2020年10月20日 星期二

Let’s not get serious

Deficits aren’t a threat, and never were.
Jacquelyn Martin/Associated Press

Today’s column was about the case for large-scale deficit spending if we get a Democratic president and Senate. As I said in the column, it was mainly about the economics; the political discussion will come later, maybe Friday, depending on how many outrageous and horrible things happen over the next couple of days. But I thought I could use this newsletter to get a bit ahead of the curve.

So let me tell you what worries me about the prospects for doing the right thing economically.

One possibility is that Trump beats the odds and wins, or at least gets within stealing range. If that happens, however, macroeconomics is going to be the least of our problems.

Another, more likely possibility is that Republicans hold the Senate. In that case the G.O.P. will simply sabotage Biden every way it can. I know that sounds harsh, but does anyone really doubt it?

But even if Democrats take both the White House and the Senate, they’ll face a problem: the Very Serious People will surely reappear.

Who are the VSPs? I think I stole the term from the blogger Atrios, who used it to describe all the influential people who thought it was sensible to support the Iraq War because all the other influential people were supporting it. In economics, the VSPs became critically important — and destructive — in the aftermath of the 2008 financial crisis.

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Here’s what happened: When the housing bubble burst, leading not just to a plunge in home building but a slide in private spending across the board, the economy was in desperate need of fiscal support; because the private sector wasn’t willing to spend, it was essential that the public sector pick up the slack. But this meant running budget deficits — and in 2010 or thereabouts it somehow became conventional wisdom that debt and deficits were a huge threat, far more important than mass unemployment.

Where did this conventional wisdom come from? Not from the markets, which showed no concern whatsoever about U.S. solvency. Not from the math, which didn’t suggest any problem with running large deficits for multiple years. Not from history: advanced countries like Britain for much of the 20th century and Japan for much of the 21st so far saw debt exceed 150 percent of GDP without experiencing any kind of crisis.

But going on about debt, talking about the need to make tough choices, sounded serious and hardheaded. It sounded even more serious because all the other serious-sounding people were saying the same thing.

Oh, and obvious phonies like Paul Ryan, who pretended to care about deficits when all they really wanted was to cut social programs and hobble President Obama, were treated with great respect.

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As far as I can tell, it’s now almost universally agreed that the result of all this seriousness was a premature withdrawal of government support that greatly slowed economic recovery. But let me tell you, those of us arguing against the deficit obsession in real time felt pretty isolated.

So now we’re in another crisis, and once again we desperately need to maintain government spending despite big deficit numbers. Will we actually do what needs to be done?

It’s a given that Republicans, who ignored deficits under Trump, will proclaim imminent economic doom. Nothing can be done about that.

What’s still unclear is how centrists and the news media will react. Last time around they went all in on deficit panic, lionizing those who spread it. Will they do it again?

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To be fair, much of the reporting I’m seeing looks much better than what we went through in 2010-11. On the other hand, I’m still seeing a fair bit of giving credit where it isn’t due, with news reports saying things like “Republicans are concerned about budget deficits.” Dear colleagues in the news media: you don’t know that. You only know that Republicans claim to be concerned about deficits, and there is in fact very good reason to believe that they’re hypocrites whose only goal is to undermine Biden.

So, will the elite get serious about the budget deficits we’re likely to see in the months and maybe years ahead? Let’s hope not.

Quick Hits

Not in Britain, apparently.

How Very Serious People set the stage for Brexit.

Republicans ready to hate deficits again.

Feedback

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Facing the Music

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No, no, I meant infrastructure.

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