Biden Cannot Win (or Govern) as a Deficit Hawk

Biden Cannot Win (or Govern) as a Deficit Hawk

Biden Cannot Win (or Govern) as a Deficit Hawk

Deficit hawk rhetoric and austerity economics will undermine the winning coalition Biden needs to build.

Facebook
Twitter
Email
Flipboard
Pocket

Joe Biden finally got to accept the Democratic presidential nomination that he began seeking in the 1980s, and he did so with a graceful turn, promising, “We can and will overcome this season of darkness.”

The former vice president’s address on the closing night of his party’s virtual convention was elegant, even poetic, in its outlining of an agenda for beating Donald Trump, tackling a pandemic, and renewing the economy.

But acceptance addresses are always aspirational, and voters know that candidates often promise more than they deliver. So Biden still has work to do. And so do the progressives who have provided so many of the ideas that Biden touched on in an address where he spoke of tackling

Four historic crises. All at the same time. A perfect storm. The worst pandemic in over 100 years. The worst economic crisis since the Great Depression. The most compelling call for racial justice since the ’60s. And the undeniable realities and accelerating threats of climate change.

To meet those challenges, the federal government must spend money. Biden acknowledged this by referencing a predecessor who dramatically expanded the role of government:

Nearly a century ago, Franklin Roosevelt pledged a New Deal in a time of massive unemployment, uncertainty, and fear. Stricken by disease, stricken by a virus, FDR insisted that he would recover and prevail and he believed America could as well. And he did. And so can we.

These are appropriate and necessary ambitions—as was Biden’s June proposal for the $2 trillion investment in clean energy and infrastructure. 

Unfortunately, even as the candidate was putting the finishing touches on his speech, creating doubts about whether the nominee is prepared to match words with deeds.. “When we get in, the pantry is going to be bare,” longtime Biden aide Ted Kaufman told The Wall Street Journal in an article published Wednesday, the third day of the convention. “When you see what Trump’s done to the deficit…forget about Covid-19, all the deficits that he built with the incredible tax cuts. So we’re going to be limited.”

The Journal explained that Kaufman “predicted…that a large increase in federal spending would be difficult to achieve in 2021.”

Ted Kaufman is not some Biden campaign hanger-on. He’s the head of the transition team. When someone in his position starts talking about limited options, alarm bells should go off. This is the kind of talk you heard in 1993 when Bill Clinton, after winning the presidency with a campaign that talked big about all that he would accomplish, suddenly became a deficit hawk. Similarly, in 2009, after George W. Bush handed Barack Obama a Great Recession, right-wing Republicans and centrist Democrats leaped in to tell the newly elected president everything he could not do.

When Vermont Senator Bernie Sanders heard that Kaufman was laying the groundwork for another austerity, Sanders said, “He is dead wrong.”

Dead wrong morally. Dead wrong economically. Dead wrong politically.

Americans have grown cynical about whether Democrats in government will address the fundamental challenges facing the nation. Kaufman fed that cynicism. If his thinking takes hold, the Democrats will be tripped up; austerity won’t cut it this time. Democrats and the party’s new leader, Biden, have to communicate that they are willing to spend what is necessary to provide health care, housing, and employment, and to ensure justice. To that end, economist Dean Baker says, “Biden’s people should be prohibited from ever whining about the government debt.”

The deficit hawk agenda is dangerous for the country. “We need massive investment in our country or it will fall apart. This is not a joke,” argues Representative Alexandria Ocasio-Cortez. “To adopt GOP deficit-hawking now, when millions of lives are at stake, is utterly irresponsible.” It’s also utterly unnecessary, because, as AOC notes, the pantry that’s always got plenty of money to fund the military-industrial complex and tax breaks for the rich “is absolutely not bare.”

“Let’s be clear,” says economist Stephanie Kelton. “The pantry is bare for millions of families. Not for Congress. Not now. Not ever.” Kelton takes on deficit hawks in her new book, The Deficit Myth: Modern Monetary Theory and the Birth of the People’s Economy.

The deficit hawk agenda is also dangerous for the Democrats. Donald Trump won’t be campaigning this fall on an austerity agenda. He’ll be promising the moon and the stars—including a mad scheme to defer the payroll taxes that sustain Social Security. Trump just wants another term so that he and his wrecking crew can cut more taxes for the wealthy and barter off the United States Postal Service.

If Democrats campaign on the Republican-lite promise of “tightening our belts,” they will undermine their own prospects. Biden might still prevail, but his margin will narrow and prospects for taking the Senate will be diminished.

To achieve a meaningful victory in 2020, Democrats must mobilize millions of disenchanted and disengaged Americans. That won’t happen unless voters know that the election of Joe Biden and Kamala Harris will lead to bold structural changes that address economic pain, racial injustice, and the fate of the planet. These are urgent times, reordered by the pandemic and spiking unemployment. Biden’s campaign can’t afford to send mixed signals that lead people to fear that he won’t keep the promises he made on the last night of the convention.

The Democratic nominee must recognize that he has a moral and a practical duty to serve as a change agent, and he has to communicate that recognition to potential voters whose cynicism has been honed by too many betrayals.

The trouble is that some of Biden’s people are sending the wrong signals. The convention was light on content. The party’s platform, which was drafted by a committee packed with Biden allies, pulled its punches by not embracing Medicare for All, a Green New Deal, legalization of marijuana, and criminal justice reforms as bold as those supported by Democrats in Congress. That was a missed opportunity. And now Ted Kaufman is running around talking about an “empty” pantry and “limited” government.

“This is wrong big time, and it is the sort of silly thing that no one in a Biden administration should ever be saying,” says Baker, who explains:

It takes some very deliberate head-in-the-ground economics to argue that we are somehow limited by the size of the government debt. Japan provides a great model here. Its ratio of debt to GDP is more than 250 percent, more than twice the current U.S. level. Yet, the country is seeing new zero inflation and has a 0.03 percent interest rate on its long-term debt. The interest on its debt is near zero, since much of its debt carries a negative interest rate.

The idea that we would not address pressing needs, like climate change, child care, and health care because we are concerned about the debt burden is close to crazy. As long as the economy is not near its capacity, there is zero reason not to spend to address these priorities, and even when it does approach its capacity, we can impose higher taxes on the economy’s big winners over the last four decades.

Kelton, whom Biden appointed to one of his pre-convention task forces, was even blunter about the danger in Team Biden’s making deficit hawk noises: “Allow me to translate ‘There will be no money’ from beltway speak into everyday English: ‘That is not a priority for us.’”

If Biden wants to convince voters that he intends to do what he talked about in his acceptance speech, he should tell his team to drop the deficit hawking.

Thank you for reading The Nation!

We hope you enjoyed the story you just read, just one of the many incisive, deeply reported articles we publish daily. Now more than ever, we need fearless journalism that moves the needle on important issues, uncovers malfeasance and corruption, and uplifts voices and perspectives that often go unheard in mainstream media.

Donate right now and help us hold the powerful accountable, shine a light on issues that would otherwise be swept under the rug, and build a more just and equitable future.

For nearly 160 years, The Nation has stood for truth, justice, and moral clarity. As a reader-supported publication, we are not beholden to the whims of advertisers or a corporate owner. But it does take financial resources to report on stories that may take weeks or months to investigate, thoroughly edit and fact-check articles, and get our stories to readers like you.

Donate today and stand with us for a better future. Thank you for being a supporter of independent journalism.

Thank you for your generosity.

Ad Policy
x