Busy busy busy this week, but out of the corner of my jaundiced eye I’ve been watching the whole “sequester” bit. A few thoughts:
*The sequester was Obama’s idea. Republicans agreed to it. Everyone, apparently, thought that by now cool heads would prevail and we could come to some sort of agreements. Cool heads have not prevailed. No indication they will, at least on a lasting basis, any time soon.
*As I watched all this I thought – come on. Sequestration cuts amount to pennies on the dollar; if we cannot survive this, we can never cut anything. But there was a piece yesterday – too tired to find the link now – from I think the New Republic, a liberal view saying now is not the time to squeeze out pennies on the dollar, the economy is too weak to cut spending now, we have to keep spending until the economy recovers, then we can cut spending.
So – and this has become my standard response – when’s that gonna be? A year from now? Two? Five? Or how about never; how about, we’ve reached the point of diminishing returns when it comes to Keynesianism; with a national debt already in the neighborhood of $16 trillion, and deficits coming down but still close to $1 trillion annually for as far as the eye can see, how much more can we spend; and will even that power the economy into self-sustaining motion? Or does that motion stop the moment you withdraw the spending/stimulus?
In other words – have we reached the point where government cannot, can never withdraw its stimulus, because if it does so, the economy sputters to a halt?
*These are conservative questions. But as we noted in the video this week, conservatives duck the obvious answers.
Which is to say – look, cutting government spending, austerity, induces a slowdown. It must. Conservatives pretend this isn’t the case, pretend that cutting government spending will empower private spending. But if it does, it will only do so down the line; in the interim, people in the aggregate will have less money to spend. That means retail sales will be down, profits will be down, additional jobs are likely to be lost.
Now – you can say all of this will be temporary; you can say that it’s the nature of our economy, both it’s intrinsic nature and its historic nature, that we went through the boom, we have to go through the bust. Except that’s not what conservatives say; conservatives say austerity can produce a boom.
Nope. Sorry. Doesn’t work that way. And so while I’ve been moving rightward in economic terms, that hits a wall because I think conservatives are being dishonest about it (liberals are being dishonest about the economy as well, in a different way).
I think the way you make the case for austerity is this:
My fellow Americans, we spend too much and we have to spend less. We can’t leave a legacy of huge debts, huge interest payments that crowd out other necessary government spending, to our children. And we can’t kick the can down the road forever, hoping to ignite breakneck growth that will solve all our problems, because if we don’t ignite that growth – we’re in even worse trouble.
But let’s not have any illusions what all of this means.
If government must spend less, then it’s going to hurt. Profits may be hurt; standards of living may be hurt. We hope the pain will be short-term, and where possible government – and, we hope, private charity – will act to mitigate the pain.
But we must think long-term. Our hope is that the economy will eventually reach solid ground, solid footing; housing prices will stabilize at realistic values, and rebound from there; “organic” job growth, not powered by bubbles inflated in housing or stocks or elsewhere, will begin.
There is no guarantee that when we get there, if we get there, that your own personal standard of living will be what it was. But if your credit cards are maxed out, if you based your spending on inflated values of your home – your “standard of living” was a sham, rooted not in reality but in wishful thinking.
We must lay the groundwork for a more sustainable economic future. Those of us here, and now, must sacrifice so there is something left for our children. It will be difficult; but America has faced difficult times before and prevailed. I expect, and pray, that this time will be no different.
Now, can you spot a million reasons why no politician ever will give that address?