The Senate has lopped off another $20 billion from the latest jobs bill in an attempt to clear the 60-vote threshold. A vote yesterday to move the package forward failed, 45 to 52, forcing this latest round of cuts. Ezra Klein’s reaction to yesterday’s vote is worth reading in full.
“$77 billion or more of this is not paid for,” said Sen. Ben Nelson, “and that translates into deficit spending and adding to the debt, and the American people are right: We’ve got to stop doing that.”
No, sir, they’re wrong, and we don’t. It’s hard to say this loudly enough, but it really doesn’t make sense to offset stimulus spending, at least in the short term. The point of the money is to get the economy moving faster, to give people cash to spend. This isn’t like health-care reform, where you’re purchasing something and you should pay for it. When you’re trying to expand the economy, you need to use debt to put more money into it than would otherwise be there. If you’re just moving a dollar from one purpose to another, you may be using that dollar better, but you’re not expanding the total amount of demand in the economy by very much. You’re just moving it around. It would be like bailing water from a boat, but throwing it into another part of the boat.
Tim Fernholz, meanwhile, has a list of all the Senators who voted either “no” or abstained yesterday.
These are the members who don’t think we should tax the income of hedge funders and private equity managers the same as someone working minimum wage, the senators who think that the next few years of anemic growth and unemployment will resolve itself without government intervention. The legislators who believe that it’s alright for states and cities to slash their budgets, cutting jobs people desperately need.
On one level, this is just spectacularly galling. Neither the Senators in Congress, nor their friends or family, run in the kinds of socio-economic circles where people are feeling the pinch of our murderously slow economic recovery, or are actually in need of unemployment themselves. So when they engage in this nonsense, the Senators are threatening neither their own livelihoods nor those of the people they care about. Which I imagine helps keep their conscience clear, and the moral purity of their noble stand for fiscal austerity unsullied.
It can’t be repeated often enough, or in too many places, that reducing deficit spending, while a critical goal, is a long-term critical goal. As in, needs to be done over the next decade. Meanwhile, stimulating the economy is a short-term critical goal, as in should have been done yesterday. And stimulating the economy requires more deficit spending — there’s no way around it. This is not a hard distinction to understand — I believe it was Fitzgerald who said the measure of of an intelligent mind is the ability to hold two seemingly contradictory ideas and maintain the ability to function — but it’s apparently beyond the capacities of much of our political class.
On the other hand, Senators, like any elected representative, are primarily just functions of the collective, nebulous impulses of the voters who put them into office. And this kind of absolutely-one-hundred-percent wrong economic “conventional wisdom” — that in an economic downturn the government needs to cut back on its spending — is pretty rampant throughout the populace. Ben Nelson isn’t just coming up with these notions of what the American people want off the top of his head. He talks to his voters and he reads the polls. It’s a pretty clear instance of basic economic illiteracy amongst the populace having very real and dire consequences.
But on the other-other hand, do Nelson and other incumbents really think voters will go easy on them when unemployment is hovering around 10 percent, just because they “tightened the government’s belt?” If people still can’t find jobs come November, they’re not going to think to themselves, “Well, the country and my life are a mess, but at least that Ben Nelson prevented another $20 billion from being added to the national debt.” Not gonna happen. No one’s going to remember this vote in five months. They’re going to wonder why the country is still in the doldrums, and conclude the best course of action would be to throw the bums out. And bye-bye incumbents. Even from the standpoint of raw political self-interest, you’ve got to wonder what the austerity crowd is thinking.