THE MORAL IMPERATIVE BEHIND DEFICIT-CUTTING
L. RANDALL WRAY
Representative Paul Ryan (R-WI), head of the House Budget Committee, says that
reducing the federal government’s deficit is a “moral challenge”.
He’s right. Finally, one politician who recognizes that the hysteria about federal budget
deficits and debt has nothing to do with economics. There is no economic theory and no
economic evidence that can possibly lead one to conclude that the US needs to reduce its
budget deficit.
It is a morality play, plain and simple.
It is, as Ryan says, a debate about “different ideas about government”. It is about
“should”, not “can”. The government CAN provide a safety net that feeds our poor, that
houses our homeless, that cares for our sick, that hires our jobless, that supports our aged
in dignity. There is no question of affordability—sovereign government can always
afford to “credit bank accounts” (as Chairman Bernanke puts it) using keystrokes. The
question is SHOULD the government do so?
On one side, we have the modern Hooverites, including Ryan. Nay, they say, government
should not help its citizens. As Hoover put it in remarkably precise Ryanesque words:
“Though the people support the government, the government should not support the
people.” President Reagan modernized that with the argument that “government IS the
problem”. (And just to prove that Democrats can be Hooverish, too, President Clinton’s
slogan was “The era of big government is over”.) Ryan puts it this way: “Let’s choose to
put proper limits on our government and unleash the initiative and imagination of the
world’s most exceptional people.”
It is not clear who those “exceptional” people are, but the past two decades have
demonstrated beyond a reasonable doubt that as government withdraws, it is Wall Street
that is unleashed—the “initiative and the imagination” of the Bernie Madoffs, Jamie
Dimons, John Macks, Joe Cassanos, Dick Fulds, Bob Rubins, Angelo Mozilos, and Lloyd
Blankfeins run loose. And when they crash the economy, causing unemployment and
poverty to explode, according to Ryan’s moral compass government should do nothing to
help its citizens.
On the other side, we’ve got the modern New Dealers, who know that unbridled
capitalism inevitably devolves to thievery. You need government to protect its citizens
from the excesses. To be sure, New Dealers recognize the benefits of Schumpeterian
entrepreneurial spirit but they share the skepticism of Adam Smith who said that our
captains of industry rarely meet except to plot against the best interests of our nation’s
workers and consumers. And they know that each time we experimented with laissez
faire, it led to economic depression, brought on by the robber barons and their Wall Street
financiers in the late 19th century, the Wall Street investment bankers of the 1920s, and
the Wall Street investment bankers (yet again!) in the 2000s. (Does anyone see a
pattern?)
Sandwiched between the Hoovers and the New Dealers, we’ve got the weak-kneed
Clinton-Obama New Democrats who want to please Wall Street in order to keep the
campaign dollars flowing, while also preserving some modicum of a safety net. Thus,
they adopt the schizophrenic deficit dove position: deficits are OK now, to clean up the
mess caused by Wall Street, but we’ve got to reign-in “entitlements” to balance the
budget once the crisis is past. Oh, and let’s not mess with Wall Street, which has surely
learned its lesson this time around. They are unwitting and unscripted characters in a
morality play they do not understand, confusing economics for morals. Hence, they hold
their noses and side with the New Dealers for the current deficit debauchery, but to atone
for their sins go with the Hoover deficit hawks for balanced budgets in the sweet
hereafter.
Here’s the problem for the Moral Right and the Schizoid Center. In poll after poll, the
American people consistently reject spending cuts for any program other than “foreign
aid”. Indeed, they want more federal government spending for education, veteran’s
benefits, (national) healthcare, and Medicare—areas our morality warriors plan to cut.
According to the recent PEW survey, 45% of Americans are willing to cut global poverty
assistance; no other category of federal government spending comes close to achieving a
majority in favor of cuts, as the following table demonstrates. (The report is at
http://pewresearch.org/pubs/1889/poll-federal-spending-programs-budget-cuts-raise-taxes-state-budgets)
Note that aside from global poverty assistance, only military defense and unemployment
assistance find slightly more support for cuts than for spending increases; in all other
areas, Americans favor more spending. Even Medicare—a favored target of deficit
hawks—finds nearly three times more Americans favoring spending increases than the
tiny minority willing to cut it. And Social Security remains the most popular government
program ever—no matter how often the deficit hawks tell them that no progress can be
made on deficit reduction without gutting Social Security.
In a thoroughly disingenuous lie, Representative Judy Biggert claimed that Republicans
“have a mandate from the American people to cut spending”. They have nothing of the
sort. The mandate is loud and clear: Americans want more spending on all those areas
that will improve the quality of life now and in the future.
Nor do Americans want higher taxes—except on the super rich, the natural constituency
for the Moral Minority and the New Dems, so that has no chance.
In short, the problem is that if democracy ever had its way in America, the government
would be substantially BIGGER, not smaller, and MORE generous, not less. Americans
decisively reject modern Hooverism, in spite of the anti-government campaign run out of
Washington over the past thirty years.
So what can the Moral Minority do? Lie. Obfuscate. Scapegoat. Talk about “unfunded
mandates”, “unsustainable deficits”, “debt burdens on our grandkids”, “government is
running out of money”, “welfare queens”, “illegal deadbeat aliens”, “national
bankruptcy”. All lies.
I hope that Rep. Paul Ryan’s admission that deficit hysteria is really about morality, not
economics, gets wide coverage. The American people need to know that the morality
campaign is well-financed by hedge fund manager Pete Peterson’s billions. He and Ryan
are trying to shove their Moral Minority views deeply down the throats of the Moral
Majority.
The Moral Majority of this country wants more education, not less. Americans want more
publicly funded healthcare, not less. They want to help the homeless get off the streets.
They want to help grandma and grandpa live a decent life in retirement. They support
nutrition programs for mothers and infants. They want to reign-in Wall Street and to jail
the crooks. And they want government to play its appropriate role in all these matters.
And most of all, they want to leave the world a better place for the generations of
Americans to come. As such, they do not, as Ryan put it, “choose to relegate America to
another chapter in the history of declining nations.” They want no part of the “dog eat
dog”, “every man for himself”, Hobbesian vision hawked by the Morality Minority.
They reject Ryan’s “case for limited government” and instead want a government that
serves its people.
Let us start with honesty about budget deficits and government debt. There is no honest
economic argument against running budget deficits when the economy is below full
employment. While we can debate about which programs government ought to fund, and
at what level, and about who ought to pay taxes, and how much, there is no legitimate
concern about the size of the resulting budget deficit or growth of government debt.
Surely, in a democracy these spending and taxing issues should be decided by the voters,
but in a process that is free of all the fear mongering about deficits. The Moral Minority
wishes to conceal the truth behind the deficit hysteria because it knows that the majority
rejects the minority’s position as immoral.
It is not moral to cut nutrition programs for pregnant women and infants, and to eliminate
funding of family planning. It is not moral to cut Social Security benefits while handing
payroll taxes over to Pete Peterson to fund his hedge fund scams. It is not moral to cut the
IRS enforcement budget to let Wall Street’s tax cheats protect their fortunes. And it is not
moral to withhold funding from Wall Street’s regulators, such as the SEC (which the
GOP plans to cut).
Yet, all of these are components of the Moral Minority’s unpalatable platform. No
wonder Ryan wants to hide behind his “moral imperative” to cut government—to keep
the debate in the religious arena of morality and away from the light that economics
might shine upon it.