A Deficit of Information

I was going to downsize the political posts on my blog, but I need to say something about a newspaper piece that I recently read.  On September 16, 2013, Peter Grier wrote an article for the Christian Science Monitor titled “Obama: Deficits Falling at Fastest Rate since WWII. Is that true?”  The piece was following up this claim made by President Obama.  As the article mentions, the Congressional Budget Office says that “through the first 11 months of fiscal 2013, the budget deficit was down 35 percent from the comparable period of 2012.”

Grier’s article asks if what the President said was true, and answers: “Strictly speaking, yes.  The deficit is falling as rapidly as it has in decades. ... But ... one of the reasons it is falling so fast is that it shot up so high in the first place.”  Grier goes on to let the air out of Obama’s balloon: “In 2008, the deficit was about $458 billion.  In 2009, it rocketed up to $1.4 trillion.  It stayed above the trillion-dollar mark for 2010 through 2012.”  

And he quotes the director of the National Economic Council under George W. Bush as writing, “When the president proclaims that the deficit is shrinking at its fastest rate in decades, that’s the same as saying that the speed at which the nation is rolling backwards has decreased dramatically.”  The gist of Grier’s article is that the problems that caused the deficit are “far from solved,” and that Obama shouldn’t be taking credit for a declining deficit during his presidency when that deficit also increased so spectacularly during his presidency.  The tone of the article is definitely anti-Obama.

But in undercutting the President’s claim, Grier leaves out a crucial piece of information: he disparages the deficit shooting upwards in 2009 — without mentioning that the government’s Fiscal Year 2009 began on October 1, 2008, under President Bush.  And that a big chunk of the deficit was due to the Wall Street bailout that year.  Yes, the year’s fiscal spending also included the American Recovery and Reinvestment Act of 2009, also known as “The Stimulus,” but as Wikipedia says: “The CBO estimated that ARRA increased the deficit by [only] $200 billion for 2009, split evenly between tax cuts and additional spending, excluding any feedback effects on the economy.”

For Grier not to mention that the Obama Administration wasn’t responsible for the entire $1.4 trillion deficit in 2009, and for his article not to mention the Bush presidency or the bailout at all, strikes me as extremely disingenuous.  And if Grier were to defend his article by saying that he was only looking at the calendar year of 2009 and not Fiscal Year 2009, that’s still intellectually dishonest.

And so, our political discourse totters along.

The Return of the Political Post: It’s the Economists, Stupid

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 I wasn’t going to write any more political blogposts.  I still have some very strong opinions — and those opinions are still liberal — but I don’t have any real insight into the political world: I’m not a journalist or a political scientist; I don’t have any firsthand knowledge of what goes on in the Senate cloakroom; I’m not privy to any facts that can prove a partisan point one way or the other.  The best that I can do, politics-wise, is to parrot a pundit that I agree with.  And that’s not a recipe for a compelling political opinion.

But watching the above episode of MSNBC’s Up with Steve Kornacki (a show title that makes me think of Up with People) on the legacy of Bill Clinton’s 1993 budget got me thinking.  The Clinton era was one of peace, prosperity, and balanced budgets — as well as venomous Republican opposition to his policies.  And that makes me wonder: Since the country and the economy were working so well, why did the Republicans so stridently oppose Clinton the way that they did, going so far as to shut down the government?

To answer this question (although, if you’ve watched the above video, you already have a pretty good idea), I turn to an op-ed scribed by conservative pundit Jonah Goldberg.  Writing during the George W. Bush years, Goldberg lamented that the man in the White House at the time wasn’t getting the credit he deserved for the economic good news on his watch. Goldberg — wrongly — attributed this state of affairs to a hostile media that is quick to fault Republican presidents for what’s bad but slow to credit them for what’s good.  Goldberg grumbles:

If Clinton “created” those 22 million jobs in the 1990s, and if Bush “lost” a few million jobs in his first term, surely by the same standard Bush has “created” 5 million jobs since 2003. Of course, Republican presidents rarely receive such fairness. The media [i.e., nasty liberals, the lot of them] held [Ronald] Reagan responsible for the 1981-1982 recession but merely darn lucky for the boom that followed. Poppa Bush was blamed for the mild recession in 1991-1992, and, even though it ended on his watch, the press credited Clinton with “fixing” the economy in the 1990s.

