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Gene Sperling, First Principles and the Fictional Straitjacket

The Fix the Debt fraud of a campaign is having a roundtable summit in Washington today, because they have the money to bankroll that, and because politicians take to money like moths to a fire (hello, Mayor Antonio Villaraigosa!), the whole world of deficit scolds has taken the opportunity to deliver remarks. Protesters are actually making some trouble at the event, heckling speakers and buttonholing them as constituents afterwards.

But I want to focus, like Digby, on the remarks from the National Economic Council’s Gene Sperling. This came right at the top, and coming in the context of these Very Serious People who think it the height of responsibility to make the poor and elderly suffer for the sins of the elites, it was jarring:

…for all of the metrics we will discuss today, that go into this or that as a percentage of GDP, the ultimate metric, the ultimate end, the ultimate test for all we do in economic policy is whether it meets the fundamental values that make this country great — which are (1) are we nation in which the accident of your birth does not overly determine the outcome of your life, where everyone has an opportunity to rise; (2) are we a nation where the economic growth strengthens the middle class and creates more room for the poor and others who want to work their way up; and (3) are we creating an economy where those who work hard and take responsibility can raise their children with dignity, work with dignity, retire with dignity. That’s the ultimate test; that’s the ultimate metric for all we do.

Talk about a turd in the punchbowl! I thought the ultimate metric was whether Social Security penciled out based on actuarial projections in 2087!

Now, you have to hope that the White House continues to put that in the foreground of their thinking as the negotiations drag on, and I assume their conception of retiring with dignity and strengthening the middle class might contrast with mine. But it’s a heck of a first principle.

When Sperling delved into something a bit more specific, it sounded like this:

If we can pass the type of balanced agreement the President has advocated, we can beat the low expectations for those of us in Washington that exist for us and provide a spark of confidence to growth, investment and jobs. That type of agreement means balance between high-income revenues and mandatory spending; balance in terms of protecting the poor and the vulnerable, strengthening the middle class and asking the most from those who can contribute the most; and balance in terms of finding the fiscal sweet spot where we both create long-term confidence from showing we are bringing down and stabilizing our debt as a percentage of our economy, but also by including measures like infrastructure and emergency unemployment insurance to ensure we are giving our recovery and working families the strength and momentum they need in the immediate term. All of those are important components of balance, and I am happy that so many of the fiscal commissions, and I heard the reference from Senator Portman, understand that a strong agreement has to make sure that we strengthen the recovery, not contract the recovery in the short term. We don’t need to do that. We can design an intelligent long-term deficit reduction package that gives momentum and strength to jobs in the immediate term as we create more confidence that we will get our debt and deficits under control in the long term.

This all is in the realm of the theoretical, and ultimately you have to match it to results. But the fact that unemployment insurance and infrastructure get a mention is significant. Sperling later said that the debt limit must be a part of an overall deal, lest we lurch into another crisis. He added that President Obama “cannot sign, and will not sign, any bill that does not raise rates or one that seeks to extend the Bush high income tax cuts at their current levels.” We’ve had this veto threat before, but this is pretty explicit.

The missing ingredient here, of course, is the questioning of why we have to do this right now. The theory that you could enhance the recovery now and get the deficit down later is one that I don’t see a huge problem with. But I don’t know why there’s any pressing need to focus on the deficit. Certainly the markets haven’t warranted it. Moreover, the focus on the deficit has put policymakers into self-designed straitjackets that force these grand bargains where each side gives up something they cherish in exchange for a political win elsewhere. That has nothing to do with sound economic policymaking. It’s a fictional straitjacket. If your first principle really is to ensure dignity in work and retirement and ensure opportunities for the middle class, ladders for those in poverty to climb and basic security for all, then you DON’T FORCE A SITUATION BASED ON AN ARBITRARY DEMAND FOR DEFICIT REDUCTION in the first place. And of course, the White House willingly participated in that process, and in fact led the way toward the new age of austerity, before Republicans even gained power in the House.

So we have to separate two issues. Sperling is talking a good game in the context of having to do a deficit deal. In reality, Congress has no such constraint; they could get together tomorrow and say “my bad,” and repeal the sequester and extend the various other measures. Only in Washington does such a “forcing event” have anything resembling certainty attached to it.

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David Dayen

David Dayen