I assume most listeners have heard of Bret Stephens. He is a conservative columnist for the New York Times and recently he has appointed himself the chief adviser to Democrats on how to defeat Trump. Stephens’ column on December 26 introduced an interesting metaphor. What we need to defeat Trump, he opines, is SOAP. His point is we don’t need to make any major changes to our economy and society --- such as a wealth tax, Medicare for all, a Green New Deal. (No surgery needed!) All we need is to have a Democrat running for President who promises to wash away the “dirt” of the Trump presidency and leave us Americans, clean (and pure?) again.
[Readers can read his entire column entitled “What Will it Take to Beat Donald Trump?” in The New York Times, December 26, 2019 available on line at https://www.nytimes.com/2019/12/26/opinion/trump-2020.html.]
He even makes specific proposals --- an infrastructure program, a carbon tax offset by an income tax reduction, some (small) tax increases to move the economy towards a balanced budget. The more basic changes, such as those mentioned above, he dismisses out of hand and guarantees that if the Democrats keep talking about these ideas Trump will be re-elected.
Over the years that I have been delivering these commentaries, I have discussed at length issues like Medicare for all, the Green New Deal, and increased taxation on the wealthy. I do not want to revisit them here. Instead, I want to focus on that old saw underlying all criticisms of big new programs --- that they cost too much. Stephens’ column says it --- he laments the “23 trillion dollar” debt and believes that just reminding us about this really big number is sufficient to convince us that the proposals for basic change being presented by some of the Democratic candidates for President are impossible. (Why? Because of that debt.)
There are of course a number of things wrong with presenting a big number like 23 trillion and letting it speak for itself. Big numbers mean nothing by themselves. (I apologize for what follows because I have written and said this numerous times in the past 14 years of delivering these commentaries --- but it bears repeating since so many journalists and politicians willfully ignore the point.) If I tell you I made $200,000 profit in my car dealership last year, you would have NO IDEA whether I was successful or not. For that you would need to know how much I had invested. If I had invested $800,000 that’s a 25% rate of profit – pretty damn good. If I had invested $10 million that’s a 2% profit --- no good at all. The only meaningful way to discuss numbers like the Federal Budget Deficit or the National Debt is as a percentage of GDP.
Right now the National Debt is 106 percent of GDP. It was 68 percent of GDP at the start of the Great Recession of 2008-2009 and it rose to over 100 percent of GDP in the early years of the recovery. Despite the fact that it has stayed at that very high level, the recovery has continued. In other words, the “23 trillion dollar” National Debt that has so horrified Stephens that he wants policy changes to move towards a balanced budget has not seemed to harm the economy at all in the past 10 years.
In any event a large National Debt is not a barrier to tackling climate change, inequality, and the rising cost of health care. To assert that it is, is the equivalence of asserting that the earth is flat. The reason is that in the United States our National Debt is in our own currency. We never have to pay it off, in fact, loans contracted to help finance the Civil War have been rolled over ever since. For details, readers can check out Chapter 9 of my book Surrender, How the Clinton Administration Completed the Reagan Revolution (U. Mich Press, 2000 --- also available on line.).
Concern about deficits and a rising National Debt has been --- to say the least --- expressed very selectively by politicians. When they decry government deficit spending and a rising National Debt they are opposing a specific program without having to make the case that it’s a bad idea. So for example, the argument against Medicare for All has nothing to do with its merits --=- it just costs too much!! But these same “deficit hawks” are totally inconsistent. Virtually all of them never oppose spending money on the military. (There are a few laudable consistent exceptions). Thus, during World War II the National Debt climbed above 105% of the GDP in 1945. The National Debt also increased dramatically during the era of the Cold War due to increased military spending for the Korean War, the Vietnam War, and the arms race with the Soviet Union (though as a percentage of GDP is was lower in those years than during World War II.)
During the George W. Bush administration, when it came to spending money on tax cuts and the Iraq War, Republicans in Congress were all for it. However, once there was a Democrat in the White House, these same Republicans reacted with horror when President Obama proposed a stimulus package in 2009. (Remember this was during the depths of the Great Recession when the economy was bleeding 700,000 jobs a month.) Not a single Republican in the House voted for the Recovery Act. Luckily the Democrats had a working majority and the crossover support of former Republican Arlen Specter in the Senate. Obama’s stimulus package raised the National Debt dramatically but it was worth it. Would we rather have unemployment back at 10% of the labor force?
[Democrats are not immune from this inconsistency. During the George W. Bush administration, they were constantly harping on the irresponsibility of the Bush tax cuts and spending programs that increased the National Debt.]
Despite Stephens’ complaints, the proposals of the Progressive wing of the Democratic Party including Medicare for all are quite popular. Yes, such proposals will be demonized during the General Election by Trump and his enablers – but that would occur no matter who the Democrats nominate. What Stephens fails to understand is that the people of the United States are hungry for a candidate who stands for something. If the Democrats want to, beat Trump they cannot be content with merely promising to wash away the dirt into which Trump has dropped our country.
Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author with Howard and Paul Sherman of the recently published second edition of Principles of Macroeconomics: Activist vs. Austerity Policies.
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