Monday, June 15, 2020

The Deficit: Remember Not to Forget About the People Who Will Remember

Biden, if elected with a Democratic Senate, will have a chance to do some big and necessary things. But he'll also be faced with a predictable obstacle: politicians and pundits who will suddenly wax hysterical about the threat of the deficit and national debt and how it will rob our grandchildren and destroy the economic foundations of the country.
By this I don't just mean the Republicans, who will turn from being unconcerned with the problem to frothing at the mouth as soon as a Democrat gets into office. The Very Serious People on the editorial pages and other "responsible" organs of opinion are still out there. The Committee for a Responsible Federal Budget lurks in the shadows, ready to pounce once the anti-deficit drumbeat starts.
It is vital to win the budget and macroeconomic argument this time around. It hurt Obama and the Democrats deeply before that they lost it (see Reed Hundt's A Crisis Wasted) and it will hurt Biden and company this time 'round should they lose it again. There is, arguably, no bigger barrier to progressive success in governance.
So be ready for this fight because it's coming. Michael Tomasky reports in a new article in the New York Review of Books:
“Obama and his team’s acquiescence in—indeed, public endorsement of—the turn to austerity in 2010 was absolutely fucking disastrous,” the UC Berkeley economist J. Bradford DeLong, who served in the Clinton administration, told me.
To put substance to his words, Biden will have to defy decades of conventional wisdom on deficits and push for major public investments. “He’s not going to just disregard [the deficit], as, say, Republicans do when they cut taxes,” one of his aides told me. “But he understands the urgency very well, and what the economic costs are to this society that the pandemic is showing us.”
I spoke with an outside adviser who has talked with Biden as part of group conversations about his agenda, and who told me that Biden understands full well everything I laid out above. This person acknowledged the inevitable pressure from deficit hawks, owing to the economic effects of the virus and to Trump’s tax cuts, but said there is a rough consensus within Biden’s circle: “He’s going to inherit a debt-to-GDP ratio of about 115 percent. But if the Democrats let the debt-to-GDP ratio block their agenda, we’re not going to get anywhere.” (A ratio of 115 percent would be the highest on record, just surpassing the ratio at the end of World War II.) The comparison to FDR indicates, the adviser offered, “the gravity of the moment—comparing the Great Depression to now, and how people just keep getting battered by market failures, and how they’re totally uninsulated by an underfunded public sector.”
I know there's lots of other stuff going on right now but do not underestimate how important this struggle will be in the future to everything progressives care about.

Joe Biden, by most accounts, has been a different man since the pandemic hit. Last year, he sometimes spoke of his presidency as a return to a pre-Trump era. Now, with unemployment nearing 15 percent and calls for change from protesters becoming more urgent—and with the crisis starkly laying bare ...

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