Media's Misplaced Obsession with Budget Cuts and Deficit Spending
Last night on CNN, and on both debates, the media again pushed this notion that both candidates are being irresponsible and dishonest about their plans by refusing to acknowledge what programs or spending initiatives would be cut in light of the cost of the bailout and the economic crisis. It's really fascinating to have people with no economic expertise offer opinions that chastise the candidates as if there is no other option.
While I agree that our deficit is out of control and that the ideal is to balance budgets, most responsible economic theorists and our experience would tell you that one of the only times you can justify deficit spending is during times of economic recession/depression. These initiatives and temporary public works type projects that were symbolic of the New Deal help instill confidence, stimulate the economy, stem unemployment growth, and keep money in the pocketbooks of Americans. Essentially, they substitute for the private sector projects until such time as it can get back on its feet and then gov't steps back and focuses on re-balancing the budget.
The Republican approach to deficit spending (to finance unnecessary wars, give huge unnecessary tax breaks to the filthy rich, and feed our addiction to oil) is what hurts the economy and is wrong about our growing deficit. Barack's approach is right.
What these pundits need to do is to look back at history and the New Deal and assemble some actual experts on their panels (as opposed to political pundits) and ask them whether there is any value to this type of deficit spending for public works projects and economic stability during times of private sector shortcomings and I bet they'd be in for a surprise.
BTW - an interesting look at economic impact of Dem v. Rep policies:
http://www.nytimes.com/interactive/2008/10/14/opinion/20081014_OPCHART.html
100% right. I also left a post earler about the myth that Bush cut taxes. He didn't cut anything - he deferred taxes and raised our yearly tax bill by at least $100 billion.
Besides, as you point out, it makes a big difference what you spend the money for. Going into debt for investment can make a lot of sense.
October 14, 2008 1:51 PM | Reply | Permalink
Unsurprisingly, reality is more complex than the NYT infographic lets on. Tommy McCall's calculations are basically correct given his assumptions, but by changing assumptions, you can get radically different pictures of the performance of the respective political parties. Wolfram Research co-founder Theo Gray has created a downloadable mathematical model that allows you to set your assumptions for yourself. With some assumptions, the Democrats look better, with others, the Republicans do.
In terms of the _current election_, it doesn't really matter if in ancient times, the Republicans were good or bad for the stock market. This ain't Your Daddy's Republican Party, the one that used to care about things like budget deficits and such, anyway. This is the Wild New Republican Party that wants to fight two or three wars at at time, build lots of nuclear power plants, employ people to hassle travellers enmass, aationalize the banks, and radically cut taxes all at once.
I don't think the Obama campaign needs Tommy McCall's infographic to get across that in _this_ election, Democrats are a better economic choice.
October 18, 2008 7:45 AM | Reply | Permalink