The deficit scold cause has suffered significant intellectual erosion over the last year or so. In the short run, the interest rate spike they keep insisting will happen keeps not happening. In the long run, the health-care-cost inflation that is at the root of the long-term fiscal predicament is growing markedly less dire. The case for prudent fiscal adjustment remains strong, but the case for bug-eyed, table-pounding terror is growing increasingly ridiculous.
But bug-eyed, table-pounding terror is the stock-in-trade of the fiscal scold movement. And so they are striking back by labeling anybody with a calmer view of the deficit as a “debt denier.” Joe Scarborough, who may have launched the new catchphrase on Twitter, has a new op-ed in Politico brandishing the epithet. Meanwhile, the anti-deficit lobby “Fix the Debt” — for whom Scarborough has served as one of many media spokespersons — has taken up Scarborough’s favorite label with a new campaign, debtdeiners.com, which, alongside its latest attempt to generate a viral dance video, amounts to a concerted counteroffensive against Paul Krugman and others who have ever so slightly mitigated the tone of apocalyptic hysteria surrounding the fiscal debate. They even have their own debt deniers hashtag. They are trying very hard to make “debt deniers” happen.
Let’s examine their case on the merits, not merely as an attempt to create a viral meme.
Analyzing the argument in a Joe Scarborough–authored op-ed is inherently challenging. (The written word in general is just a terrible medium for Scarborough, hiding his winning personality while exposing his inaptitude for analysis.) It mainly consists of using variations of “debt denier” repeatedly to describe his opponents. To his credit, Scarborough finally cites one actual economist who shares his view, a welcome departure from his usual method of answering charges that he is in the grips of an incestuous groupthink driven by non-economist elites by citing the agreement of his non-economist elite friends.
Unfortunately for Scarborough, the economist he cites, Alan Blinder, turns out to hold essentially the same view as Krugman. Blinder’s column argues, “America doesn’t have a generalized spending problem that requires severe cuts across the board. We have, instead, a massive problem of exploding health care costs.” Blinder notes that advocates of Obamacare hope that it will significantly slow down health-care-cost inflation, but “right now, nobody knows” if it will for sure. This is almost identical to Krugman’s argument (“America does have a long-run budget problem, thanks to our aging population and the rising cost of health care”). Blinder does differ a bit from Krugman in his emphasis, but his substantive view of the situation seems to be identical. That Scarborough would support his claim that Krugman’s view is “extreme” and “indefensible” by citing Blinder is just a total failure of reading comprehension.
Obviously, nobody is denying the existence of the national debt, or the long-term budget deficit. Hardly anybody is even denying that reducing the long-term budget deficit would be a good thing. The actual disagreement comes into focus in Fix the Debt’s rebuttal of unnamed foes:
Some have called for $1.5 trillion of additional deficit reduction in order to stabilize the debt. Although this would be a start, it would leave no margin for error if projections are off, provide no insurance against future irresponsibility in Washington, offer no fiscal flexibility to deal with future crises, and would almost certainly fail to stabilize the debt in future decades.
Though “Fix the Debt” does not deign to link to opposing views, “some” refers to the Center on Budget and Policy Priorities, a highly respected and rigorously honest center-left think tank specializing in fiscal policy. It issued a recent paper arguing that the $1.5 trillion target for additional deficit reduction would likely stabilize the debt for a decade, and thus forestall the dangers of runaway debt and rising interest rates against which Fix the Debt has been warning. Krugman has endorsed CBPP’s view, as did President Obama in his State of the Union address (implicitly — Obama identified $2.5 trillion in deficit reductions undertaken since 2011, and a total goal of $4 trillion in deficit reduction, leaving $1.5 trillion to go).
The CBPP paper carefully weighs the pros and cons of further deficit reduction, arguing that a higher deficit reduction total would be more “desirable,” but only if it could be done in a smart way. That, of course, is the catch: Republicans continue to insist that no revenue at all can be used. (Paul Ryan reiterated this stance yesterday.)
As CBPP argues, stabilizing the debt would buy enough time to craft a sensible solution to open up. It is true that over a very long time period, the deficit problem looks extremely bad. At the same time, the farther out in time you try to extend a budget projection, the greater the likelihood will be that your prediction will be wildly off. The paper makes a careful argument for probabilistic weighing of costs and benefits and calibrating different probabilities of risk.
There are issues where immediate action would make a huge difference. Every ton of greenhouse gasses pumped into the atmosphere is a ton of greenhouse gasses we’ll never get back, ratcheting up global warming in a way we can probably never reverse. Mass unemployment from the 2008 economic crisis likewise creates irreversible harm for millions of Americans — the longer they stay out of the job market, the more their job skills and networks deteriorate, and the more remote the likelihood grows that they’ll ever recover their standing.
The deficit is not like that. Not only do we not need to start reducing the budget deficit this year, it would actually be harmful to do so with unemployment still high. And even if we do run too-high deficits after the economy has recovered, the harm isn’t permanent, as we can pay down the excess debt later. But one of the oddities of our political debate is that we have categorized these issues in just the opposite order. We’ve treated climate change and mass unemployment as back-burner issues, and debt reduction as a moral crisis.
It’s easy to see why the fiscal scolds feel compelled to moralize deficits. Deficit reduction is politically hard because it means making people pay more for their government or get less from it. Politicians will never want to do anything about it unless they feel some urgency. But the result of the effort by the fiscal scolds to generate urgency has been not only crowding genuinely urgent issues off the primary agenda, but also to cultivate a widespread hysteria about debt.
In an interview with Greg Sargent, Scarborough concedes he actually agrees substantively with the liberal position. Likewise, if you look closely at Fix the Debt’s claims, it’s pretty silly — they are treating the difference between $4 trillion in debt reduction (with more later if needed) and $5 trillion in debt reduction as the difference between a future of prosperity and a bleak hellscape of bankruptcy and ruin.
The positions themselves are not what is at issue here. It is the belief of the debt scolds that their issue holds such overweening importance that it can only be considered in moralistic terms. To Joe Scarborough and the whole team of anti-debt television personalities, calibrating out the ideal terms of debt reduction is like calibrating out how much to spend fighting Hitler. The fiscal scolds have so successfully inculcated their moralistic urgency about debt, so thoroughly dominated the news agenda, that millions of people like Joe Scarborough think it is self-evidently insane and evil to in any way minimize the awesome scale of the crisis. Scarborough can’t really explain why Krugman is wrong, because the nub of the issue is that Krugman’s way of looking at the issue simply offends him.