The Spectacle Blog

Political-Class Struggle: It’s the Spending, Stupid!

By on 10.20.10 | 1:14PM

Longtime Capitol Hill and administration tax aide J.T. Young has a piece in today's Wall Street Journal which opens by challenging the claim that we have been confronting the greatest economic downturn since the Great Depression, proceeding to focus on key economic and budget aspects framing the politics of then, versus now.

But it rather curiously, and completely, misses an elephant -- shall we say Tea Party activist -- in the room: It's the spending, stupid!

You know an analysis is likely to slip the rails with non sequitors like If today's experts are correct and the recession has already ended, President Obama's economic record compares very favorably to FDR's (maybe they were indeed very different recessions, as you elsewhere detail?), and "Even by 1940, as FDR sought his third term-and despite direct intervention through programs like the Work Projects Administration (WPA) and the Civilian Conservation Corps (CCC)-[unemployment] was still 14.6%." Despite? As in the mantra of the 'green economy', government creates jobs? Actually, it makes work. And we know how that turns out.

Then it asks, with an almost-quaint cluelessness, "So why are Mr. Obama and today's Democrats apparently faring so much worse politically than their predecessors, when their economic record appears better? "...and concludes the difference is principally a matter of political timing. Ah.

Consistent with this, not one of the 720 words is "spending".

Instead, Young focuses on things like "Tax receipts in 2009 were $2.1 trillion and this year they were $2.14 trillion. Certainly the economy has had an impact, but Mr. Obama's tax increases also have thus far been small in comparison to FDR's."

Well, true, in his first two years and after campaigning on the negative consequences of raising taxes during a downturn, Obama did not focus on tax hikes, particularly those to take immediate effect (can you imagine? Seriously.). He focused on a spending binge leading up to the recent, risible call to now become deficit conscious. But who in the room doesn't know that debt equals taxes? Why not note the spending, that this of course necessitates tax hikes which the economy understands, and the resulting problems from that spending?

Nope. Just Obama hasn't been a tax raiser like FDR. Except that he has guaranteed someone has now got to be.

This piece by a longtime Hill and administration aide-turned-consultant is another representation of a key malady afflicting Washington, the principal-agent problem. Under this dynamic, corporate government affairs representatives and consultants are not generally brought in from the wealth-creating sectors of the company, but from the institutions of government. And they tend in practice to view the wealth-creating sectors of the company with suspicion and as a vehicle for social redistribution, and appeal to different constituencies with whom they must work like regulators, lawmakers and their staffs, pressure groups and the media.

This is how we get a DC culture where it is deemed a sign of wisdom to parrot -- when advising your company on the right thing to do -- "Well, you can't just say no"; "of course, we have to do something", "it's inevitable", and, of course, the ultimate fool's errand, "well, ok...because we need certainty". Like the oil guys got when they sat down with resignation to agree to ethanol standards. No, not that time. The first time, two times before the most recent (and certainly not final) time. And the auto guys did when agreeing with resignation to sit down and agree to CAFE standards. No, no. Not that time. The time two times before that.

It's the spending. You can say no. It isn't inevitable. And it would certainly take a few cycles to change Washington. The next year will inform us how resistant to change the beast will prove to be. Recognizing reality as the public sees it -- contrary to the world reflected by an insufferably arrogant Washington Post headline today: "Dems hurt by voters' denial of reality" -- is a necessary first step.

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