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Trouble Is When We Take the Truth Off the Table

Arianna Huffington is calling attention to “the great budget battle of 2011,” between the President and the Republicans. She correctly points out that whichever of the two sides win, we, the people, lose. She’s right, of course, and says further:

Just look at this so-called “debate” we’re having. The problem ostensibly on the table is the deficit. But, without any context, the raw deficit number is meaningless. If the country’s debt were, say, $50 million, that wouldn’t be a big deal. If some average American suddenly found himself $50 million in debt, well, that would be a big deal. And that’s because the country’s GDP is a lot bigger than the average person’s income. So what we’re talking about is really the debt-to-GDP ratio.

Yet the debate is concentrated almost entirely on the debt side of the equation and barely at all on ways to increase the GDP side. . . .

Arianna’s right about the pure deficit number being meaningless and needing context. But it’s also true that it needs the right context. The right context for deficits isn’t simply GDP or comparing the size of a deficit to the annual volume of economic activity, and the right measure of whether we have a deficit problem or not, or how serious it is, is not the debt-to-GDP ratio. Implicitly here, Arianna is accepting the view that the debt-to-GDP ratio is an indicator of something that causes grave economic problems. But there is no empirical evidence that there is any relationship between that measure and negative economic effects when a nation has a fiat, non-convertible currency, a floating exchange rate, and no external debt in a currency not its own.

So, she’s claiming that the current debate is constrained because only the debt side and not the GDP side of the deficit/debt issue is being debated, but I think it’s constrained because nearly everyone in the mainstream, including Arianna, refuses to debate whether there are any deficits, debts, or debt-to-GDP ratio levels that make it necessary to either increase taxes or cut spending, or, alternatively to avoid further tax cuts or spending increases. Please don’t misunderstand. I’m not suggesting that we shouldn’t cut spending and/or taxes in certain areas, or increase spending and taxes in others. What I’m saying, instead, is that any fiscal proposals at all need to be evaluated according to whether their consequences are likely to be in accord with public purposes, and not according to whether they either raise or lower deficits, the national debt, or the debt-to-GDP ratio.

In short, I’m suggesting that there is no deficit/debt problem for the United States at all. And I’m asking why the debate that Arianna refers to doesn’t start with the bedrock question of whether there is a deficit/debt problem, and only when that question is settled, and only if necessary, move to the subsidiary question of whether the present focus on spending cuts ought to be broadened to the GDP context, or for that matter to the question of tax increases on the wealthy?

Arianna continues:

. . . How has the playing field of what is acceptable in this debate been so shrunken that the only two competing proposals still allowed on the field are the president’s cuts and the House GOP’s draconian cuts?

Well, it was no accident. And, as it turns out, there’s an entire field of study based on the dynamic being played out: Agnotology. Coined by Robert Proctor, a historian of science at Stanford University, the word means the study of ignorance that is deliberately manufactured or politically or culturally generated. “People always assume that if someone doesn’t know something, it’s because they haven’t paid attention or haven’t yet figured it out,” Proctor says. “But ignorance also comes from people literally suppressing truth — or drowning it out — or trying to make it so confusing that people stop caring about what’s true and what’s not.”

Sadly, this is quite to the point. But it doesn’t apply only to the present debate in the sense that the wider context of how the debt-to-GDP ratio might be reduced through alternative tax and spending policies designed to increase GDP is being “drowned out” or suppressed. It also applies to it in the sense that most media outlets including blogs with wide audiences are “drowning out” or suppressing post-keynesian and other heterodox economic viewpoints on the deficit/debt debate.

Ignorance of these positions is being manufactured and maintained by all of the mainstream media and by much of the alternative media, too. The way it is maintained is partly by ignoring the existence of alternative views about whether there is a deficit problem; partly by distorting and misrepresenting these views when they are, infrequently, able to find expression in popular outlets, and finally, by not supporting and fostering open debates between different fiscal sustainability/responsibility approaches. Using these methods, the media have made it difficult for any views to gain currency except deficit hawk and deficit dove views on the deficit. It’s as if the media, including much of the blogosphere is frozen in the deficit hawk/dove neo-liberal polarization, just as politics in Washington is frozen into its narrow left-right polarization. However, there is a deficit owl position in the fiscal sustainability/responsibility debate, and it needs to be considered seriously by everyone debating these issues because 1) it may be right; and 2) the deficit hawk/dove polarization has worked out very poorly for the doves.

Why? Because the deficit dove position, in its most enlightened form represented by Paul Krugman, Joe Stieglitz, Robert Kuttner, Simon Johnson, and much of the Washington, DC progressive establishment starts by granting the premise of the deficit hawk position, namely that the debt-to-GDP ratio is important, and that we must monitor Government spending with reference to its impact on this ratio. Now, these folks, as the old saying goes, “haggle over price.” The hawks think that the ratio has to go down now and that we can’t expect the increase in the GDP half of the ratio to outpace the increase in the debt half. The doves believe that we have time to bring the ratio down and that if we do things right, then we can lower it by growing faster than we borrow, raising taxes on the wealthy, and by cutting things like Defense spending, and the rate of growth of health care costs.

