It’s always best to wait until the dust settles. As common expressions go that’s a good one – far better than saying that’s no skin off my teeth. Foreigners learning English must puzzle over that one. Skin? Teeth? But colloquialisms are like that. Language is odd. There’s that famous Feydeau farce A Flea in Her Ear – no, really. What, the French have fleas? No, it’s just that we’d say she has a bee in her bonnet, even if that’s a bit puzzling too. But we all want to know the buzz. That must be it.
And there is the buzz. The dust has settled from Obama’s 2011 State of the Union address, and the official Republican response from Paul Ryan, and putative Tea Party response from Michele Bachmann. The talking heads on cable television had run out of nifty observations and admiration and scorn and whatnot, and they had headed home for some sleep. And by the next day people had decided what they thought they’d heard, and what they thought about what they thought they’d heard, and what they’d decided they’d say about what they thought they’d heard. Things firmed up, or cleared up, as there was no dust in the air. The battle lines were drawn.
And oddly enough, the positions people settled into had to do with language, with what words actually mean. It seems we are about to have an extended national dialog, or one heck of an odd argument. Austerity is prosperity. No it isn’t – austerity is austerity. Choose your side.
Yes, there’s a bit of Orwell to that. Austerity is Prosperity. War is Peace. But this isn’t that novel – it’s just semantics, or economic theory, or political ideology, or theology. Actually it may be all those things.
The Republicans’ budget wonk, Paul Ryan, gave the Republican response – see Remarks of Congressman Paul Ryan (R-WI) As Prepared for Delivery – and the message was stop spending, shut things down as much as possible, the government exists for national defense and nothing more. And the deficit will kill us all. Austerity is prosperity.
And part of that was this:
Just take a look at what’s happening to Greece, Ireland, the United Kingdom and other nations in Europe. They didn’t act soon enough; and now their governments have been forced to impose painful austerity measures: large benefit cuts to seniors and huge tax increases on everybody.
And the next day, Paul Krugman called what Ryan had said deeply revealing.
Imagine yourself in Ryan’s position. You’ve been chosen by one of America’s two great political parties to respond to the president of the United States. That’s a fairly awesome responsibility. And you’re going to make some blanket assertions about world events. Wouldn’t you make at least some effort to check whether those assertions are right?
Actually, if your whole public act is based on your supposed knowledge of the importance of fiscal responsibility, wouldn’t you long ago have made sure that you actually know something about the fiscal crises now taking place in Europe?
And Krugman argues that there is a problem here:
I suspect that Ryan is honestly unaware that Ireland, far from being a spendthrift, was seen as a fiscal role model before the crisis. And that’s not hyperbole: in 2006 George Osborne, now Britain’s Chancellor of the Exchequer, declared that “Ireland stands as a shining example of the art of the possible in long-term economic policymaking, and that is why I am in Dublin: to listen and to learn.”
And I also suspect that Ryan is honestly unaware that the UK has not, in fact, experienced a debt crisis.
It would be nice to get the facts straight. But we have always been at war with Oceania – as everyone knows.
But Krugman wonders about that:
How can he be unaware of these things? The only explanation I have is intellectual laziness – why check the facts when you already believe that you have The Truth?
And this may be a case where economic theory melds into political ideology and ends up as theology, as Krugman notes this:
Let me also highlight another point from that passage: Ryan warns that if we don’t deal with our fiscal problems, we’ll have to raise taxes and cut benefits for seniors. So what can we do to reduce the deficit? Well, government spending is dominated by the big five: Social Security, Medicare, Medicaid, defense, and interest payments; you can’t make a significant dent in the deficit without either raising taxes or cutting those big five. Defense is untouchable, says the GOP; so that leaves the entitlement programs. And 2.7 of the three entitlement programs are benefits to seniors (70 percent of Medicaid spending goes on seniors).
So let’s see: to avoid cuts in benefits to seniors, we must … cut benefits to seniors.
So it’s simple:
I’m reasonably sure that Ryan hasn’t thought any of this through.
Well, maybe Ryan is simply using a special subset of colloquialisms – fleas in ears and bees in bonnets, and austerity is prosperity, as Ireland found out when it spent a ton and was prosperous, then tried austerity and sank like a rock.
But there are the details, as Michael Tomasky points out:
Ryan’s plan slashes Social Security and Medicare – the latter by 80% around 70 years from now (come to think of it, when my daughter would be using it). It wouldn’t balance the budget, as Miller said, until 2063. It would make the debt problem worse by a staggering $62 trillion. It would slightly raise taxes on the middle class, according to reviews by admittedly liberal (though expert) policy analysis shops.
