The debate rages on over Obama’s budget.
For good reasons, the “fiscal hawk” position has become a consensus position in our national politics. But what too many fiscal hawks are missing, is that there IS a difference between “investing” and mere “spending”. If there weren’t, all your 401(k) money would go towards electronic Dura Ace 11-speed upgrades.
(Oh, I forgot: it already does!)
During the campaign, Barack said repeatedly that Bush didn’t just spent too much money, but that, in the end, we got nothing for it. The money was spent recklessly, and didn’t help create any platform (infrastructure, education, etc.) to leverage in the future. (And, IMHO, when the full record becomes available, the amount of criminal spending, i.e., big ticket no-bid appropriations that went to politically connected friends, is going to be shocking; remember the $4 billion that “disappeared” in Iraq?)
Obama’s theory is that future increases in economic activity made possible by investments in meaningful things today (repeat after me: Energy, Education and Health Care; Energy, Education and Health Care) will significantly reduce future structural deficits.
This theory makes at least as much sense as the theory behind massive tax reductions, i.e., that the incentives for American entrepreneurs had been thrown so wildly out of whack by the pre-1982 federal tax code that drastically lowering taxes would actually raise tax revenues. And Obama’s reasoning certainly makes as much sense as the Republican orthodoxy, developed over the past decades by a reductio ad absurdum of that same logic – and without the pre-1982 top marginal tax rates any longer as a pretext – that any and all tax reductions actually increase tax revenues.
Obama’s investment-oriented budget is not simply neo-Keynsian tax and spend liberalism; and neither does it make sense to view it through the same lens as one viewed the last decades’ disastrous “voodoo” economics. Maybe we should call it “401(k) liberalism.”
It’s a new mindset: try to think for once past October 2010 (the end of the proposed budget’s fiscal year), and ask yourself, what should America invest in? If you think a good part of the answer to that question is Education, Energy and Health Care, maybe it’s time to stop whining about the size of the investment, and how much that investment is going to (hopefully, temporarily) take from our extravagant spending pockets. Instead, let’s start a dialogue about our priorities and what returns we expect in the future from our current investment in our government.
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