Kinsley: Don’t blame the deficit
If you saw any of the Republican convention last week, you may be aware that President Obama has run up deficits averaging about $1 trillion a year over his nearly four years in office. In case your math is weak, that’s $4 trillion added to the national debt. But what would have happened if we hadn’t borrowed and spent that money?
Much of this $4 trillion was not borrowed for the usual purpose of spending in the reckless way Republicans suppose that Democrats borrow and spend — that is, for shoveling out cash to poor people on the condition that they quit their jobs and go on welfare, and so on. Nor was this money spent for reasons Republicans might approve of, such as subsidizing small businesses or building useless airplanes.
It was not borrowing in order to spend. It was spending in order to borrow, under the conventional Keynesian view that government deficits occasionally have to be used to stimulate demand in a recessionary economy. Even that part of the $4 trillion that wasn’t explicitly labeled “stimulus” was part of the calculation of how big the explicit stimulus should be.
But for this trick to work, it must increase the size of the deficit. Cutting spending to pay for a tax cut or raising taxes to pay for a spending spree neutralize the stimulus.
Now, you can criticize this policy from many perspectives. You can say, with liberal economists like Paul Krugman, that the stimulus wasn’t big enough to work. You can say (as I do) that the stimulus will lead to disastrous inflation unless we offer a more convincing plan about how we’re going to pay it all back in the long run. You can say, as the Republicans do, that we should have cut taxes more and increased spending less.
But you cannot say with any hope of being taken seriously that the stimulus of $4 trillion of deficit spending destroyed jobs.
This doesn’t mean that the deficits were necessarily a good idea. We have lots of goals for our economy, of which jobs is only one. We want low inflation. We want capital formation. We want long-term growth. We want clean air and water. We’d like our Social Security checks, please. We’d like not to overburden our children with debt.
Deficit spending is bad for most of these other goals. All things considered, it’s not clear that this strategy was the right idea.
The Republicans, however, are not considering all things. They have decided to concentrate on one economic statistic: jobs. In his acceptance speech, Mitt Romney made a joke of it, ridiculing Obama’s concerns about the environment and global warming. None of that pansy stuff for Mitt. He promised to focus on jobs. “Lots of jobs.”
So, pop quiz: Would there be more U.S. jobs or fewer today if the government had run a balanced budget, or even just a smaller deficit, for the last four years? All else being equal, it is obvious beyond dispute that there would have been fewer jobs, not more.
The GOP’s enthusiasm for curbing the national debt, and its alarm about what happens if we don’t, have waxed and waned. These days conservatives are quoting again from Ronald Reagan’s first inaugural address: the famous passage about how you and I have to pay our bills, so what makes us think the government doesn’t? At that moment, the Republicans pretty much had a lock on fiscal responsibility as an issue.
Of course, Reagan famously ignored his own sermon and ran up record peacetime deficits. Since it was axiomatic that Reagan could do no wrong, deficits came back into Republican fashion. New theories arose. Republicans started saying that if you cut taxes first, spending would automatically follow. That didn’t happen.
During the Bill Clinton years, temporary agreement between the parties, with help from the economy, actually did wipe out the deficit briefly. Then came George W. Bush and his war in Iraq. Vice President Dick Cheney, concerned that alarm about the return of huge deficits might spoil the fun, declared that “deficits don’t matter.” Republicans began dismissing concern about the national debt as “Rubinomics,” a reference to Clinton’s Treasury secretary, Robert Rubin.
And now, in the latest chapter so far, Republicans have decided that deficits are heinous once again. No doubt they will continue to believe that for as long as there is a Democrat in the White House.
Michael Kinsley, a former editorial page editor of The Times, is a Bloomberg View columnist.
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