Friday, March 04, 2005

Krugman: Deficits and Deceit

In my initial Draft Zinni post I suggested that the defining characteristic of modern conservative politics is their deceit. Zinni spoke up against one area of the lies- the ones which led us to invade and occupy Iraq- but this behavior can be seen in just about every area where they push their radical agenda.

In today's New York Times, Paul Krugman illustrates the ploys that the Republicans, and the Fed Chairman Alan Greenspan, have used to try and destroy Social Security and other federal programs.
Four years ago, Alan Greenspan urged Congress to cut taxes, asserting that the federal government was in imminent danger of paying off too much debt.

On Wednesday the Fed chairman warned Congress of the opposite fiscal danger: he asserted that there would be large budget deficits for the foreseeable future, leading to an unsustainable rise in federal debt. But he counseled against reversing the tax cuts, calling instead for cuts in Social Security, Medicare and Medicaid.
This is the first sign of Republican lies- shifting rationales towards the same policy goal. During the leadup to Iraq the shifting justifications were the need for regime change, WMD, the War on Terror, compliance with U.N. mandates (the winner for most ironic rationale), protecting Iraq's neighbors, and bringing stability to the region. Once the occupation had begun, and as it became clearer and clearer that the top selling points to the American Public, WMD and terrorism, were clearly false, the justification changed to emancipating the Iraqi people from Saddam's tyranny and putting "Democracy on the march" throughout the Middle East. As Zinni pointed out, the Bush Administration conned the American people into supporting a war of choice, at immense cost in blood, money, and prestige.

But as Krugman has consistently pointed out, the conning of the American People doesn't extend only to Iraq, it extends to just about every policy that the Bush Administration pushes forth. In this case, the Bush Administration, and conservatives in general, are out to dismantle every aspect of the New Deal that they can. But given that these are immensely successful (especially social security) and popular programs, conservatives must use deception to avoid making the debate about their true aims.
To put Mr. Greenspan's game of fiscal three-card monte in perspective, remember that the push for Social Security privatization is only part of the right's strategy for dismantling the New Deal and the Great Society. The other big piece of that strategy is the use of tax cuts to "starve the beast."

Until the 1970's conservatives tended to be open about their disdain for Social Security and Medicare. But honesty was bad politics, because voters value those programs.

So conservative intellectuals proposed a bait-and-switch strategy: First, advocate tax cuts, using whatever tactics you think may work - supply-side economics, inflated budget projections, whatever. Then use the resulting deficits to argue for slashing government spending.
Bait-and-switch. The motto for modern conservatism. But as Krugman notes, the "starve-the-beast" strategy that the right has adopted as a means to destroy the social structures that they hate isn't working.

According to starve-the-beast doctrine, right-wing politicians can use the big deficits generated by tax cuts as an excuse to slash social insurance programs. Mr. Bush's advisers thought that it would prove especially easy to sell benefit cuts in the context of Social Security privatization because the president could pretend that a plan that sharply cut benefits would actually be good for workers.

But the theory isn't working. As soon as voters heard that privatization would involve benefit cuts, support for Social Security "reform" plunged. Another sign of the theory's falsity: across the nation, Republican governors, finding that voters really want adequate public services, are talking about tax increases.

The best bet now is that Mr. Bush will manage to make the poor suffer, but fail to make a dent in the great middle-class entitlement programs.

So what are we left with? Instead of "tax-and-spend" liberals, we have "borrow-and-spend" conservatives, and as a result our budget deficit is reaching crisis levels.

Krugman concludes:

The only question now is when foreign investors, who have financed our deficits so far, will decide to pull the plug.

Let us all pray that the plug isn't pulled soon, because it won't be the wealthy who will pay the highest costs, but the middle-class and poor who have lost the safety nets put in place to guard against just such a crisis.

And on a side note- with China increasingly focused on developing asymmetric capabilities to battle the U.S., and with their immense holdings of U.S. dollars (which they bought to finance our budget deficits), doesn't it seem like we may have sold China an extremely lethal weapon against our nation- the keys to our economy? I'll come back to this question a little later.