The Deficit Matters After All…

Sometimes the dark or quirky side of me misses the Bush administration. Who can forget those ‘great’ Rumsfeld press conferences where he would attack the media (‘back off,’ ‘freedom is messy’)? Or Bush for his mind-blowing sillinesses (‘heckuva job,’ the ‘moo-lahs’ of Iran) and catastrophic English. Or Cheney (‘no doubt Iraq has nuclear weapons, ‘ deficits don’t matter’)? The political scientist in me can’t help, a little bit, but miss the sheer fun provoked by the endless stream of foolishness from the bad old days. R Gates is vastly superior SecDef, but for sheer entertainment value, you could always count on Rumsfeld to say something ridiculous on TV or Capital Hill and to provoke you. My top three ballonhead moments for W are:

1. When he ran in 2000, he was asked to name his favorite political philosopher and he said Jesus. For a nanosecond, the academic in me thought of Thomas Pangle. The moderate centrist citizen in me gaped in astonishment. To this day I remember that that line sealed my decision to vote for Gore.

2. In 2004 (I think), W was asked in a press conference what mistakes he had made. He said nothing for 15 seconds, before ducking the question. I remember exactly where I was when that happened, it stunned me so much.

3. In one of the State of the Union addresses, Bush said we could balance the budget without raising taxes. I was playing a SotU drinking game with a friend. I think I just about fell off the sofa laughing when I heard that one, and then again when I had to drill my whole cocktail in payment.

So now that reality has returned a little under the great O, another fine Bush era fantasy has just proven to be the illusion serious people always knew it was. It turns out the deficit does matter. How nice to learn once again what my freshmen learn in basic IR when we cover IPE and American power.

When W became POTUS, the deficit was under $6T. When he left, it was over $9T. Even while the economy was growing, we couldn’t balance the budget – which is a basic requirement if you want to borrow during the hard times (Clinton did this in his second term). Now the not-so-great-after-all O will give us trillion dollar plus deficits every year! Gah! I tell my Asian students this (gasp!) and then remind them who we expect to buy all those T-bills (GASP!). If Obama thinks they will just buy, buy, buy, he’s wrong. They may be great savers out here, but they’re not stupid.

Just in case you needed another W-era failure to reinforce your scope of what Obama has to fix, this is probably W’s worst pedestrian, everyday failure. It does not have the media glare and awful human toll of Katrina or Iraq, but this will effect the average American much more than those ‘highlights.’ And it is worse, because so few people understand it. You can see the awfulness of Iraq or Guantanamo on TV or when you travel and meet foreigners who loathe W and you have to tell them you come from Canada. But the deficit and the staggering debt have the kind of micro-effects only someone trained in economics can see in detail. This is not an argument for social science intellectual superiority; I mean only that it takes weeks of classtime for me to explain budgeting to my undergraduates, whereas they could grasp the Iraq mess pretty easily. The budget trainwreck is a complex topic. It is a failure that is easy to hide, dissemble about, or just ignore, as Cheney’s locution makes clear. But in myriad little ways, we must pay for this everyday. It sucks money from the budget to pay for interest on the debt (so we can keep a AAA credit rating in order to borrow MORE); it threatens higher interest rates and inflation should we lose the ability to finance it; it weakens US superpowerdom by placing vast dollar reserves in the hands of foreigners, especially China, who may not share our values. Consider, if China and Taiwan get in a shooting war, how hard it will be for the US to help Taiwan if China threatens to dump all its dollars abruptly.

So at least these people are out of government and some measure of sanity has returned. At least the Republicans can now be the voice of fiscal sanity in opposition they failed to be when in power. The irony is rich – an inverse of the ‘only Nixon can go to China’ notion. Only Clinton would try to balance the budget, because Dems are open and sensitive to the charge they tax and spend. The GOP under W went wild with the fiscus, because the usual voices for spending restraint (the Wall Street Journal, e.g.) were quiet.

Perhaps the larger problem though is we the taxpayers. It increasingly seems like the dominant problem is that Americans want government, but don’t want to pay for it. And ‘deficits don’t matter’ fits perfectly with such an attitude.