Burnt Orange Report

First, Denial...

By Jim Dallas

As CalPundit notes, The Weekly Standard's David Gelernter has some really bad arguments in his piss-poor attempt to justify the exploding budget deficit.

Normally, I would simply ignore this rant, but instead (because I am hearing these bad arguments repeated by a lot of dittoheads) I am going to refute them all here so that I can ignore them later.

Now class, let us begin...

POINT:The assumptions beneath this question are all wrong. The looming deficit might or might not be important, but it has no moral implications of any kind.

COUNTERPOINT: The inner fundamentalist Christian in me tells me to refer you to Deuteronomy 15:6, and Deut. 28:12 ('thou shalt not borrow') and Proverbs 22:7 ('the borrower is servant to the lender.').

POINT:It would be nice if the deficit were smaller. Then again, borrowing money is, at base, a bet that you will be richer in the future than you are today. Will this nation continue — allowing for regular business-cycle fluctuations — to grow richer? We don't really know, anything could happen, who can say, no one can predict — waffle, waffle, waffle — and the answer is yes. So, it's hard to get too worked up over the deficit. Most Americans agree. Anyone who thinks that the deficit is hot news in the sushi bars and Thai restaurants of Middle America has not been paying attention.

COUNTERPOINT: This is the first of Gelernter's faulty analogies. It is true that borrowing once is a simple and relatively riskless bet on the future. However, the policy in question is, essentially, a perpetual deficit. Consider for example, the CBO projections showing deficits out as far as the eye can see, growing roughly in line with the gross domestic product. And the simple fact is you cannot grow yourself out of a hole that is getting deeper at the same rate.

The claim borders on a straw man, because it conflates one deficit with the Bush administration's policy of perpetual deficits.

POINT:Lower taxes were a reasonable response to a slow economy. Higher military spending was the only possible response to 9/11. Together, they produced a fiscal climate that was bound to cause deficit problems.Today the deficit and the economy have both roared back. This year's deficit might be something like $500 billion. The quarter ending in September saw the fastest economic growth in 20 years; job creation also seems to be picking up.

COUNTERPOINT: So I suppose now that the economy is starting to recover that we can expect the President to propose a "reasonable" increase in taxes?

If the Republicans were trying to be real Keynesians (as opposed to simply trying to bribe voters with tax cuts), they might understand that "leaning-against-the-wind" is a "double-edged sword" (forgive me for mixing metaphors).

POINT:Let's look at the basic nature of deficits. (Don't worry, I'm no economist.) Some people say the administration, by running up the national debt, is saddling "our children" with our expenses. But if I take out a 20-year mortgage on my house, that doesn't mean I'm inflicting my debts on my children or the "next generation." Nor does it mean (although many people would once have interpreted it to mean) that morally I am a weak character. Borrowing money is a practical decision with no intrinsic moral implications. Deficits and household mortgages are not the same. Neither are they wholly different. Twenty years from now, the adult population of America will be mostly the same as it is today. Granted, when a nation borrows, some of the eventual payers-off will not have been around when the original charges were incurred. But that doesn't mean they won't benefit from the long-ago loan.

COUNTERPOINT:When you take out a mortgage on your house, you pay for it over a fixed mortgage period. When the country is forced to issue public debt, future taxpayers (this includes your children, obviously) pay for it, in practice however long it takes to get the debt paid off.

No matter how you spin it, a budget deficit saddles future taxpayers. The more important question (which Gelernter hints at) is whether or not borrowing (the means) is justified by the ends. Which leads us too...

POINT:Had we chosen not to overthrow tyrants in Afghanistan and Iraq, the deficit would almost certainly be no big deal today. Overthrowing tyrants is a gift that keeps giving. Howard Dean's grandchildren will bless George W. Bush. And if future generations wind up paying part of the tab, I doubt they will whine. More likely they will thank us, and write books about what a great generation we were.

COUNTERPOINT: Talk about counting your chickens before they hatch (honestly, snark fails me)! At any rate, you cannot justify the entire deficit on the grounds that part of it paid for military operations in Iraq and Afghanistan.

This is not a moral claim; it's a mathematical fact. Of the current deficit, about a half of it springs from reduced revenue. Another quarter comes from increases in non-defense spending. Less than a fourth of it has anything to do with the "Global War on Terrorism."

