Writing at New Economic Perspectives, Bill Black goes into inevitable territory during an election cycle, in which we are being asked to choose between two brands of “austerity”: The Democratic Version or The Republican one. He’s lays out the problem on very realistic ground and let’s us know who the greater enemy to our economy really is: The Democrats.
After this election is finally over, the Democrats are going to go full bore on Social Security and every other social program they can get their grubby hands on. Nancy Pelosi, openly (and ironically) supported by the Congressional Progressive Caucus, have already signaled their intent over the last few weeks. It’s just a shame we can’t have a debate on this before the election, when it might do more good.
So this piece is well-timed and very worthy of your attention. In my not-so-humble opinion:
To many people, it seems paradoxical that conservatives target not the worst social programs, but the best. There is no paradox. Bad government programs are desirable from the right’s perspective – they discredit government intervention. Good government programs pose an existential challenge to conservative memes, so they are the prime target for attack.
The attacks from the right, however, do not provide any guarantee of success. The right’s immense success has come from convincing large numbers of moderates and liberals to join the assault on successful government programs. The major financial deregulation bills that have shaped the criminogenic environments that produced the epidemics of accounting control fraud that have driven our recurrent, intensifying financial crises have enjoyed strong, even overwhelming, governmental support. The Garn-St Germain Act of 1982, the state S&L deregulation laws in Texas and California that “won” the regulatory “race to the bottom”, the “reinventing government” assault on financial regulation, the Gramm-Leach-Bliley Act of 1999, and the Commodities Futures Modernization Act of 2000, all enjoyed broad bi-partisan support. Laws making it extremely difficult for victims of securities fraud to obtain civil remedies passed with such strong bipartisan support that supporters were able to override President Clinton’s veto.
Just as only a conservative Republican like Nixon could begin to normalize diplomatic relationships with China without bearing a crippling political price, only “liberal” Democrats can safely begin the process of attacking Social Security. The rationale for the liberal assault on Social Security is “there is no alternative” (TINA). TINA is a particularly nonsensical argument in this context, however, because we are trying to recover from a Great Recession. There are vastly superior alternatives to cutting Social Security benefits, which could force the economy back into recession. There is also no need to cut Social Security benefits. The funding required to meet fulfill our promises is modest (relative to the U.S. economy) and poses no threat to our economy.
The progressive austerians are all the more remarkable because the economists and economic theories they rely on were wholly discredited even before Europe’s suicidal experiment with austerity. The neoclassical and Austrian economists that push austerity were the same economists who (1) propounded the anti-regulatory policies that caused the global crisis, (2) the opponents of counter-cyclical fiscal policies who predicted that pro-cyclical U.S. fiscal policies would speed the U.S. recovery while counter-cyclical policies would fail to spur growth and would cause inflation, and (3) the deficit hawks who claimed that counter-cyclical U.S. monetary and fiscal policies would cause hyper-inflation. The predictions of the proponents of austerity have proven consistently wrong and the proponents of counter-cyclical fiscal policies have proven consistently correct. The predictions of the proponents of counter-cyclical fiscal policies proved correct as to both the direction and the magnitude of the economic recovery. We argued from the beginning that the stimulus package was far too small and that there would be a financial disaster among many states and localities absent a program of federal revenue sharing.
Please do read the whole thing. It’s worth every minute of your time.