It feels like Backward Day in the mainstream media this week. Case in point: The editorial board of the Washington Post published an opinion on deficit spending. The short version is that they believe there’s too much of it going on and the Trump administration, abetted by the GOP in Congress, has been burning through cash like a sailor on shore leave. In their opinion, the projected $900B deficit we’re looking at for 2019 is a sign of an unhealthy democracy.
For our part, we don’t think the deficit per se is likely to cause short-term economic harm, or that there’s a case for immediately adopting a zero-deficit budget. And we don’t know anyone who does think those things — notwithstanding the pummeling that straw man sometimes takes from the deficit doves. What we do believe is that fiscal prudence counsels against accelerated debt accumulation during a time of full employment, as opposed to trimming deficits and preserving fiscal space to deal with the next recession — among other priorities, foreseeable and otherwise, with which the country will be faced…
In a healthy democracy, the budgeting process reflects a reasonable balance between the resources available and policy priorities, both present and future. Leaders persuade voters to accept trade-offs in the public interest. In an unhealthy democracy, leaders pretend that resources are unlimited and compete for voter favor by promising the moon. They engage in magical thinking. They opportunistically abandon their party’s supposed fiscal principles, as the Republicans have done under Mr. Trump. Judged by these criteria, alas, democracy in the United States is not healthy.
The irritating part of this editorial (at least from my perspective) is that they actually make several important points, despite the hypocrisy of largely ignoring the problem while Obama was in office. But you’ll note that in the excerpted portion above, the editors build in an insurance policy against charges of employing a double standard. They state that times of full employment and robust economic growth are the ideal periods to pay down debt and set aside some cap space for the inevitable next economic downturn. (Which should be an obvious truth.) But they preface that by implying that such concerns can be safely ignored during a collapse such as we saw in 2007 and a sluggish, stumbling recover such as was seen for the next eight years.
Borrowing a reasonable amount of money to spur the nation’s economy back toward health with functional programs could indeed be excused if the stated (and enforceable) premise was that the money was only to be used for that and replaced when the goal was achieved. That’s never been how the government has operated in my lifetime, however, and certainly wasn’t under the Obama administration. Too much of the stimulus money was frittered away to little effect and they never had any intention of cutting our debt after the economy was back on its feet.
If you look past those inconsistencies, however, the WaPo board is pretty much spot on. The current situation is unsustainable and everyone knows it but nobody wants to talk about it. It’s not a question of if this ballon is going to burst, but only when. They are also right when they note that neither party is serious about paying down the debt or even significantly reducing annual deficits. Both parties talk about it when they are out of power, but once they get hold of the steering wheel it’s back to giving away “other people’s money” as fast as possible to win over the shifting loyalty of the voters.