Adam Haber’s column regarding the coming federal budget deficits caused by the Biden Administration’s proposed budget addresses the legitimate worry as to how it’s going to be paid for, and he rightly shows that the math just doesn’t seem to work, given the history of deficits and interest rates.
While Haber says that everyone loves government spending- I’d refine that to say the everyone loves government spending on what they think is best for them, in their district, and for what their personal priorities are for spending in this country – otherwise, not so much.
What’s Haber is missing is … and the alternative is?
Dick Cheney famously said in response to the mounting costs of the Iraq war – with off-budget accounting tricks – that deficits don’t matter. Of course, what he meant is that they don’t matter when you’re spending borrowed money on things that he thought were important.
When the Bush administration drove the economy into a ditch with a combination of repeated tax cuts, poor fiscal policy and banking deregulation, Barack Obama walked into the first days of his administration facing the worst financial crisis since the Depression.
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Amazingly, the Republicans then refused to go along with the borrowing he felt necessary to climb out of the crisis, wringing their hands about the deficit. Virtually every reputable economist agrees, in hindsight, that underfunding the recovery made the crisis last longer than necessary.
To address the headline of Haber’s column: Can federal deficit spending go on forever? Probably not. But where was this column during the most recent tax cuts?
The result of those tax cuts (even before the pandemic) was record-setting deficits – then, and projected into the future. Haber is right to worry about other unexpected disasters, and what they might do to the ballooning deficits, but that doesn’t mean that the things Biden is proposing are unnecessary. In fact, much of it is desperately needed.
Fresh off of the four years of a Republican presidency, and despite all the problems plaguing this country, while controlling all branches of government for the first two years, it’s revealing that their only piece of successful legislation was more tax cuts. That was the only thing that the Republicans could agree upon amongst themselves for two years.
Trump talked about a grand infrastructure plan that would be revealed “in a few weeks”- for four years. All Republicans had to do was look at the price tag of all of that and you know where that conversation was going to go because they knew it would have to be paid for somehow (except of course for Mitch McConnell, who managed to corral hundreds of millions of dollars in infrastructure funds for Kentucky).
Is it any wonder that Joe Biden has embraced the crisis of Infrastructure repair with no less sense of alarm as the financial crisis that Obama walked into? And, politics being what it is, for the Democratic Party to try to bolt on social programs and loosely define them as part of the solution to the Infrastructure problem?
Biden’s justification is that it will build a better, stronger, more competitive America. I have no idea whether his plan will result in increased tax revenues as a result of the investment, or if it will work out the way he says it will, but at least it sounds like a plan.
Bill Clinton’s budgets raised taxes and balanced the budget by the end of his terms in office. Obama’s financial stewardship mostly succeeded despite Republican efforts to sabotage it for eight years.
Underfunding infrastructure will have the same result as underfunding the financial recovery- but missing this opportunity may mean that we may never climb out. This is a bold response to a monumental problem.
Republicans have, for years, been invited to bring their own legitimate plan (not a cynical replica thereof) to the table as a viable alternative- and they’re always saying that they’re working on it; that it’ll be revealed soon.
It’s not politics to criticize the statement that the math doesn’t work. Alternative ideas are hard not just because their formulation requires deliberate thought, but because they will be subject to scrutiny themselves.
But not providing a plan, or an alternative is a sure way to make sure that the Infrastructure problem will never be solved. This is the choice we face- a budget deficit, or an ever-expanding infrastructure deficit.
It’s that simple, and the math of that is coming at us whether we’re ready with a plan or not.