This is a comment about the Republican party that I am loath to make. I do not generally find sweeping claims about "the others" to be all that convincing, and they're pretty damn distasteful to listen to and, surprisingly, just as distasteful to make. I do not believe that this is the case for Republican voters as a group. I do not even believe that it is the policy preference of all Republican members of Congress. It is almost certainly not the position of Republican governors not actively positioning themselves for higher office. But I have found over the last year the theoretical model "Republicans don't care about the deficit, they only care about taxes and winning political position" to be a much better predictor of member behavior and leadership pronouncements than "Republicans care about the deficit and sincerely want to resolve the country's long term political problems."