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Steely-Eyed Armchair Deficit Warrior Evan Bayh

This hasn’t gotten much attention today, but it’s my vote for the soundbite with the biggest chutzpah quotient of the year:

President Barack Obama needs to show the same resoluteness in tackling the deficit as he showed in his Nobel Prize speech, Sen. Evan Bayh (D-Ind.) urged Friday.

Bayh said it would take a political act of courage similar to what Obama demonstrated Thursday during a speech in Oslo, Norway in order to help slash the deficits.

“It would be a nice domestic parallel to the speech he gave in Oslo,” he said during an appearance on MSNBC. “We need to bring the same sense of resoluteness to tackling the deficit and getting our spending in order.”

Yes, it would require courage to destroy the domestic economy.

There’s a simple lesson that Paul Krugman can provide to all of these deficit warriors. The economy would need to create 300,000 jobs a month for FIVE YEARS to return to full employment. The closest we’ve come to that since December 2007 was last month, which was… a little over 300,000 jobs away. We have double-digit unemployment and private businesses are still not providing sufficient demand. Incomes are not rising, consumers are not spending, and until either or both of that happens, jobs will not return without public investment. And not of the “tax cut for small businesses” variety, but real public investment in jobs.

This is the worst possible time to put on plastic armor and go into your backyard and yell “Wolverine!” in arguing for cutting the deficit. It’s not a matter of being resolute, it’s a matter of being foolhardy.

Ideally, the Federal Reserve would actually fulfill their mandate and start creating jobs, but it’s helmed by a conservative who is more concerned with the safety and prosperity of the banks than of the public. They need to expand the flow of credit and they haven’t. But that’s a political problem, one Barack Obama could solve by finding a new Federal Reserve chair who understands his core mission.

There are some in Washington who understand that this deficit reduction talk is a crock, and indeed, the commission that Kent Conrad and Judd Gregg put together would have more veto points than a normal bill, making it almost impossible to succeed, no matter how “resolute” everyone is. So we have a great deal of lip service being paid to a skittish public that doesn’t understand economics very well. A
whole lot of lip service.

But if the Administration takes this advice and thinks that the public contradiction between wanting jobs and wanting deficit reduction must be accomplished all at once, it’s going to be a difficult few decades for the United States of America. And the problem would be a surfeit of “deficit warriors” who thinks that staring down poor people is a sign of character.

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David Dayen

David Dayen