There's such a thing as a smart deficit
Whoever is elected president will not have an enviable job. The economy is in crisis and the defict is sky high. But commentator Thomas Frank says deficits can be good depending on how the money is spent.
Thomas Frank, commentator and author of "What's the Matter With Kansas?" and "The Wrecking Crew" (us.macmillan.com)
More on The Economy, Politics, Fed. Budget/Govt. Spending, America's Financial Crisis
Links
- Thomas Frank's Web site
Thomas Frank's Web site
TEXT OF STORY
Kai Ryssdal: Running this country is tough enough even when things are good. But whoever is elected next week, to the White House and to Congress, is going to inherit a seriously hobbled economy and sky-high deficits. That means presidential ambitions might well have to be curtailed.
Commentator Thomas Frank says whether government deficits are good or bad kind of depends on how the money is spent.
Thomas Frank: This is one of history's great paradoxes: Again and again we elect deficit-denouncing conservatives to office, and again and again they proceed to run up gigantic federal deficits.
Why do they do it? Well, for one thing, deficits allow them to reward their constituents; They can cut taxes for the very rich while sluicing money to politically-connected contractors.
For another thing, deficits allow the conservatives who piled them up to demand that social programs be cut, that government operations be outsourced, that Social Security be privatized.
And now we have a conservative Republican running for president who is outraged by the deficits run up by another conservative Republican. That candidate, John McCain, promises -- and you guessed it -- a balanced budget in his first term in office. After all, his campaign tells us that individual families don't get to run deficits -- they have to pay their bills on time, and therefore so should the federal government. So what we need to do is slam on the brakes.
McCain's approach would be calamitous. The federal government isn't a family; it's allowed to run deficits when they're called for, and believe me, they're called for right now when we're in recession and everything is contracting.
Maybe there's another way of looking at the problem. Suppose we understand the current deficits that benefited the rich and the well-connected as stupid deficits that didn't stimulate much more than the market for yachts and lobbyists. Smart deficits, on the other hand, would come from federal spending that gets the economy going again. Spending money on infrastructure, on stabilizing the housing market and on a massive energy independence program -- that's the kind of energetic and intelligent governing we so urgently need today.
Look, the alternative is to deliberately bring on some economic day of judgment. But the right answer to our problem is not to steer for an iceberg while shouting 'every man for himself!'
Ryssdal: Thomas Frank is a columnist for the Wall Street Journal. His latest book is called "The Wrecking Crew: How Conservatives Rule."
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Comments
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From Draper, UT, 11/03/2008
Frank makes at least two major mistakes in this piece. First, he calls George Bush a conservative. Second, he calls McCain a conservative. The truth is that neither one is anything close to conservative when it comes to economics. Bush's economic policies of high spending and high taxes (yes, some have been lowered but they are still way too high) are liberal, and the reaction from the left goes to show that even when you do what they want, they'll still blame you for it when things go wrong.
11/01/2008
I was going to take your Mr. Frank's comment seriously until he said "They can cut taxes for the very rich while sluicing money to politically-connected contractors." Please, politically-connected contractors do well regardless of who is in charge in the office. If you want to attack the tax cut, why don't you mention that the president cut the bottom tax bracket from 15% in 2000 to 10% in 2003 AND from 28% in 2000 to 15%/25% in 2003? Maybe if you mention tax cut for the poor is not that sexy for your comment.
From Charlotte, NC, 11/01/2008
I agree with rar loke. This is Keynesianism. There are some very strong criticisms of JM Keynes ideas about aggregate demand and how it can be replaced by government spending. Not the smallest of these criticisms is that it tends to produce bubbles as the government arbitrarily spends on things that are politically favored at the moment.
So the way we got over the bursting of the .com bubble was to prop up real estate. Now that bubble is burst. And we're suggesting that the solution is to create some other bubble?
10/31/2008
franks should be required reading.
10/31/2008
brilliant work. franks' books unpack disaster capitalism in ways that are should be required reading. for those that read.
From new york, NY, 10/31/2008
how come there are never Monetarist economists on this show? Thomas Frank is the typical Keynesian economist. Run up huge deficits, run away inflation, print new money, and more government intervention in the economy.
From new york, NY, 10/31/2008
how come there are never Monetarist economists on this show? Thomas Frank is the typical Keynesian economist. Run up huge deficits, run away inflation, print new money, and more government intervention in the economy.
From Fort Collins, CO, 10/31/2008
Praises for Thomas Frank's comments 10.31.08. I have no degree in economics or public policy, but Mr. Frank's analysis is clear and logical. Let's all send this article to our congressional and state legislators! Thanks! LS Foster
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