What Is It About Government Spending that Freaks Out Otherwise Rational People?
by Neil H. Buchanan
Once the Republicans revealed themselves as being completely disingenuous in their teeth-gnashing about budget deficits, one might have hoped that the discussion of federal budget issues would become at least a little bit more sensible. After all, not only does neither party currently seem to have a policy interest that hangs on deficit fear-mongering, but the Republicans' credibility on these issues is now completely shot. Deficit hysteria should be a thing of the past, right?
Good luck with that. There is a bottomless (cess)pool of people who are willing to make anti-deficit comments, helped along by two things. First, the nonstop anti-deficit rhetoric of the last several decades makes every politician think that the safe, uncontroversial thing to do in every situation is to inveigh against the evils of federal borrowing. Second, there is always at least a short-term advantage in pointing out that something your opponent is doing contributes to budget deficits.
After all, every politician is in favor of some spending and has supported some tax cuts, so all anyone needs to do to attack a politician is to say: "Senator X just told us that we need to spend a billion dollars on Project A. A billion dollars -- with a 'b' -- which will go straight into the huge federal deficit. What is he thinking about the burden that we are placing on the backs of our children and grandchildren?" Whenever one happens to be in a debate where the anti-deficit gambit is available, few people can resist the gravitational pull of the conventional wisdom.
Although that temptation is often irresistible, the net effect is in the long-run interest of conservatives, because (as Professor Dorf, among others, has pointed out) the conservative project is ultimately designed to roll back the New Deal and the Great Society. Succeeding in baiting their opponents into accusing conservatives of hypocrisy -- "Oh, look, Ronald Reagan increased deficits, so he was irresponsible, right?" -- merely reinforces the conventional wisdom. The near-universal move to condemn the Trump/Republican hyper-regressive 2017 tax bill by screaming about deficits follows this playbook perfectly. When Republicans again find it convenient to become fiscal conservatives, this will help them.
That would be bad enough, given how many things we could and should be doing by borrowing and smartly spending money at the federal (and state and local, for that matter) levels. But it gets even worse. Today, I want to take the next step, moving from the conventional (and completely incorrect) wisdom about deficits to the conventional (and even more damagingly incorrect) wisdom that holds that government spending itself is per se bad.
My starting point in thinking about this is an exchange during the most recent Democratic presidential non-debate (which has already been, of course, completely forgotten despite having happened only nine days ago). There, a journalist confronted Senator Bernie Sanders about his supposed fiscal irresponsibility, not asserting that Sanders would destroy the country by running up big deficits but by spending money at all.
To be clear, a big part of the problem is that journalists simply do not know much about economics. It is not as if reporters were ever particularly savvy about economic issues, but modern trends in journalism have made it nearly impossible for all but the most high-profile news sources to employ anything but generalists who are occasionally expected to write something about an economic matter. In a panic, such reporters will hide behind the safe and uncontroversial.
And although The New York Times, as one prominent example, does have a smart economics writer like Neil Irwin on staff, the headline writers and editors clearly do not learn anything from their best writers, at least when it comes to economics. Adam Liptak's analyses of constitutional issues can move the needle. Irwin's on economics never seem to do the same.
Even worse, most mainstream (and even many left-leaning) news sources do not even feel the need to engage in two-sides-to-every-story narratives when it comes to fiscal policy. It is infuriating when a major news source treats, say, the impeachment story as a matter of opinion and describes disagreements as the result of "partisanship" or "tribalism." It is categorically worse when reporters treat spending and taxing issues as if there is one, and only one, responsible position -- and that position is anti-government to its core.
This brings us back to that moment in last week's non-debate in Iowa, which I discussed briefly toward the end of my Dorf on Law column this past Friday. The question to Sanders, from a CNN reporter (thus, in the minds of Republicans and much of the public, a "liberal" reporter) was as loaded as they come: "Sen. Sanders, your campaign proposals would double federal spending over the next decade, an unprecedented level of spending not seen since World War II. How would you keep your plans from bankrupting the country?"
