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The Hidden Storyline: No Progressive Economic Pushback Killing Democrats

The over-reading of 2009 Election Day has already begun in earnest. But while we wait for results, I think this tweet from Dave Weigel sums up a lot of what’s motivating and energizing conservatives, and why a lack of pushback from Democrats could prove fatal in upcoming elections.

Voters and campaign workers (in NY-23) all talking about national debt. Obama failure to explain Keynesian economics really hurting.

This is not limited to teabagger activists or deeply conservative voting blocks. All over the country, the fiscal scolds have started their push, to fearmonger about the national debt and “runaway spending,” to stop Democrats from taking the necessary steps in the midst of a recession and a job-loss recovery, to call any effort at public investment reckless and wrong, to whip up concerns about debt. And there is virtually nobody from the Democratic side on the playing field to rebut these concerns.

You can best see the constraints under which Democrats have placed themselves by this story from yesterday. It’s very clear from the economic data that the stimulus package is both working well and insufficient to the task of fixing the multitude of problems from the recession – the current growth rate wouldn’t return our economy to something like full employment for a decade. And in fact, we should be thinking bigger than that. At last week’s Building the New Economy Conference, United Steelworkers chief Leo Gerard said, “I’m tired of hearing the world ‘stimulus.’ That means a one-shot deal. We need to transform our economy and make these kinds of investments this year and every year.” But any member of the Administration who even hints at talking about a second stimulus has to immediately walk the language back:

Commerce Secretary Gary Locke was “imprecise” when he said President Barack Obama’s advisers are considering a second stimulus measure, his spokesman said today.

Locke, in an interview with Bloomberg Television, said: “If there is to be another stimulus — and that’s being hotly discussed and very seriously considered within the administration as well as members of Congress — it needs to be very targeted, very specific and we need to be very mindful of the deficit as well.”

Kevin Griffis, a Commerce Department spokesman, said in a telephone interview after Locke spoke that the secretary was referring to “all the different job-creating measures being considered” by lawmakers rather than a single stimulus measure.

The White House and Congress are considering some job-creation measures and safety-net additions, and even the President discussed a “post-bubble growth model” that would have to go “beyond tax policy” just yesterday, but no Democrat dares talk about stimulus, let alone make a wider case for public investment to transform the economy, rebuild manufacturing, rein in the trade deficit and create the job-growth engines of the 21st century.

The fiscal scolds and deficit hawks have poured into that vacuum with persistence, and from all parts of the political spectrum. Republicans are simply using this year’s $1.4 trillion dollar deficit as a scare tactic, to argue against any federal spending (of course, the $680 billion dollar defense budget, exponentially more than any country on Earth, never factors into that equation). But without the cover from the President and the leadership, making the case for public investment, Democrats have gone scurrying for cover, too.

Nine Democratic Senators and Joe Lieberman recently signed a letter asking Harry Reid to support a special legislative process for debt-reducing legislation, basically an up-or-down vote on all cuts (with the filibuster enacted for any revenue raisers, of course). The drumbeat on this, aided by a media obsessed with the debt, has grown in recent weeks.

And it’s not just coming from the typical Blue Dogs. Joe Sestak, who’s in a contested primary in Pennsylvania where each candidate is waging a battle on who can appear more to the left, recently sent out a call for his opponent in the race, Arlen Specter, to endorse paygo legislation:

“I have supported strengthening PAYGO since my first day in office because it would ensure that we can implement critically needed programs for American families, while protecting our nation’s fiscal health,” said Joe. “As we face a $1.4 trillion deficit because of tax policies inherited from the previous Administration and exacerbated by a historic recession and financial crisis, I believe we must require cost offsets not only for mandatory spending, but also for discretionary spending. Without action in the Senate by Arlen Specter and others, however, we cannot take even the first step toward restoring fiscal discipline.

As Russ Feingold, a longtime fiscal conservative but also a liberal darling who voted for the stimulus, picked now to introduce the Control Spending Act, a series of bills that would cut $500 billion dollars from the budget over a decade (more on them here). Many of these cuts would be to programs that are wasteful, and they according to Feingold represent a road map to cutting what’s unnecessary in the budget to focus on what is necessary. But the timing is especially odd, considering the state of the economy. Notably, Feingold constructed this series of measures after hearing a lot of talk about the deficit at town hall meetings.

It’s not that members of Congress actually act on this impulse to control spending, at least not all the time. An example is Bill Nelson (D-FL) asking Obama to put all unspent stimulus dollars into NASA to specifically help his state. Another is Congress preserving multiple sets of funding for programs President Obama has cancelled in his budget. For many in Congress, deficit mania is more a talking point.

But that’s because it resonates in the country. The Administration has simply not told the story well about why federal spending is necessary in the short run and the long run to rebuild the economy. They put out white papers about the stimulus saving jobs, but those haven’t connected with enough Americans. And their reluctance to make the argument for more spending now, an argument former Reagan official Bruce Bartlett is comfortable making, has allowed the deficit hawks to take over the debate, demonize the Administration, and gain followers for a right-wing agenda.

William Greider has an excellent piece in The Nation about this, and about the pitfalls for Democrats if they fail to understand it:

This nonsense, grounded in ignorance and discredited nineteenth-century bromides, is a recipe for continuing the economy’s downward spiral and could prove poisonous for the country. The hawks claim self-righteous rectitude in their warnings, but their real intent is to stymie the very spending programs that can deliver economic recovery and relief to battered citizens. Whining about deficits is a way to halt promising talk about another substantial stimulus package, one that should be focused more concretely on job creation. That will require more deficit financing, for sure; but at a time when unemployment hovers near 10 percent and foreclosures are in hemorrhage, more is needed […]

Far from proposing deep restructuring, Obama and his lieutenants are instead predicting prosperity right around the corner. They are going to be disappointed. As the severity of our condition becomes clearer to people, events may drag the president toward considering more drastic actions. Certainly, public support will build for more fundamental solutions. The usual influential voices will insist there’s nothing Americans can do but accept our fate. People and politicians must have the nerve to ignore them.

Let’s hope President Obama and the political community brush aside the deficit hysteria and do what they need to do to restore the economy: that is, spend more money–a lot more money–and run up even larger deficits for some years to come. The time to pay down the deficit will come only after the economy recovers. If politicians surrender to the budget scolds, the nation will be stuck in this ditch for a long, long time.

People like to make lip service about the deficit – even when the deficit is being reduced – but they’re far more concerned with having a job. If they see a Democratic Party standing up for them they will respond favorably. If they see a Democratic Party unwilling to make the economic arguments from a progressive perspective, they will accept the conservative one – that the debt prevents us from doing anything substantive for people. And that, more than anything, will resonate in 2010.

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David Dayen

David Dayen