The High Cost of a Broken Metaphor, Paul Krugman: Dumbing Deficits Down

http://www.truthdig.com/report/item/the_high_cost_of_a_broken_metaphor_20110313/

 

The High Cost of a Broken Metaphor

By E.J. Dionne, Jr.

Truthdig: Mar 13, 2011

“We’re broke.”

You can practically break a search engine if you start looking around the Internet for those words. They’re used repeatedly with reference to our local, state and federal governments, almost always to make a case for slashing programs—and, lately, to go after public-employee unions. The phrase is designed to create a sense of crisis that justifies rapid and radical actions before citizens have a chance to debate the consequences.

Just one problem: We’re not broke. Yes, nearly all levels of government face fiscal problems because of the economic downturn. But there is no crisis. There are many different paths open to fixing public budgets. And we will come up with wiser and more sustainable solutions if we approach fiscal problems calmly, realizing that we’re still a very rich country, and that the wealthiest among us are doing exceptionally well.

Consider two of the most prominent we’re-brokers, House Speaker John Boehner and Wisconsin Gov. Scott Walker.

“We’re broke, broke going on bankrupt,” Boehner said in a Feb. 28 Nashville speech. For Boehner, this “fact” justifies the $61 billion in domestic spending cuts House Republicans passed (cuts that would have a negligible impact on the long-term deficit). Boehner’s GOP colleagues want reductions in Head Start, student loans and scores of other programs voters like, and the only way to sell them is to cry catastrophe.

Walker, of course, used the “we’re broke” rationale to justify his attack on public-worker collective bargaining rights. Yet the state’s supposedly “broke” status did not stop him from approving tax cuts before he began his war on unions and proposed all manner of budget cuts, including deep reductions in aid to public schools.

In both cases, the fiscal issues are just an excuse for ideologically driven policies to levy lower taxes on well-off people and business while reducing government programs. Yet only occasionally do journalists step back to ask: Are these guys telling the truth?

The admirable website PolitiFact.com examined Walker’s claim in detail and concluded flatly it was “false.”

“Experts agree the state faces financial challenges in the form of deficits,” PolitiFact wrote. “But they also agree the state isn’t broke. Employees and bills are being paid. Services are continuing to be performed. Revenue continues to roll in. A variety of tools—taxes, layoffs, spending cuts, debt shifting—is available to make ends meet. Walker has promised not to increase taxes. That takes one tool off the table.”

And that’s the whole point.

Bloomberg News looked at Boehner’s statement and declared simply: “It’s wrong.” As the agency’s David J. Lynch wrote: “The U.S. today is able to borrow at historically low interest rates, paying 0.68 percent on a two-year note that it had to offer at 5.1 percent before the financial crisis began in 2007. Financial products that pay off if Uncle Sam defaults aren’t attracting unusual investor demand. And tax revenue as a percentage of the economy is at a 60-year low, meaning if the government needs to raise cash and can summon the political will, it could do so.”

Precisely. A phony metaphor is being used to hijack the nation’s political conversation and skew public policies to benefit better-off Americans and hurt most others.

We have an 8.9 percent unemployment rate, yet further measures to spur job creation are off the table. We’re broke, you see. We have a $15 trillion economy, yet we pretend to be an impoverished nation with no room for public investments in our future or efforts to ease the pain of a deep recession on those Americans who didn’t profit from it or cause it in the first place.

As Sen. Al Franken, D-Minn., pointed out in a little-noticed but powerful speech on the economy in December, “during the past 20 years, 56 percent of all income growth went to the top 1 percent of households. Even more unbelievably, a third of all income growth went to just the top one-tenth of 1 percent.” Some people are definitely not broke, yet we can’t even think about raising their taxes.

By contrast, Franken noted that “when you adjust for inflation, the median household income actually declined over the last decade.” Many of those folks are going broke, yet because “we’re broke,” we’re told we can’t possibly help them.

Give Boehner, Walker and their allies full credit for diverting our attention with an arresting metaphor. The rest of us are dupes if we fall for it.
   
E.J. Dionne’s e-mail address is ejdionne@washpost.com.
   
