Here We Go Again

by Steve

For sake of discussion this morning, let’s say you are a leading star of the Tea Party who fancies themselves a president in 2017. You know that you’re peddling an economic strategy that only sells well amongst the brain-dead sheep in your gerrymandered House districts and safely red states, and that you’ll need a catchy and short message to sell your real agenda (to gut the federal government and most of its spending), one that can sway millions of voters with a popular concept that can only cause widespread economic misery. And you’d want a way to take your extremist Tea Party dogma and force it from a minority upon the majority of the nation not just through political means, but also through the ultimate mechanism enforced by a friendly Supreme Court: by constitutional means as well.

What do you do?

Since you have no real prescription to jumpstart a depressed economy, you ask a semi-credible right wing economist, the one who gave us the failed Bush economic program, to author another attempt at a balanced budget amendment.

Seriously.

R. Glenn Hubbard does this today in the New York Times, where as one of the Very Serious People he tries with a straight face to convince us that a balanced budget amendment is essential for our economic well-being. After the usual straw-man argument, where Hubbard and Tim Kane allege that the left now dismisses the problem of deficits, when in fact what is being dismissed is any disingenuous argument from right wing economic hacks that short term deficits are our chief economic problem, Hubbard and Kane admit that conservatives do only really care about “starving the beast”:

Let’s admit it, then. Conservatives were wrong — not in beliefs that higher marginal tax rates harm growth, not that debt is dangerous, but about strategy. The beast was not starved.

Actually, conservatives have been wrong about high marginal tax rates and growth, and about debt being dangerous, but Hubbard is more concerned that the Right hasn’t found an effective strategy to finally accomplish what only a few of them have been willing to admit was their goal all along. He and Kane think they've found that sales pitch through a balanced budget amendment that only allows current spending to be pegged to the last seven years’ average of collected revenue.

First, because reconciling expenditures and revenues would be impossible in real time, the constraint should be on expenditures only. A good rule would be this: Congress shall spend no more in the current year than it collected, on average, over the previous seven years. No more overspending in fat years and no draconian cuts to expenditures during future recessions.

It should jump out at you that what Hubbard, Kane, and yes Paul and Cruz are proposing here is that an economy that is suffering a slow and depressed recovery from a market-generated Armageddon would be deprived of any Keynesian stimulus, thereby perpetuating the ongoing misery and demolition of the middle class. This is nothing new for Hubbard, who was Romney’s chief economic thinker. Hubbard believes the best way to economic growth is to shrink government spending and the debt. That, and perhaps more education and skills training for the low and middle class are Hubbard’s entire prescription to fix our income inequality and macroeconomic woes. And if that sounds like a minimalist and denial-laden rationale that comes straight from Wall Street and the One Percent, it should because it is.

It should also jump out at you that suggesting such a scheme now represents curious timing, after the last 5-6 years of depressed economic activity and revenues, caused largely by an obstructionist political opposition fixated on personal animus rather than the country's best interests. Yet this scheme, given the declining revenue picture for the federal government since the Reagan days whereby there has been an average 3-point gap between federal revenues and expenditures would require an immediate cut in spending so large that it is beyond even what Paul Ryan is contemplating, an amount only extremists would love. It's a pretty neat trick: let Corporate America blow up an already-anemic and under-regulated economy, driving down revenues and sending growth into depression territory while you rake off ATM-type handouts from the taxpayers, then you use your Tea Party lackeys to demand that all spending be constitutionally driven down to the historical revenue averages that your malevolent policies created.

The Right and the Tea Party have no prescription for what ails the economy right now, which are a lack of consumer demand and a lack of public investment that can lead to economic growth. The people bankrolling the Tea Party aren’t concerned about the masses because they are making their money regardless of what happens to the 99%, and if they can use the mess they created to get reduced spending, reduced taxes, and reduced regulations it’s all a big win for them. And the best way to do that is through a better way to sell that dogma, through another attempt at a balanced budget amendment that gets the deficit scolds their dream through constitutional means, even if it results in a decade of depressed economic output here at home, as long as the profits and returns continue to pour in.

And if it lets you sell a devastating economic strategy and get your very own extremist into the White House, all the better.