Posted by: Jeff | February 3, 2011

Am I a Deficit Hawk?

Here’s Matt Yglesias defending the failure of both President Obama and Paul Ryan to lay down any meaningful specifics on deficit reduction:

[N]ot only is evading the entitlement challenge politically smart but economically speaking there’s no reason to focus on the deficit right now. Imagine a car driving on a very straight patch of empty highway at 45 miles per hour. Thirty miles ahead comes a very steep curve that’s dangerous to take any faster than 20 miles per hour. You’re going too fast. You’re going to have to slow down soon. But right now you’re going too slow. There’s no reason to be driving 45 mph on an empty straight highway. The fact that in the future you need to slow down and take a tricky turn is neither here nor there.

On one level, I totally agree with this. Deficit reduction in-and-of-itself should not be the overwhelming goal of American government right now. There are other values — such as shoring up the economy and relieving suffering and deprivation — that, at least in the short-term, should take precedence. So there’s a practically and morally necessary balancing act. And conservatives’ current austerity obsession strikes me as a naked attempt to short-circuit that balancing act. (Also, to hit on other themes Yglesias has brought up, the future is inherently unknowable, and democratic countries — like all extremely large groups of human beings — are rather bad at reacting to anything other than immediate stimuli, so there are serious limits to how much long-term budget policy-making we can realistically do.)

But there’s also going to come a point when those priorities will flip; when we’ve done all we realistically can to meet the second and third goal, and when the financial markets really do start to bite, and thus deficit reduction finally comes to the fore. And the thing is, we don’t know when that flip will occur. We don’t know when the markets may finally lose confidence in the dollar, when interest rates will spike, or what other precipitating economic upheavals the world may have in store for us.

So I think Yglesias’ car metaphor would be more apt if he added that you’re driving down that highway in heavy fog. You know a turn is coming, but you don’t actually know it’s thirty miles ahead. It could be sixty miles. It could be five. And that makes the metaphor a lot less comforting, and the decision to just keep tootling along at high speed seem a lot less reasonable or responsible.

I don’t know if all this makes me a deficit hawk, or a moderate deficit hawk, or what, but there it is

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