Hey, maybe we're winning this battle! When it comes to economic growth, suddenly voices on the left are starting to sound like Robert Bartley and Jack Kemp. Or I should say, they're doing what they think is a passable imitation of the past generation's great advocates of growth policies. The problem, of course, is that those on the left have an, er, interesting idea about what kinds of policies generate growth.
Actually, that's not the biggest problem. The biggest problem is that they're totally insincere, and they're suddenly embracing growth as a way to take the heat of Barack Obama for the completely out-of-control deficits for which he has no serious solution whatsoever. That's why you end up with "pro-growth" arguments like this one from E.J. Dionne:
“Calm down” is exactly what we need to do. We have been inundated with apocalyptic prophecies about our debt levels. While they come from the center as well as the right, Republicans are using them to turn the next two years into a carnival of contrived crises. These will (1) make normal governing impossible -- no agency can plan when budgets are always up in the air; (2) distract us -- we need to think about measures, such as an Infrastructure Bank, that would promote prosperity now and into the future; and (3) drive business people crazy -- no enterprise would put itself through the contortions that are becoming part of Washington’s routine.
Only if you believe that deficits mean the end is near can any of this be justified. Sen. Mitch McConnell, the Republican minority leader, perfectly encapsulated the effort to diminish the importance of all else (including growth) when he declared recently that “deficit and debt” constitute the “transcendent issue of our era.”
No, it’s not. As Bruce Bartlett, the bravely dissident conservative economics specialist wrote a few days ago: “In fact, our long-term deficit situation is not nearly as severe as even many budget experts believe. The problem is that they are looking at recent history and near-term projections that are overly impacted by one-time factors related to the economic crisis and massive Republican tax cuts that lowered revenues far below normal.”
Former Treasury Secretary Lawrence Summers warned in The Washington Post that we can’t “lose sight of the jobs and growth deficits that ultimately will have the greatest impact on how this generation of Americans lives and what they bequeath to the next generation.” And economists at the International Monetary Fund have offered some honorable mea culpas about underestimating the damage that ill-timed austerity programs have done to growth -- and also to the fiscal positions of the nations affected by them.
Got that? Calm down about $1 trillion deficits that have the national debt soaring in excess of GDP. And when you look at the fact that we are facing budget showdowns every few months, by all means blame Republicans, and completely ignore the fact that none of this would be happening if Senate Democrats would pass a budget every year like they're supposed to.
Oh, and while you're at it, be sure to quote "dissident conservative economics specialist" Bruce Bartlett, a one-time foot soldier in the Reagan Revolution who lost his way and voted twice for Obama. That's like citing Charlie Crist and saying, "Look, a Republican said it!"
In the final paragraph, we get right down to it. In citing Summers, Dionne is attempting to make the case that cutting spending would amount to an "ill-time austerity program" that would have a crippling effect on growth. Nonsense. The fact is that we are spending a higher percentage of GDP - a full 25 percent - than at any time since World War II, and we're seeing anemic growth at best - and if you look solely at the fourth quarter of 2012, no growth at all.
These people have a lot of nerve spending us into this kind of debt, generating piss-poor growth in the process, then insisting that we can't stop running up debt because we'll ruin all the wonderful growth!
Some conservatives are falling into this trap, too, panicking that talk of spending cuts is a political loser because it can be portrayed as "austerity" by the likes of Dionne and Paul Krugman, and wanting the discussion to focus totally on growth.
Here is the problem with that: Yes, growth is the answer. There's no doubt about that. If we could consistently achieve 4 percent growth, it would have a hugely positive impact not only federal revenues but also spending because it would relieve a lot of the pressure to spend on things like unemployment benefits.
But real, sustained growth does not come from federal deficit spending. It has to be driven by the private sector. When you cut taxes on corporations and investors, you free up capital that can then flow into wealth creation and job creation. This drives real, sustained growth. The private sector always spends capital more productively than government because the private sector puts it where it will be productive, not where it will buy votes.
Oh, well. At least liberals are talking about growth. Maybe one of these days, they'll learn what actually produces it, but that assumes they're not just using it as a distraction - and if I were you, I wouldn't assume that.