I do not honestly think that the reporter even knew that she was jumping over the anti-deficit conventional wisdom to the anti-spending conventional wisdom, because the unthinking reflexes (and the rhetoric) of the two are so similar. It is all about bankruptcy and irresponsibility and profligacy. Even so, let us pause for a moment to note the important distinction that even Sanders did not seem to notice. She is not saying that large deficits will bankrupt the country but that spending increases themselves will do so.
But that is crazy even by standard deficit-hysteria standards. She did not bother to ask Sanders -- as reporters had done previously in hounding Senator Elizabeth Warren about her supposedly (but not actually) vague Medicare-for-all plan -- "How will you pay for this?" She went straight to, "Won't this bankrupt the country?" But if, as is true of Sanders, the big spending increases would be paired with big, progressive tax increases, the national bankruptcy meme simply does not apply.
Two asides are important here. First, there is in fact no danger of bankruptcy for the United States government, and even the supposed financial crisis (which is not the same as bankruptcy) that people like former House Speaker Paul Ryan tell us is inevitable because "we're becoming just like Greece, Greece I tell you," continues not to happen. Maybe we are not in fact at all like Greece.
Second, it continues to be true, as Sanders tried to say in answering the reporter's question, that his Medicare-for-all proposal is the more economically responsible approach, because it would replace the very large amount of private spending that we currently pour into a wasteful health care system with a smaller amount of public spending on a new system that, by its very design, eliminates most of the built-in wasteful incentives in our current system. Roughly speaking, Sanders would spend $30 trillion in a decade on health care to replace a system that will, if unchanged, spend over $50 trillion in the same decade -- for inferior care. But the question is always: "Thirty trillion dollars is so much money. How can you even consider such a plan?"
Returning to the deficits question, as I noted in last Friday's column, the reporter's reference to World War II was actually quite telling. There, we actually did increase spending dramatically without increasing taxes by nearly as much, pushing the debt-to-GDP ratio from 45 percent in 1941 to 119 percent in 1946. And that 45 percent number in 1941 was an increase from 16 percent in 1929, after almost a decade of the New Deal.
Did fighting the Great Depression with deficit spending -- for the Civilian Conservation Corps, the National Reconstruction Administration, the Rural Electrification Administration, the Tennessee Valley Authority, and so on -- bankrupt the country? Did fighting in World War II with borrowed funds bankrupt the country?
Again, I do not believe that the reporter who asked this question even noticed that she slid from deficits to spending when asking her question. Indeed, the WWII example is usually used to illustrate an increase in deficit spending, not spending alone. I suspect that she actually thought she was talking about deficits, which would mean that she truly did not understand what was happening, because Sanders does indeed have plans for large soak-the-rich tax increases that would limit or even eliminate any increase in deficits. (If the reporter wants to ask whether those tax increases would be harmful, she is free to do so -- the answer is an emphatic "no" -- but she did not even seem to be aware of the step that she skipped.)
And the very mindlessness of the reporter's move is a problem, because when Republicans have been confronted with their deficit hypocrisy, their slippery shift has always been to say, "We don't have a revenue problem, we have a spending problem." In other words, even paid-for spending is bad, because it means collecting taxes (presumptively bad) and spending money (also presumptively bad).
That there are so, so many examples of government spending that have paid off handsomely -- universal public education, the internet, the interstate highway system, a university system that manages to remain (despite Republicans' ongoing efforts to cripple it) the envy of the world -- simply does not penetrate the consciousness.
And again, this reporter actually used WWII as an example of unprecedented spending increases without bothering to notice that we bought something pretty darn good -- the defeat of fascism -- for all of that money.
As I noted in last Friday's column, this is all an example of "centrist bias," in which politicians, pundits, and even supposedly neutral reporters accept without question that fiscal conservatism is simply true and right. And to be clear, there are plenty of Democrats who are playing on the wrong side of that game. Vice President Joe Biden and the other center-right candidates -- especially Mayor Pete Buttigieg and Senator Amy Klobuchar -- are all too eager to paint Sanders's spending plans as irresponsible and unrealistic.
They might be unrealistic in the sense that they would not pass the Congress as currently constituted, but that is true of everything that the center-right candidates have proposed, too. But the point is that we might now have reached an odd moment in history, where even nominally unbiased reporting is so steeped in anti-government presumptions that most people barely even notice. If the Democrats do not push back against that, they will only make it even more unrealistic to achieve anything useful.