© 2011, Washington Post Writers Group

http://www.nytimes.com/2011/03/11/opinion/11krugman.html?nl=todaysheadlines&emc=tha212

 

Dumbing Deficits Down

 

Paul Krugman:

NY Times Op-Ed: 3/11/2011

 

Like anyone who writes regularly about what passes for economic and fiscal debate in American politics, I’ve developed a strong tolerance for nonsense. After all, if I got upset every time powerful people were illogical and/or dishonest, I’d spend every waking hour in a state of raging despair.

Yet there are still moments when I find myself saying, “They can’t really be that stupid,” or maybe, “They can’t really think the rest of us are that stupid.” And I had one of those moments reading about a recent conference on national health policy, which featured a bipartisan dialogue among Congressional staffers.

According to a column in Kaiser Health News, Republican staffers jeered at any and all proposals to use Medicare and Medicaid funds better. Spending money on prevention was no more than a “slush fund.” Research on innovation was “an oxymoron.” And there was no reason to pay for “so-called effectiveness research.”

To put this in context, you have to realize two things about the fiscal state of America. First, the nation is not, in fact, “broke.” The federal government is having no trouble raising money, and the price of that money — the interest rate on federal borrowing — is very low by historical standards. So there’s no need to scramble to slash spending now now now; we can and should be willing to spend now if it will produce savings in the long run.

Second, while the government does have a long-run fiscal problem, that problem is overwhelmingly driven by rising health care costs. The Congressional Budget Office expects Social Security outlays as a percentage of G.D.P. to rise 30 percent over the next quarter-century, as the population ages, but it expects a near doubling of the share of G.D.P. spent on Medicare and Medicaid.

So if you’re serious about deficits, you shouldn’t be pinching pennies now; you should be looking for ways to rein in health spending over the long term. And that means taking exactly the steps that had those G.O.P. staffers sneering.

Think of it this way: Congress could, with a stroke of a pen, cut Social Security benefits in half. But it couldn’t do the same with health spending: Medicare can’t suddenly start paying to replace only half a heart valve or mandate that bypass operations stop halfway through.

Limiting health costs, therefore, requires a smarter approach. We need to work harder on prevention, which can be much cheaper than a cure. We need to find innovative ways of managing health care. And, above all, we need to know what works and what doesn’t so that Medicare and Medicaid can say no to expensive procedures with little or no medical benefit. “So-called comparative effectiveness research” is central to any rational attempt to deal with America’s fiscal problems.

But today’s Republicans just aren’t into rationality. They claim to care deeply about deficits — but they’ve spent the past two years putting cynical, demagogic attacks on any attempt to actually deal with long-run deficits at the heart of their campaign strategy.

Here’s a recent example. In his new book, Mike Huckabee — the current leader in polls asking Republicans whom they want to nominate in 2012 — attacks the Obama stimulus because it included funds for, yes, comparative effectiveness research: “The stimulus didn’t just waste your money; it planted the seeds from which the poisonous tree of death panels will grow.” Will others in the G.O.P. stand up and say that Mr. Huckabee is wrong, that Medicare needs to know which medical procedures actually work? Don’t hold your breath.

Of course, Republicans aren’t the only cynics. As the national debate over fiscal policy descends ever deeper into penny-pinching, future-killing absurdity, one voice is curiously muted — that of President Obama.

The president and his aides know that the G.O.P. approach to the budget is wrongheaded and destructive. But they’ve stopped making the case for an alternative approach; instead, they’ve positioned themselves as know-nothings lite, accepting the notion that spending must be slashed immediately — just not as much as Republicans want.

Mr. Obama’s political advisers clearly believe that this strategy of protective camouflage offers the president his best chance at re-election — and they may be right. But that doesn’t change the fact that the White House is aiding and abetting the dumbing down of our deficit debate.

And this dumbing down bodes ill for the nation’s future. Health care is only one of the large and difficult problems America needs to deal with, ranging from infrastructure to climate change, all of which demand that we engage in a lot of hard thinking. Yet what we have instead is a political culture in which one side sneers at knowledge and exalts ignorance, while the other side hunkers down and pretends to halfway agree.