And why would it do all these things in the name of fiscal prudence? Because in keeping with supply-side religion, it must first and foremost do that which supply-side economics holds as its First Commandment: Cut taxes on the morally superior rich. It is madness. It is a joke.
And Tomasky also points out that Ryan is the Republicans’ acknowledged expert on fiscal and budgetary policy. He is the best they have. But he is, of course, more of a priest, asserting beliefs, than an economist. He asks a question. Why don’t you believe? Where is your faith? And faith needs to evidence.
And at salon.com Joan Walsh says this:
The president was lucky to have not one but two GOP rebuttals, and they were equally strange and dishonest. Rep. Paul Ryan railed against the deficit without proposing even one specific cut. He didn’t talk about his own infamous “Roadmap” – maybe because most analysts have called it a budget buster, even though it essentially replaces Social Security and Medicare with vouchers. The Congressional Budget Office estimates Ryan’s plan wouldn’t balance the budget until 2063, and would add $62 trillion to the debt by then. Citizens for Tax Justice said Ryan’s Roadmap raises taxes on 9 out of 10 taxpayers and while slashing them for the wealthiest.
Wisely, Ryan talked about none of that. He promised to repeal “Obamacare” and replace it with “fiscally responsible patient-centered reform,” but didn’t say word one about what it would entail.
It seems Walsh has no faith:
Most dishonestly, Ryan said Democrats had overspent “to the point where the president is now urging Congress to increase the debt limit,” ignoring the fact that Congress raised it seven times under President Bush. That’s your new chair of the House Budget Committee.
And she adds this:
Somehow I missed the best line in Ryan’s rebuttal, in which he worries we’re headed toward “a future in which we will transform our social safety net into a hammock, which lulls able-bodied people into lives of complacency and dependency.”
I want to ask the 14.5 million unemployed Americans, and the millions more who are underemployed, how they’re enjoying their hammocks. Leave it to a Republican to come up with such vivid metaphors of leisure to talk about suffering. It’s the only way they can relate.
Well, you can get stuck in the language you use, and Krugman had earlier commented that such economic policies are not based on analysis and projection of possible results, but rather on morality:
You see, if you’re the kind of person who views being taxed to pay for social insurance programs as tyranny, you’re also going to be the kind of person who sees the printing of fiat money by a government-sponsored central bank as confiscation. You may try to produce evidence about the terrible things that happen under fiat currencies; you may insist that hyperinflation is just around the corner; but ultimately the facts don’t matter, it’s the immorality of activist monetary policy that you hate.
And this is also why politically conservative economists arguing for something like nominal GDP targeting, and pleading with their perceived political allies to stop talking nonsense, are going to be disappointed. If you’re in the intellectual universe where monetary policy is to be evaluated by results, you’re already out of the true believers’ moral universe. At a fundamental level, Milton Friedman and John Maynard Keynes are on one side; Ron Paul is on the other. And it’s not a debate in which evidence really matters.
And Krugman also wrote a post about the “war” on the idea that a shortage of demand can hurt the economy:
It’s becoming clear that many people don’t so much disagree with the idea that demand matters as find it abhorrent, incomprehensible, or both. I fairly often get comments to the effect that I can’t possibly believe what I’m saying about monetary or fiscal policy, that no sensible person could believe that printing money or engaging in deficit spending will increase output and employment – never mind that all I’m saying is what Econ 101 textbooks have been saying for the last 62 years. …
It’s becoming clear to me that a substantial number of writers on economics find the whole idea that the economy can suffer because people are too thrifty, and insufficiently willing to spend, deeply repugnant. I’m the sort of person who finds the notion that sometimes virtue is vice, and prudence folly, interesting. But it’s clear that a number of people find that notion just plain evil. The world shouldn’t be like that – and therefore it isn’t.
And then there was Digby watching CNN’s pre-speech coverage of the State of the Union and noting that Piers Morgan explained that Britain “went with GOP-style austerity and now have .5% lower GDP.” Digby added that she saw that his CNN colleagues “looked confused.”
And Steve Benen comments:
That’s not unexpected. Much of the media has bought into the nonsense, accepting the Republican line that taking money out of the economy, and undermining consumers’ buying power, will somehow help promote growth.
Wolf Blitzer noted “they’ve had some radical cuts in Britain and elsewhere and Europe as well. And folks aren’t happy about it, but they have no choice.” But Morgan differed on that:
And here’s a fascinating parallel. Britain has been through this exact kind of conundrum a few months ago. And David Cameron’s government decided that they would go the Republican route. They would slash the deficit by cutting public spending. And today, this morning, out came the figures. The economy has shrunk by 0.5 percent.