But when the two sides debate, the compromise that comes out of that debate always means agreement on the need to manage fiscal policy with the goal of decreasing the debt-to-GDP ratio, and on some plan to reduce that ratio by spending less, taxing more, and just accepting CBO’s future GDP growth projections, which are both very conservative and extremely unreliable, as all long-term projections have always been. This leads inevitably to a shared pain and sacrifice scenario for various plans for decreasing the debt-to-GDP ratio over the long term. And this mantra of shared pain and sacrifice then inevitably devolves into a debate about how that sacrifice should be shared. In today’s political system, the wealthy and powerful, in the end make no sacrifices, and in fact gain new advantages after these debates. But working people somehow always get called on to make any financial sacrifices that are implicit in the deficit hawk/dove position. Hence the 99ers, the long-term unemployed, Medicare recipients, public employees in Wisconsin, Ohio, New Jersey, Indiana, and the like.

The deficit doves fight back when spending cut proposals threaten programs like Social Security, Medicare, and various “discretionary” programs that are very important to many people. But the pushback from the doves while fact-based and logical, is designed to avoid specific cuts, like preventing Social Security cuts. It is not pushback against the very idea of deficit cuts and managing Federal fiscal policy with reference to the deficit/debt “problem.” So, for example, a year after the President appointed his Catfood Commission, and a large coalition of progressive organizations picked apart the logic and facts supporting the Commission’s leaked views on Social Security, it appears that a lot of the momentum in back of Social Security cuts has been blunted, but, as Arianna says, the debate is now down to a choice between the President’s proposed, and very damaging to the economy, cuts and the GOPs “draconian” ones. But what can one expect from a debate that concedes the major premise of the deficit hawks in the first place?

If we had been fighting over the past two years about whether there really was a deficit problem, and whether it was ever proper to manage fiscal policy with an eye toward deficit and debt indicators, we would be looking at different debates today. We would not be down to damaging cuts vs. draconian ones, but to whether we should have any spending cuts at all, or instead should be spending whatever it takes to reach full employment and solve our other national problems. In other words, we’d be having the Hoover/Roosevelt debate right now, not the Obama/Tea Party one.

So this is my advice to Arianna. If you want a broader debate, then structure some between deficit doves and deficit owls. That is, get the Keynesians like Krugman, Johnson, and Stieglitz arguing with people who follow the Modern Monetary Theory (MMT) approach like Randy Wray, Warren Mosler, Stephanie Kelton, Scott Fullwiler, Marshall Auerback, Mike Norman and Jamie Galbraith. And get Bill Mitchell participating from Australia. And get some Congresspeople exposed to these perspectives. Then you’ll see some fireworks, and you’ll also begin to structure a debate that won’t be about cuts, but about what we can do to get the economy growing rapidly and building the foundation our grandchildren will need to keep the dream alive.

Often when we’re debating issues, it’s not about “drowning out” or suppressing the truth from our point of view. What it’s about, instead, is suppressing alternative points of view that we don’t think can possibly be the truth, because their implications conflict with our preconceptions, and so are not worth taking our time to learn. The problem with this is that we’re too often wrong about what can’t possibly be the truth, and as a result we take the truth out of the debate before it has been tested against competing points of view. We can’t continue to let that happen in the debate over fiscal policy. If we do, we may well be dooming working Americans to a future of needless continuing privation that will threaten the economic basis of American Democracy.

(Cross-posted at All Life Is Problem Solving and Fiscal Sustainability).

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Joseph M. Firestone, Ph.D. is Managing Director, CEO of the Knowledge Management Consortium International (KMCI), and Director and co-Instructor of KMCI’s CKIM Certificate program, as well as Director of KMCI’s synchronous, real-time Distance Learning Program. He is also CKO of Executive Information Systems, Inc. a Knowledge and Information Management Consultancy.

Joe is author or co-author of more than 150 articles, white papers, and reports, as well as the following book-length publications: Knowledge Management and Risk Management; A Business Fable, UK: Ark Group, 2008, Risk Intelligence Metrics: An Adaptive Metrics Center Industry Report, Wilmington, DE: KMCI Online Press, 2006, “Has Knowledge management been Done,” Special Issue of The Learning Organization: An International Journal, 12, no. 2, April, 2005, Enterprise Information Portals and Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003; Key Issues in The New Knowledge Management, Burlington, MA: KMCI Press/Butterworth-Heinemann, 2003, and Excerpt # 1 from The Open Enterprise, Wilmington, DE: KMCI Online Press, 2003.

Joe is also developer of the web sites,,, and the blog “All Life is Problem Solving” at, and He has taught Political Science at the Graduate and Undergraduate Levels, and has a BA from Cornell University in Government, and MA and Ph.D. degrees in Comparative Politics and International Relations from Michigan State University.