Once the Republicans revealed themselves as being completely disingenuous in their teeth-gnashing about budget deficits, one might have hoped that the discussion of federal budget issues would become at least a little bit more sensible. After all, not only does neither party currently seem to have a policy interest that hangs on deficit fear-mongering, but the Republicans' credibility on these issues is now completely shot. Deficit hysteria should be a thing of the past, right?
Good luck with that. There is a bottomless (cess)pool of people who are willing to make anti-deficit comments, helped along by two things. First, the nonstop anti-deficit rhetoric of the last several decades makes every politician think that the safe, uncontroversial thing to do in every situation is to inveigh against the evils of federal borrowing. Second, there is always at least a short-term advantage in pointing out that something your opponent is doing contributes to budget deficits.
After all, every politician is in favor of some spending and has supported some tax cuts, so all anyone needs to do to attack a politician is to say: "Senator X just told us that we need to spend a billion dollars on Project A. A billion dollars -- with a 'b' -- which will go straight into the huge federal deficit. What is he thinking about the burden that we are placing on the backs of our children and grandchildren?" Whenever one happens to be in a debate where the anti-deficit gambit is available, few people can resist the gravitational pull of the conventional wisdom.
Although that temptation is often irresistible, the net effect is in the long-run interest of conservatives, because (as Professor Dorf, among others, has pointed out) the conservative project is ultimately designed to roll back the New Deal and the Great Society. Succeeding in baiting their opponents into accusing conservatives of hypocrisy -- "Oh, look, Ronald Reagan increased deficits, so he was irresponsible, right?" -- merely reinforces the conventional wisdom. The near-universal move to condemn the Trump/Republican hyper-regressive 2017 tax bill by screaming about deficits follows this playbook perfectly. When Republicans again find it convenient to become fiscal conservatives, this will help them.
That would be bad enough, given how many things we could and should be doing by borrowing and smartly spending money at the federal (and state and local, for that matter) levels. But it gets even worse. Today, I want to take the next step, moving from the conventional (and completely incorrect) wisdom about deficits to the conventional (and even more damagingly incorrect) wisdom that holds that government spending itself is per se bad.
My starting point in thinking about this is an exchange during the most recent Democratic presidential non-debate (which has already been, of course, completely forgotten despite having happened only nine days ago). There, a journalist confronted Senator Bernie Sanders about his supposed fiscal irresponsibility, not asserting that Sanders would destroy the country by running up big deficits but by spending money at all.
To be clear, a big part of the problem is that journalists simply do not know much about economics. It is not as if reporters were ever particularly savvy about economic issues, but modern trends in journalism have made it nearly impossible for all but the most high-profile news sources to employ anything but generalists who are occasionally expected to write something about an economic matter. In a panic, such reporters will hide behind the safe and uncontroversial.
And although The New York Times, as one prominent example, does have a smart economics writer like Neil Irwin on staff, the headline writers and editors clearly do not learn anything from their best writers, at least when it comes to economics. Adam Liptak's analyses of constitutional issues can move the needle. Irwin's on economics never seem to do the same.
Even worse, most mainstream (and even many left-leaning) news sources do not even feel the need to engage in two-sides-to-every-story narratives when it comes to fiscal policy. It is infuriating when a major news source treats, say, the impeachment story as a matter of opinion and describes disagreements as the result of "partisanship" or "tribalism." It is categorically worse when reporters treat spending and taxing issues as if there is one, and only one, responsible position -- and that position is anti-government to its core.
This brings us back to that moment in last week's non-debate in Iowa, which I discussed briefly toward the end of my Dorf on Law column this past Friday. The question to Sanders, from a CNN reporter (thus, in the minds of Republicans and much of the public, a "liberal" reporter) was as loaded as they come: "Sen. Sanders, your campaign proposals would double federal spending over the next decade, an unprecedented level of spending not seen since World War II. How would you keep your plans from bankrupting the country?"
I do not honestly think that the reporter even knew that she was jumping over the anti-deficit conventional wisdom to the anti-spending conventional wisdom, because the unthinking reflexes (and the rhetoric) of the two are so similar. It is all about bankruptcy and irresponsibility and profligacy. Even so, let us pause for a moment to note the important distinction that even Sanders did not seem to notice. She is not saying that large deficits will bankrupt the country but that spending increases themselves will do so.