Now, there are lots of excuses. They’re even blaming the weather. The reality is if you do this you’re taking a huge gamble with the strength of your economy. And you now have a clear divide between the Republicans and the Democrats. President Obama is saying freeze, invest, grow. Republicans are saying slash, don’t invest, grow. One will win.
The CNN panel looked confused, but Morgan has just been following the news:
Prime Minister David Cameron’s coalition government received a sharp political jolt on Tuesday with the release of official figures showing that Britain’s economy contracted slightly in the last three months of 2010, prompting some economists to warn that the country was at increased risk of a “double dip” recession after four consecutive quarters of modest growth.
While the economic figures are subject to revision, the 0.5 percent shrinkage fell well short of the 0.5 percent growth many economists had predicted. And the wider message seemed clear: The slowdown placed the Cameron government’s $128 billion, four-year program of spending cuts and tax increases – policies on which it has staked its survival – at sharply heightened political risk.
The net effect of the new figures was to blunt the government’s momentum and to recast – at least until economic growth resumes – the role Britain has played in the global debate about the best way back to prosperity.
And Benen adds this:
Remember, just this week, Sen. Jeff Sessions (R) of Alabama said it’s imperative that President Obama follow the lead set by our friends across the pond: “We need a budget with a bold vision – like the one unveiled in Britain.”
You mean the one that helped bring the British economy to a screeching halt, senator?
But austerity is prosperity. It has to be. And Benen also notes this:
A week ago, Rep. Jim Jordan (R-Ohio), chairman of the right-wing Republican Study Committee, boasted, “I have never seen the American people more receptive, more ready for the tough-love measures that need to be taken to help fix the country.” And by “tough love,” Jordan meant making devastating cuts to domestic spending.
It’s hard to gauge GOP officials’ sincerity with confidence, but I suspect they genuinely believe Americans just love spending cuts. Republicans seem absolutely convinced that they lost their majority in 2006 in part because they spent so freely, and made big gains in 2010 thanks to an anti-spending platform. If the GOP takes a hatchet to the budget, the party expects to be richly rewarded.
It’s a great theory. And war is peace. But Benen points out that the problem is that much of the public tends to approve of spending cuts only in the abstract:
Prior to the State of the Union address, a majority of Americans said they favor cutting U.S. foreign aid, but more than 6 in 10 opposed cuts to education, Social Security, and Medicare. Smaller majorities objected to cutting programs for the poor, national defense, homeland security, aid to farmers, and funding for the arts and sciences.
This might be the most discouraging poll for Republicans in a very long time. Last week, Gallup asked respondents to say whether they “favor or oppose cutting government spending” in a variety of areas. A majority opposed cuts to everything – literally, everything – except foreign aid. A 52% majority even opposed cuts to funding for the arts. A whopping 67% opposes cuts to education – which happens to be one of the main targets for congressional Republicans.
There are some partisan differences, not surprisingly, but Gallup also found that even most self-identified Republican voters also opposed cuts to farmers, domestic security, defense, combating poverty, Medicare, education, and Social Security.
So that only leaves one thing:
As for foreign aid — the only area of the budget both Democrats and Republicans are willing to cut – it’s worth emphasizing that most Americans vastly overstate how much we currently spend in this area. Recent research from the Program on International Policy Attitudes found that the public thinks roughly 25% of the budget goes to foreign aid, while the truth is about 1%.
So to review, Americans say they want spending cuts, until confronted with options, at which point they only want to cut foreign aid, which is only a tiny sliver of the budget.
Good luck, Congress.
But austerity is prosperity, isn’t it? Any business knows the way to make a ton of money is to forego investing in plants and equipment and more basic research to make an even better or and even newer product. You can’t spend money to make money. You can’t borrow to grow. What if companies issued corporate bonds to buy stuff and grow, or offered shares of ownership in the corporation if you handed them some money, and then also promised to pay you a bit of their profits for handing them that money? No – to make money you cut costs and spend nothing.
No wait. That can’t be right. The words are shifting all around again. Nothing means what is seems. Is that a flea in your ear?
That’s probably why Obama had to shift to metaphor. You do that when the words that everyone is using stop meaning what they seem to mean. So we got Obama’s “Sputnik Moment.”
Fred Kaplan discusses that in this item – and the thesis is simple – “The lesson from the 1950s is that it takes more than private enterprise to revive American innovation. It takes lots of government spending.”
