Now that the economy is stumbling back to normal health (disclaimer: at least, that’s what CNBC appears to be trying to get me to believe), I’m supposed to believe that the biggest threat to our economic health right now is the deficit. Inasmuch as I have believed for pretty much my entire adult life that the biggest threat to our economic health right now is the deficit, this shouldn’t be a hard sell.
But at least at the moment, I’m not buying it. And if the people who are selling are having trouble getting someone like ME to buy, whether or not a majority of the country agrees with them (which in fact it does, at least at the moment), then maybe they need to entertain the possibility that the deficit is NOT, in fact, the biggest threat to our economic health right now.
I would argue that the biggest threat to our economic health right now is the lack of jobs, which is hurting us at the most basic level: The number of Americans who “lack consistent access to adequate food” is now 49 million. Yeah, you read that right, 49 million, or about 1 in 6. Of those, a third are actually skipping meals or at least cutting portions; the rest are eating regularly, but only with the help of food stamps, food banks or soup kitchens:
“Many people are outright hungry, skipping meals,” said [James Weill, director of the center that did the story]. “Others say they have enough to eat but only because they’re going to food pantries or using food stamps. We describe it as ‘households struggling with hunger.’ ”
Well, some of us do:
“Very few of these people are hungry,” said Robert Rector, an analyst at the conservative Heritage Foundation. “When they lose jobs, they constrain the kind of food they buy. That is regrettable, but it’s a far cry from a hunger crisis.”
During the last close-to-comparable recession, in the early 1980s, news like that would have been atop the front page — not only because of the number of people doing without but also because back then the public was still capable of outrage at such deliberate lying about the misfortune of our fellow Americans. Now? Eh. We shrug, so much have our expectations been lowered by those who are stealing from us.
But I digress.
Let us say, for the sake of argument, that the deficit really is the single greatest economic danger we face. Problem is, the media are both explicitly and implicitly conflating ALL spending with deficit increases. But not all spending increases the deficit, if it is offset by increased revenues and/or by spending cuts elsewhere. Consider this bit of Politico analysis:
… it will be tough for many Democrats to sell themselves as deeply concerned about spending after voting for the stimulus, the bailouts, the health care legislation and a plan to address global warming, four enormous government programs.
Well, yes, it will … if all four of those programs increase the deficit. However, at least two will not. Politico even acknowledges manages to report this fact without acknowledging that it completely undermines the whole deficit argument:
For starters, the White House has not dropped plans for an aggressive global warming bill early next year that will be loaded with new spending on green technology and jobs – that would be paid for with tax increases. Democratic lobbyist Steve Elmendorf says the White House focus on deficit reduction could easily kill the cap-and-trade effort. “I think this means cap-and-trade has to go to the backburner,” he said.
Now, whatever you think of the merits of cap-and-trade, we’re talking about a bill that, as Politico explicitly acknowledges, would be paid for with tax increases. That means it will not add to the deficit. So why even bring it up in this context?
OK, so what about health-care reform? Well, David Sirota has a math problem for you to solve:
Let’s say you’re a congressperson or “tea party” leader looking to champion deficit reduction — a cause 38 percent of Americans tell pollsters they support. And let’s say you’re deciding whether to back two pieces of imminent legislation.
According to the nonpartisan Congressional Budget Office, the first bill’s spending provisions cost $100 billion annually and its tax and budget-cutting provisions recoup $111 billion annually, thus reducing total federal expenditures by $11 billion each year. The second bill proposes $636 billion in annual spending and recoups nothing. Over 10 years, the first bill would spend $1 trillion and recover $1.11 trillion — a fantastic return on taxpayer investment. Meanwhile, the second bill puts us on a path to spend $6.3 trillion in the same time.
Save $110 billion, or spend $6.3 trillion? If you’re explicitly claiming the mantle of fiscal prudence, this should be a no-brainer: You support the first bill and oppose the second one.
The first bill would be health-care legislation. As currently priced and structured, it would actually reduce the deficit, compared with doing nothing. So explain to me again why enacting it would make the deficit worse?
Sirota’s related point, which isn’t someplace I’d originally set out to go but is probably worth addressing anyway, is that right now we’re spending $636 billion annually on defense. And that’s just what we budget. The actual war-fighting appropriations for Iraq and Afghanistan aren’t even part of the budget, and they total hundreds of billions more.
Moreover, we spend more money on defense every year than the rest of the world combined. I’m thinking that if we want to reduce the deficit, we need to do a Willie Sutton and go where the money is. That’s defense spending in general and spending for two unnecessary Asian land wars in particular.
But if, God help you, you watch the Sunday talk shows, what you’ll hear is that the only way to bring the deficit under control is for entitlements to take a hit. Crap. We can cut defense spending. We can raise taxes on the wealthy. We can raise the cap on income subject to the Social Security withholding tax. If we stop and think about it, we have a number of options for reducing the deficit without gutting Social Security or Medicare. (And it bears repeating that although you often hear about a Social Security crisis, there isn’t one: Even if we do nothing, Social Security can continue to pay what it owes for several more decades, and only minor fixes now would suffice to keep Social Security solvent over its entire 75-year time horizon.)
We can also stop sending hundreds of billions of taxpayer dollars to the banks. If they’re going to fail — and, in a truly free market, Citi and Bank of America, at the least, would have failed long ago — better to bite the bullet and let them do it now. Let’s further eliminate “too big to fail” as an instrument of public policy: “too big to fail” means too big, period. And when banks do dumb things with their/our money, they need to go under and be nationalized, not kept artificially alive with endless transfusions of your hard-earned cash.
These steps, even in combination, wouldn’t eliminate the deficit. But, done right and targeted correctly, they could bring the deficit down to a more sustainable level, buying us time to rebuild a healthy economy whose expansion, based on solid fundamentals, eventually will build the tax base up to the point at which a final assault on deficits becomes feasible.
But the answer is NOT to let them take more of your Social Security. And when you hear anyone suggest otherwise, very quickly turn around and stick your pocketknife through the hand he’s about to place on your wallet.
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