Goldberg’s gripe is flawed at best.  During the 40th president’s administration, I remember such media outlets as Newsweek and others referring to economic growth of the time as the “Reagan Recovery.”  Reagan was a very popular president, when he was in office as well as afterwards, and — when not genuflecting to his sunny persona — the news media weren’t going to be too critical of him for fear of alienating their pro-Reagan readers (and sponsors).  So, Goldberg’s kvetching is merely a bid for Republican victimhood.

But his diatribe gives us a glimpse into what many conservatives are saying about Clinton’s stewardship of the economy in the 1990s.  In a political inversion of Goldberg’s complaint about liberals unfairly withholding credit to Republican presidents for their good managing of the economy, conservatives contend that Clinton was just “darn lucky” to be president during the dot-com boom and other favorable financial factors.  Conservatives essentially argue that the economy would have been even stronger and more prosperous if it hadn’t been for Slick Willie’s onerous taxes on those who could most afford them.  In this view, the 1990s would have been prosperous regardless of who was in the White House. 

Conversely, this version of events says that Clinton’s successor, George W. Bush, had the misfortune to be president when the economic tide turned and the “war on terror” made for a more financially difficult decade.  So, conservatives say, Clinton did everything wrong (raise taxes, expand government), but the financial landscape, by the sheerest fluke, just happened to get better anyway.  Meanwhile, Bush did everything right (lower taxes, loosen regulations), but the financial landscape, by the sheerest fluke, just happened to be, according to the Washington Post, “the weakest eight-year span for the U.S. economy in decades.”  In other words, conservatives are telling us to trust them and not to believe our lying eyes.  This is their story — narrated in the above video by conservative economist Avik Roy — and they’re sticking to it.

When you point out to a conservative economist that the economy grew after Clinton’s more liberal financial policies but contracted under Bush’s conservative ones, you will get the response, as Roy says in the video, “Correlation is not causation.”  But Roy and others who answer this way get the saying wrong; more correctly, it’s “correlation is not necessarily causation.”  I understand that several other factors were also responsible for the economic boom of the 1990s, but Clinton’s policies surely contributed as well, especially the role of higher taxes on the wealthy bringing down the deficit.

To be hypothetical, if a U.S. president raised taxes the way Clinton did and the economy performed as it did under Bush, and then another president cut taxes the way Bush did and the economy performed as it did under Clinton, I submit that conservative economists would not be saying, “Correlation is not causation.”  I submit that these economists would be pointing to the hypothetical presidents’ actions on taxes and the subsequent fiscal performances as a vindication of the economists’ conservative theories.  But since the actions of Clinton and Bush, and the respective financial outcomes of those actions, seem to refute their thesis, conservative economists are quick to fall back on “correlation is not causation.”

I’m not an economist.  For all I know, there may very well be complicated and inconspicuous reasons — reasons more discernable to a professional economist — why Clinton’s economic policies (under normal circumstances) ought to have failed, but miraculously didn’t, and why Bush’s policies (under normal circumstances) ought to have succeeded, but disastrously didn’t.  I’m willing to believe all of this, but I don’t.  And I don’t because of my experiences with the U.S. economy over the last 20 years: the way it prospered under Clinton and the way it declined under Bush.  In other words, the empirical evidence is on the side of the liberal economists: Clinton raised taxes and had a prosperous economy, while Bush cut taxes and had (to put it charitably) a substandard economy. 

If conservative economists are going to convince me that Bush’s approach to the economy was superior to Clinton’s, they will need to come up with an explanation that compellingly contradicts my experiences of the last two decades.  They will need to provide powerful and palpable evidence that my perceptions mislead me.  They will need to prove that Clinton’s wrongheaded fiscal policies just happened to luck out, when they shouldn’t have, while Bush’s wiser policies just happened to strike out, when they shouldn’t have.  But so far, all these conservatives have are assertions.

So, conservative economists, I’m willing to let you convince me that I have it all wrong.  I’m willing to be persuaded that George W. Bush’s economic policies were superior to Clinton’s.  But in order to sway me, you will need to find a compelling way to get me to re-evaluate what I have seen and felt these last 20 years.  So, go ahead, conservative economists, change my mind.  The burden is on you.