Douglas Holtz-Eakin: Balancing the Budget Is Just a Sales Gimmick to Gut the Federal Government. And We Republicans Think It Will Work! [UPDATED]
So there we have it. Balancing the budget is just a sales gimmick by Republicans to gut the federal government. And they think it will work. As both a sales gimmick and of course as a way to gut the federal government.
People may understand what balanced budgets are, but they do not understand balanced budgets. They would, if we had a president willing and able to explain such complexities to the masses, and to explain exactly what Holtz-Eakin just has, to the readers of today’s New York Times: that, while it is important to keep budget deficits below a certain level relative to revenue and relative to GDP over the long haul, it is not important to actually balance the federal budget. But the Republicans can convince the public that it is, because people understand the concept of balanced budgets, and can thereby, via semantics trickery, accomplish the Republican goal of gutting the federal government.
But we don’t. Have a president who is willing and able to explain such complexities to the masses, that is.
We do, though, now have Douglas Holtz-Eakin, who has just provided a nice quote, should other Dem politicians recognize its value and decide to use it. Here’s hoping.
UPDATE: Regular AB reader and commenter rjs and I just had the following exchange in the Comments to my post:
rjs: as an economist, he should know that as long as we’re running trade defcits, it impossible for the feederal government to run a balanced budget while the private sector is deleveraging…
Me: He probably does know. But he also knows that the public doesn’t know that. (I didn’t.) And when you’re goal is really to gut the federal government, and you think you’ve found a way to con the public into thinking your goal is something else, that’s all that matters.
These people are downright diabolical.
as an economist, he should know that as long as we’re running trade defcits, it impossible for the feederal government to run a balanced budget while the private sector is deleveraging…
He probably does know. But he also knows that the public doesn’t know that. (I didn’t.) And when you’re goal is really to gut the federal government, and you think you’ve found a way to con the public into thinking your goal is something else, that’s all that matters.
These people are downright diabolical.
the 3 must net out to zero, beverly….it’s easy to see on the chart here from Goldman’s chief economist Jan Hatzius…
Thanks, rjs. I just put a link to that into the update I posted to my main post.
it keeps coming up, but it isn’t an idea that is moving to the front of the line, as it should. And until the concept of public understanding becomes important to journalists that level of public awareness is never going to be attained.
Note, as I pointed out in the thread that follows this one, that the Times headline exchanges the idea of ideology with philosophy in regards to the budget debate. That is an extension of the use of a false equivalence in such political discussions. Philosophy is based on a reasoned review of reality. Ideology is a preference which need not be grounded in reality, nor based on facts or reason. Think of the difference between science and religion.
i wish you hadn’t put it that way. Popular science is just as ignorant as popular religion. And serious religion is just as “reasoned” as serious science.
RJS makes a valid point which supports my core belief that if the nation truly understood aggregate demand, they would realize that demand must come from one of four sources only. If domestic consumption is falling due to debt service and low wages, business will not invest or grow demand unless they believe they have a new market in the government or abroad. When the government promotes austerity, the only other source is foreign. Every trade deficit we have had for decades proves that our foreign export sources are shrinking compared to our imports. This last factor decreases aggregate demand and produces a smaller output number. If the nation understood this, we would be further along in pursuing rational trade policies, higher average incomes and greater Keynesian stimulus.
the problem is that just because we’re right doesnt mean we can sell the facts as well as Holtz-Eakin sells his trickery…
this goes to a complaint i’ve made before, we’re losing the game where words are the tokens…when we talk about fiscal stimulus, it’s about “borrowing” and “debt”, which are words that have negative connotations, and the Holtz-Eakins talk of balancing the budget, which is a clever use of language, as everyone thinks “balance” is something virtuous, not depression inducing…
it shows in the polls; people want to cut the deficits, limit the debt, yet ask them about a specific program, they’re in favor of all of them…
again, we really need new words to describe government note, bill, & bond issuance, because the nature of a government issue is closer to creating needed money than it is to what the public & the congresscritters think of as “debt”…and even obama suffers from the same delusion, saying that the government is like a household and should also tighten its belt when times are tough…& the fiscal mistakes that this thinking generates are what has been costing us this prolonged & deep recession…
did obama really say that (government is like a household..)?
if so he is stupider than i thought. or more dishonest.
talk about education failing us.
Obama calls for belt-tightening on eve of Asian tour – “At a time when families have had to cut back, have had to make some tough decisions about getting rid of things that they don’t need in order to make the investments that they do, we thought that it was entirely appropriate for our governments and our agencies to try to root out waste, large and small, in a systematic way,” he said
I’m thinking that you could make a pretty good book called “Economics and Adam and Eve” (so keep it absolutely simple by just having two “people”). Sometimes the people are called Govertment and Private Sector, sometimes they are called Creditor and Debtor, sometimes they are called Foreign and Domestic Sector. Get the idea. Then even your average YEC could understand.
So the basic #1 story is what happens if Adam has a nasty divorce coming and wants to save up for it …. and then Eve does too!
the trouble with “economics” is that it is too simple.
reality is a bit more complex.
Yes – that is true, but it is remarkable how far you can get with just two (and you can throw in Cain and Able occasionally) and how entertaining you can make it!
This is really meant to be economics for dummies.
oh, well, yes. but i have to tell you, every time i try to “explain” something with a simple analogy, folks grab hold of some irrelevant part of the analogy and then that becomes the topic of discussion. hate and discontent.
See if Adam tries to save by spending less, Eve’s income goes down, so she has to reduce her spending, so Adam’s income goes down – etc, etc, and they both end up with nothing and starving (well probably suffering from malnutrition because Adam is supplying meat and Eve apples – or something similar).
Then you change what they supply and there names – with always the same story of their being complements of one another. This is a simple way to combat the the government is just like a household story.
Yeah, rjs. That was just brilliant of Obama. Very clever reelection strategy there. Undermine your own policy proposals and grounds, and help your opponents sell a deeply false and harmful economic policy. Yeah. Clever.
The good news is that, according to the live tweets yesterday by a few House Repubs during their meeting with Obama, Obama said that the federal government’s budget is NOT like a family’s. I assume he actually began explaining why, although the tweet didn’t say that.
So he’s finally willing to expressly admit that his earlier statement was flat-out wrong. Good for him.
go for it.
a live analogy is always fun. but maybe not so easy to write a convincing one as we suppose.
not to be mean here, but just to encourage you “oppositely.” so far, i don’t think your Adam and Eve story is quite making the point you (and I?) want to make.