But that is crazy even by standard deficit-hysteria standards. She did not bother to ask Sanders -- as reporters had done previously in hounding Senator Elizabeth Warren about her supposedly (but not actually) vague Medicare-for-all plan -- "How will you pay for this?" She went straight to, "Won't this bankrupt the country?" But if, as is true of Sanders, the big spending increases would be paired with big, progressive tax increases, the national bankruptcy meme simply does not apply.
Two asides are important here. First, there is in fact no danger of bankruptcy for the United States government, and even the supposed financial crisis (which is not the same as bankruptcy) that people like former House Speaker Paul Ryan tell us is inevitable because "we're becoming just like Greece, Greece I tell you," continues not to happen. Maybe we are not in fact at all like Greece.
Second, it continues to be true, as Sanders tried to say in answering the reporter's question, that his Medicare-for-all proposal is the more economically responsible approach, because it would replace the very large amount of private spending that we currently pour into a wasteful health care system with a smaller amount of public spending on a new system that, by its very design, eliminates most of the built-in wasteful incentives in our current system. Roughly speaking, Sanders would spend $30 trillion in a decade on health care to replace a system that will, if unchanged, spend over $50 trillion in the same decade -- for inferior care. But the question is always: "Thirty trillion dollars is so much money. How can you even consider such a plan?"
Returning to the deficits question, as I noted in last Friday's column, the reporter's reference to World War II was actually quite telling. There, we actually did increase spending dramatically without increasing taxes by nearly as much, pushing the debt-to-GDP ratio from 45 percent in 1941 to 119 percent in 1946. And that 45 percent number in 1941 was an increase from 16 percent in 1929, after almost a decade of the New Deal.
Did fighting the Great Depression with deficit spending -- for the Civilian Conservation Corps, the National Reconstruction Administration, the Rural Electrification Administration, the Tennessee Valley Authority, and so on -- bankrupt the country? Did fighting in World War II with borrowed funds bankrupt the country?
Again, I do not believe that the reporter who asked this question even noticed that she slid from deficits to spending when asking her question. Indeed, the WWII example is usually used to illustrate an increase in deficit spending, not spending alone. I suspect that she actually thought she was talking about deficits, which would mean that she truly did not understand what was happening, because Sanders does indeed have plans for large soak-the-rich tax increases that would limit or even eliminate any increase in deficits. (If the reporter wants to ask whether those tax increases would be harmful, she is free to do so -- the answer is an emphatic "no" -- but she did not even seem to be aware of the step that she skipped.)
And the very mindlessness of the reporter's move is a problem, because when Republicans have been confronted with their deficit hypocrisy, their slippery shift has always been to say, "We don't have a revenue problem, we have a spending problem." In other words, even paid-for spending is bad, because it means collecting taxes (presumptively bad) and spending money (also presumptively bad).
That there are so, so many examples of government spending that have paid off handsomely -- universal public education, the internet, the interstate highway system, a university system that manages to remain (despite Republicans' ongoing efforts to cripple it) the envy of the world -- simply does not penetrate the consciousness.
And again, this reporter actually used WWII as an example of unprecedented spending increases without bothering to notice that we bought something pretty darn good -- the defeat of fascism -- for all of that money.
As I noted in last Friday's column, this is all an example of "centrist bias," in which politicians, pundits, and even supposedly neutral reporters accept without question that fiscal conservatism is simply true and right. And to be clear, there are plenty of Democrats who are playing on the wrong side of that game. Vice President Joe Biden and the other center-right candidates -- especially Mayor Pete Buttigieg and Senator Amy Klobuchar -- are all too eager to paint Sanders's spending plans as irresponsible and unrealistic.
They might be unrealistic in the sense that they would not pass the Congress as currently constituted, but that is true of everything that the center-right candidates have proposed, too. But the point is that we might now have reached an odd moment in history, where even nominally unbiased reporting is so steeped in anti-government presumptions that most people barely even notice. If the Democrats do not push back against that, they will only make it even more unrealistic to achieve anything useful.