Why the Democrats should get over deficit phobia (the Republicans did long ago!)

Ryan Grim interviews economist Stephanie Kelton, Bernie's Economist Explains Why We Can Actually Have Nice Things [Part 1] TYT Investigates 03/02/2018:

Bernie's Economist: Student Loan Forgiveness Will Boost Economy [Part 2] TYT Investigates 03/06/2018:

See also my related post: Describing Modern Monetary Theory 02/23/2018

The establishment Democrats' conservative instincts

A number of considerations are shaping my understanding and expectations of the this midterm election year:

• Democratic primaries are critically important for the direction of the party and whether or not the intensity gap with Republicans will be reduced. If progressives do well and a few conservative Dems like Diane Feinstein in California lose to progressive challengers, that will be an excellent sign on the policy and intensity fronts.
• The "out" party that does not hold the White House typically loses Congressional seats in midterms.
• Polls are showing a good likelihood that Democrats will retake the House in this year's elections. ( Seth Masket, A House forecast holds good news for Democrats Vox 02/12/2018)
• October will almost certainly see a flood of sexual harassment allegations of varying degrees of substance against Democratic candidates as a result of the Senate Democrats' hasty defenestration Al Franken under the Gillibrand Standard ("We should not have to be explaining the gradations between sexual assault, harassment and unwelcome groping.")
• Ginning up a war can give a President a burst in popularity. (See: Iraq, Invasion of, 2003)
• Even aside from the unique features of the current occupant of the Oval Office and his professional wrestling style, Republicans are terrible and governing but good at campaigning.

The Democrats have some well-established bad habits. Chief among them an instinctive conservatism on economic issues and a bad habit of distancing themselves from "the left," aka, their voting base. Let's recall The One True Thing David Frum Ever Said: "while Republican politicians fear their base, Democratic pols hate theirs." (Gibbs on the Left FrumForum 08/10/2010)

Establishment Democrats will be sorely tempted to look at the current situation this way: We have a big possibility of cruising to a win in November. So we have to be cautious not to offend any Republican voters who would never vote for us anyway. Our base voters have no place else to go! And we need to keep courting big donors and stick to our strategy of relying heavily on the same media consultants who we're used to losing with. So we'll complain a lot about the deficit, which gives us something to complain about even though no actual voters care about it. And we certainly don't want to disturb any rich people by loose talk about rolling back Trump's bandits' tax cuts. Or talking about Medicare for all. Or, Lordy no, we can't talk about bloated military budgets because that would step on our Russia-Russia-Russia talking points and might disturb military-contractor donations.

David Dayen has an excellent essay on the politics of the deficit. And how badly the Democrats played it during the Obama Administration, although the title maybe isn't the best for it, The Big Budget Deal Isn’t Irresponsible The New Republic 02/13/2018:

[Fred] Hiatt [of the Washington Post] longs for the halcyon days of 2012–2013, when [Republican] House Speaker John Boehner and President Barack Obama came together in a bid to slash Social Security and other domestic spending, nearly destroying the country’s full faith and credit in the process. While Social Security survived, the Republicans’ failed attempt to hijack the debt ceiling to cut the deficit led to the sequester, a painful, mindless policy that capped discretionary spending automatically across the board, regardless of whether the program was useful or not.

The result was the lowest public investment in the United States since the demobilization after World War II. Budgets for serious needs like infectious disease outbreaks or public defenders for the indigent were reduced indiscriminately. The United States wasted the chance to use low borrowing rates to rebuild outdated infrastructure, one of the biggest missed opportunities in recent memory. The output lost by capping spending amounted to trillions of dollars in lost income and reduced economic growth.

This unquestionably denied work and prosperity to millions of people, simply to feed the irrational desires of people like Hiatt. Public sector jobs sagged under Obama more than any president of the past 40 years. And because public spending disproportionately assists poorer and more vulnerable Americans—an inverse of a tax code which largely benefits the rich—the historic cuts fueled income and wealth inequality. [my emphasis]

The Democratic Party paid dearly for Obama's bipartisan obsession and his economic conservatism.

And the establishment Democrats haven't given up those habits, as Cenk Uygur reports, Democrats: Progressives KEEP OUT 02/12/2018:

Conventional wisdom and the federal deficit

The Pod Pundit obsession with The Deficit is very much on display in the first few minutes of this Morning Zoo segment form today, Where Are Democrats As GOP Prepares Vote On 'Pro-Rich' Tax Cut? Morning Joe/MSNBC 11/27/2017:

I'l give Joe Scarborough a little credit at just after 8:00 in the segment, when he describes the proposed Republican tax plan as "the most, just nakedly pro-corporate, [pro]-rich tax cut at the expense of working class Americans that I've ever seen in my life."

But this peroration leads him to ask, "What the hell is wrong with the Democratic Party?" Say what?!?

The Republicans don't care about the deficit. And haven't since 1980 or so. They pretend to care when they want to cut money from something. But this corporate tax cut is based on creating a gigantic increase in the federal deficit.

Sadly, the Democrats actually do seem to care about the federal deficit. They need to cut it out. They need to take the advice in the title of Jamie Galbraith's 2008 book, The Predator State: How Conservatives Abandoned the Free Market and Why Liberals Should Too. A large part of his point is why worrying about the federal deficit in the US is a sucker play that the Democrats should keep falling for. Sadly, the Democratic President elected that year took the deficit way too seriously. Which led him to frame economic policies in ways that fit nicely with the Republican narrative, even for ones like the stimulus bill and the auto company bailouts that the Republicans opposed.

Our star journalists and commentators, though, have adopted concern about the deficit as one of those essential pieces of the narrative to which they are so committed, regardless of empirical reality.

But it's sloppy economics. And that's putting it very generously.