I understand that liberals/progressives want to encourage good behavior on the President's part. Paul Krugman has made very clear that he thinks deficits are not an immediate problem and that sensible economic policy would be seeking more stimulus right now, not cuts in public spending. But he also praises Obama's deficit speech by pointing to its dramatic contrast to Paul Ryan's dystopian Republican fantasy deficit plan. (Who's Serious Now? New York Times 04/14/2011) George Lakoff, who has been calling for the President to start a more progressive messaging/framing strategy, had high praise for the message, though he evaluates it more in terms of effectiveness of advertising than of the policy substance at stake. (Obama Returns To His Moral Vision: Democrats Read Carefully! 04/17/2011)
My own lack of enthusiasm over what seems to be one of Obama's more progressive moments has to do with several things: our actual experience with Obama as President; the deficit speech itself; the live contrast presented in California by a fighting Democratic Governor, Jerry Brown; and, my disapproval of Obama's actions in the Libya War.
Obama's actual Presidential record
One is our experience with him over the last nearly 2 1/2 years gives Democrats real reason for concern. On the health care plan, his Kabuki over the public option - which was and is critical to make his private-insurance based health care reform work properly - he played a cynical game, publicly supporting the public option while making an early deal with insurance and health care lobbyists to keep it out of the plan. We could argue that it was good statecraft; but that doesn't mean we have to forget it happened. Other examples abound, unfortunately, his folding on the Bush billionaires' tax subsidy in the lame-duck session and his eagerly adopting a compromise on last week's budget deal that was far closer to the Republicans' version than his own official proposal are just two recent examples.
So it's not encouraging when Obama seemingly makes a strong defense of Medicare and Medicaid on Wednesday, but then on Thursday, Digby reports this (Obama Talked Progressive on Deficits, But Will He Walk Conservative? New York Magazine 04/14/2011):
... the president's budget director, Jacob Lew, was quoted this morning saying that Obama doesn't rule out raising the retirement age to 70 and that the administration believes "it's important that we deal with Social Security and we deal with it now." [my emphasis]Rhetoric is nice, and even important. Having the Democratic President go to the wall to defend Social Security and Medicare is more important, both in policy and politics. I want to see what the final deal looks like.
Obama and deficits
A second reason I'm restraining my enthusiasm is the Wednesday deficit speech itself. I would the speech reads better than it sounded. As David Bromwich puts it so well, Obama "has two distinct registers of diction: one for talking to very clever but abstracted people, the other for talking to well-meaning people who are very young or very old and certainly need remedial help." He was definitely in the latter mode in that speech. Despite the combative jabs at Republicans, it sounded pretty stiff. I can sympathize with Vice President Joe Biden nodding off during it.
More substantively, his description of the alleged deficit problem is poor macroeconomics. And it frames the deficit - which anyone who has been paying attention to American politics the last 30 years can see the Republican Party cares nothing about - in the terms Republicans favor when and only when they're opposing Democratic priorities:
So that’s how our fiscal challenge was created. That’s how we got here. And now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s. We have to live within our means. We have to reduce our deficit, and we have to get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, protects the investments we need to grow, create jobs, and helps us win the future.No, the economy is not on track for a healthy recovery. No, there is no urgency to pay down the national debt. No, it's not a problem if the US keeps borrowing money for years into the future, which we will have to do anyway unless there is an unlikely stretch of years where private investment draws down net private savings year after year. What difference does it make what the absolute dollar amount of the interest payment is as long as it's a reasonable percentage of GDP and doesn't actually cause economic problems? I'm not even sure how meaningful it is to say that "all this rising debt will cost us jobs and damage our economy" even when he qualifies it by saying "ultimately." Ultimately is a long time away, and current growth rates won't get the US back to pre-Great Recession levels of employment until circa 2018. In the meantime, slashing public expenditures as we are in the process of doing at the federal, state and local levels does damage the economy and may put it into a double-dip recession. No, corporations aren't currently sitting on large savings because they give a flip about the federal deficit; it's because they don't enough profitable investment opportunities in a still-stagnant economy whose recover will be inhibited by austerity economics. And, no, there is no sign that "our creditors" are about to "start worrying that we may be unable to pay back our debts."
Now, before I get into how we can achieve this goal, some of you, particularly the younger people here -- you don't qualify, Joe. (Laughter.) Some of you might be wondering, “Why is this so important? Why does this matter to me?”
Well, here’s why. Even after our economy recovers, our government will still be on track to spend more money than it takes in throughout this decade and beyond. That means we’ll have to keep borrowing more from countries like China. That means more of your tax dollars each year will go towards paying off the interest on all the loans that we keep taking out. By the end of this decade, the interest that we owe on our debt could rise to nearly $1 trillion. Think about that. That's the interest -- just the interest payments.
Then, as the Baby Boomers start to retire in greater numbers and health care costs continue to rise, the situation will get even worse. By 2025, the amount of taxes we currently pay will only be enough to finance our health care programs -- Medicare and Medicaid -- Social Security, and the interest we owe on our debt. That’s it. Every other national priority -– education, transportation, even our national security -– will have to be paid for with borrowed money.
Now, ultimately, all this rising debt will cost us jobs and damage our economy. It will prevent us from making the investments we need to win the future. We won’t be able to afford good schools, new research, or the repair of roads -– all the things that create new jobs and businesses here in America. Businesses will be less likely to invest and open shop in a country that seems unwilling or unable to balance its books. And if our creditors start worrying that we may be unable to pay back our debts, that could drive up interest rates for everybody who borrows money -– making it harder for businesses to expand and hire, or families to take out a mortgage.
Yes, Obama said nice things about Medicare, didn't offer up Social Security yet for the chopping block, and took a few good political shots at Republicans. But this deficit obsession is Herbert Hoover economics, even if it's not as toxic a version as Paul Ryan's.
Tags: barack obama, democratic party, social security, us economy
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