And this is a stroll down memory lane:
President Barack Obama didn’t say much about foreign or military policy in Tuesday night’s State of the Union address. To the extent he did talk about it, he spent more time on economic agreements with India, South Korea, and China than on the wars in Afghanistan and Iraq – and, given the state of the economy and the nature of the political battles ahead, the balance was probably right.
But he did evoke a huge defense issue from a half-century ago – the signal wake-up security call that marked the years of transition from Dwight Eisenhower to John F. Kennedy, the single word that has symbolized ever since the fear of slipping behind in a dangerous world: Sputnik.
“This is our generation’s Sputnik moment,” Obama said. As a result, we need to fund “a level of research and development we haven’t seen since the height of the space race,” with particularly strong investments in biomedicine, information technology, and clean-energy technology. In the same section of the speech, he likened this funding effort to “the Apollo Project,” which later put a man on the moon.
Yet Kaplan was not impressed that later on in the speech Obama proposed, starting this year, to “freeze annual domestic spending for the next five years.” That is supposed to “bring discretionary spending to the lowest share of our economy since Dwight Eisenhower was president.”
Kaplan is confused:
It’s hard to see how he or the Congress can resolve this contradiction – Kennedy-esque vigor and investment on the one hand, Ike-like torpor and penny-pinching on the other. He said much of this extra money could be freed up by eliminating subsidies for the oil companies. First, good luck on that. And second, that alone won’t free up enough.
And Kaplan looks at history:
Sputnik was the 184-pound satellite that the Soviet Union launched into outer space on Oct. 4, 1957. It was a first (the United States had tried once before, with the Explorer, but failed), and it shocked the world. Everyone had assumed the Soviets were technologically primitive; now it looked like they were ahead.
The achievement wasn’t merely symbolic; it also meant that, if the Soviets could build a rocket to boost a satellite into orbit, they might also build a rocket to boost an intercontinental missile that carries a hydrogen bomb and comes back down on the other side of the Earth, blowing an American city to smithereens.
Edward Teller, father of the H-bomb, declared on national television that, with Sputnik, America had “lost a battle more important and greater than Pearl Harbor.” In the U.S. Congress, Clare Boothe Luce, R-Conn., called Sputnik’s beep “an intercontinental outer-space raspberry to a decade of American pretensions that the American way of life was a gilt-edged guarantee of our national superiority.” Senate Majority Leader Lyndon B. Johnson’s aide (and later presidential speechwriter), George Reedy, sent his boss a memo, emphasizing, “It really doesn’t matter whether the satellite has any military value. The important thing is that the Russians have left the earth and the race for control of the universe has started.” (His emphasis.)
Yes, folks were upset. And then we got Kennedy and a lot of useless spending:
Early in his term, he directly responded to Sputnik in two ways: He poured money into the Minuteman ICBM program (both before and after he realized that the missile gap was a myth). And he pledged to land an American on the moon by the end of the decade.
In the spring of 1959, Texas Instruments had introduced a new technology called the microchip. But it was very expensive and generated no demand from the private sector. However, these tiny chips would be needed to power the guidance systems in the Minuteman’s nose cone – and in the coming Apollo program’s space capsule.
It was the Pentagon and NASA that bought the first microchips. The demand allowed for economies of scale, driving down costs enough so that private companies started building products that relied on chips. This created further economies of scale. And so came the inventions of the pocket calculator, smaller and faster computers, and, decades later, just about everything that we use in daily life.
Was that useless spending? Would private enterprise have come up with all this anyway? Kaplan thinks not:
None of this was inevitable. It started only because of government investment. Obama made this same point in Tuesday night’s address: “Our free enterprise is what drives innovation. But because it’s not always profitable for companies to invest in basic research, throughout history our government has provided cutting-edge scientists and inventors with the support they need. That’s what planted the seeds for the Internet. That’s what helped make possible things like computer chips and GPS.”
And facts are facts:
GPS was initially an Air Force program, designed to make bombs more accurate. The Internet was an internal communication program created by the Defense Advanced Research Projects Agency.
Obama could have gone back further. The first commercial computer, the IBM 1401 of the late 1950s, came about only because the first customers were government agencies, the Social Security program and the Veterans Administration, which required a computer with enough capacity to store data about the millions of Americans receiving government checks.
Obama said, twice, near the end of his speech, “We do big things.” Yep, and not by claiming austerity is prosperity.
But people say all sorts of things where they don’t even know what the words mean anymore. But that’s no skin off my teeth, you know.