Friday, May 25, 2012
The Difference Between Policy And Politics
Austerity has failed. The evidence is overwhelming that Keynes is right and all the Austerians are wrong.
But the basic idea that "governments, like families, should tighten their belts during hard times" is deeply ingrained in the public mind. Once something becomes a trope, it's hard to dislodge. Obama has managed to make the Democrats the responsible party on national defense, but he was helped a ton by the raging incompetence of Team Bush, the Iraq Quagmire and shooting bin Laden in the face.
But the idea that governments should cut sail in the face of an economic storm is incredibly entrenched and incredibly damaging.
Look, if the GOP wins both branches of government next fall (God help us), they will become Keynesians.
But right now they can exploit the idea that Obama is fiscally profligate - which is entirely false - and the idea that they will balance the budget. Again, we KNOW from the past thirty years that Democrats are more balanced in their fiscal policy than Republicans.
The challenge that Obama is facing is that he must win the political debate - "I'm not a big spender. I believe in fiscal discipline." - while also winning the policy debate - "We must stimulate demand in a sluggish economy and that requires temporary planned deficit spending."
I remember a few years back, I was arguing with my dad about the Bush tax cuts and how they represented poor leadership. He said he didn't care, because Bush was getting the Global War on Terra right. (I would argue that last point, too.)
Needless to say, he's now VERY concerned with deficits.
If it wasn't for the Fifty Little Hoovers, the Fifty Little Greeces, we'd be out of the unemployment recession already. If it wasn't for the policy debacle in the Eurozone, I bet we'd be out, too.
But austerity makes a sort of gut-level sense and it's what people believe, evidence be damned.
Needless to say, given Mitt Romney's demonstrated propensity to say literally almost anything and the flood of Super PAC money, I think we are in for a very depressing debate.