Moreover, this gets into the more fundamental question of ends and means posed earlier. Deficit spending is not the only way to finance wars; we could have just as easily collected a war tax to finance them.

In the words of Thomas Jefferson, "It is incumbent on every generation to pay its own debts as it goes. A principle which if acted on would save one-half the wars of the world."

POINT:Bush could have tried to cut discretionary domestic spending, and hasn't. Instead, he has signed lots of pork into law and wants to sign more. That's the American way. It's not a part of the American way I'm proud of, but I don't know how to fix it. Somehow I'm not absolutely certain the Democrats do either. If they have a solution, let's hear it.

COUNTERPOINT: In short, Gelernter concedes here that the President has been larding up the budget with pork and allowing the deficit to explode. That's really about all you need to know.

POINT:Yet suppose that, some time over the last few years, Congress had reared up on its hind trotters and announced: We must cut spending, or cancel some tax cuts, or raise taxes in some other way, because otherwise deficits are going to the moon. Most likely the American public would have yawned — and would have added, by way of explanation: "Listen. On a percentage-of-GDP basis, we're looking at deficits that might rival what we saw in 1983, the worst deficit year since the end of World War II. But what followed 1983? A strong and sustained economic boom, and in percentage terms, lower deficits. So, what's your problem?"

COUNTERPOINT: The "problem" is that the deficits of the 1980s caused interest rates to soar in the latter half of that decade, slowing growth and causing a recession. Unchecked, it might have caused a full-blown crisis. And yet even then, America was not faced with having to figure out how to keep Social Security solvent.

POINT:And what about that famous Clinton surplus, that "legacy" we have blown? Legacy, hell. A federal government that is running a surplus is holding us up, strong-arming the nation. Suppose you were in the habit of handing someone money to buy you pizza. If you handed him too much ("Here's $20, get me a medium with mushrooms"), you'd expect him to hand you the change back. Should he announce casually one evening, "By the way, I'm running a surplus," you might want to know why. Should he explain that he's got a few thousand of your dollars in his back pocket, having decided (in his wisdom) to set them aside for you instead of returning them, lest you blow the money on something stupid instead of more pizza … he'd be out of a job. The federal government is our agent. We give it tax money so it can operate the nation. If we hand it too much and it keeps the change instead of returning it — runs a surplus, builds a national "legacy" — it is acting like an officious, well-meaning crook. This is what John O'Sullivan, former editor of National Review, calls "Olympian" liberalism. We never asked the government to please hold some of our money lest we run out and waste it. It is ours to waste. On moral grounds, budget surpluses are far more likely to pose problems than deficits.

COUNTERPOINT: Probably the dumbest statement in the entire article, Gelernter conveniently forgets that despite the budget surplus of the 1990s, the country still maintained a multi-trillion dollar deficit. If a pizza guy pocketed a dollar on your $20 pizza each time he delivered, it might be excusable if, say, you already owed him $1000 for smashing his car a week ago. Comprende?

Just as the surplus represents the "people's money", the public debt represents the people's obligations, with interest.

POINT:Nowadays, whenever we see Democratic caucus or primary campaigns on TV, we seem always to have tuned in the Bugs Bunny version by accident. You expect each distinguished candidate in turn to step up to the mike and launch a furious attack on the president that soars higher and higher into the pristine upper reaches of rage until he goes straight into orbit (shaking his fists and sputtering) and is never heard from again. (Next candidate, please?)

COUNPOINT: Fairly obvious ad hominem. Gets us nowhere. I only mention it because I think it's funny.

POINT:But on the deficit issue we get a break, and we deserve one. There is nothing ignoble or intrinsically wrong in the Democratic idea that we should raise our taxes for the long-term good of the nation. But worrying about the long-term consequences of today's economic decisions is like worrying about the long-term consequences of spitting into the Atlantic. Yes, there are consequences, but ultimately they depend on all sorts of things that have yet to happen, and we are in no position to calculate them. I am not opposed to long-term economic planning; it's just that history makes clear that there is no such thing.

COUNTERPOINT: In the words of the inimitable Kevin Drum, "[t]he frightening thing is that I suspect Gelernter speaks for a lot of Republicans these days. Long term planning? Bah. It's for wimps. Let's just stick our heads in the sand and get reelected instead."