New Majority Agenda

So I was watching a ballgame last night, and an ad appeared for something called the New Majority Agenda. An anti-Obama ad, but more specific and more issue-focused than most of the political ads this election cycle.  They said 'check out our website,' so I did.  Here it is: new majority agenda. And, just for grins and giggles, here's wikipedia's article about their organization, Crossroads GPS. 

Okay, patriotic Americans, offering their views, trying to influence the electoral process.  Nothing wrong with that.  I figure they deserve a respectful hearing, and I also think they deserve a policy-oriented response.  Let's engage, let's debate, let's have a conversation.

First, they talk about a 'fiscal cliff' we're approaching.  What they're actually doing is conflating two issues: sequestration, and the end of the Bush tax cuts.  Sequestration refers to the budget deal President Obama engineered with House Republicans and Senate Democrats (the two relevant majorities), to resolve the debt limit fiasco.  The Budget Control Act deal created a Super Committee with representatives from both sides that was supposed to work out a budget--if they didn't, the bill included a poison pill, a measure with massive budget cuts to defense (which Repubs hate) and domestic spending (which Demos don't want cut). Predictably, the Super Committee couldn't agree on anything.  Now both sides are furious, because it looks like the poison pill is something they're going to have to swallow.  Here's a Huff post link.  Also, the infamous Bush tax cuts are set to expire on Jan. 1--Republicans have taken to calling that expiration "taxmageddon."  (I think the Bush tax cuts were moronic--good riddance.  But I'm a liberal.)

The New Majority Agenda says the consequences of sequestration and expiration are: "Small businesses and entrepreneurs will be drained of capital to grow and sustain jobs, and health care costs will continue to skyrocket" leading to "higher unemployment and another recession." So they propose "a pro-growth tax policy, a renewed commitment to the power of free enterprise, and restrained spending that no longer crowds out private sector investment and real growth."  They argue that the deficit is largely caused by "wasteful and unnecessary Washington spending."  They're against "wasteful stimulus spending" and want to return "discretionary domestic spending" to "pre-Obama administration levels."

Personally, I don't like the poison pill either, and think the Super Committee should have been locked in a room without food or water until they came up with something.If they'd had to resort to cannibalism, all to the good. But let's look at these specifics.

"Small businesses . . . drained of capital."  Look, there's no connection between deficit spending and unemployment, and this group seems to acknowledge it.  Saying "we have to cut spending to increase employment" is like saying "we have to eat more vegetables so we can rotate our tires."  The one legitimate fear is that federal borrowing will crowd out investment dollars.  But if that were happening, we'd see it in interest rates.  And interest rates have never been lower.  The problem with the economy is not that small business can't get financing.  It's a demand side recession.  It's a vicious cycle: demand is low, so businesses don't hire, which means fewer consumers with money, which means demand stays low, which means businesses don't hire. . . . Something has to break the cycle, and essentially all academic macro-economists would agree the cycle breaker HAS to be the federal government. It has to be a federal stimulus.  The problem with the Obama stimulus isn't that stimuli don't work; it was that it was too small.  It kept things from getting worse, but it didn't sufficiently stimulate. And I also know that some of the stimulus money was wasted, and some projects were foolish.  Doesn't mean stimulus packages can't work, or don't work. 

I know conservatives loathe the work of economists like John Maynard Keynes, but there basically aren't any macro-economists who aren't Keynesians.  My son graduated from a very conservative economics program--when they got to macro, what they taught was Keynes.  That's because essentially all the data support Keynesian theories. 

Here's where these guys are really sneaky--they support cutting "discretionary domestic spending" to "pre-Obama administration levels."  The facts are clear, the Obama administration has not been terribly profligate. Rhetoric aside, what we've actually seen is close to European-style austerity. (Which, by the way, also hasn't worked in Europe).  So what does "pre-Obama" levels refer to?  To Rooseveltian levels?  I doubt it.  To, I don't know, like, Coolidge administration levels?  Bingo.  Betcha anything.

This group hates Obamacare, of course, and their counter- proposals, as usual, are either things that won't solve the central problem Obamacare solves, or are already in the legislation.  Such as 'trade insurance across state lines.'  That's essentially the same thing as the Obamacare insurance exchanges. 

Tax policy: they want more tax cuts.  Here's how they put it:  "Redesign the tax code to make American business more competitive and productive, and make tax compliance easier and fairer for job creators and individuals alike."  We can read that code: more tax cuts for corporations, and more tax cuts for 'job creators'.  Rich guys, in other words. We've tried that; there's no evidence that it works, or has worked, at all, ever.  Trickle-down economics is a disaster; wealth don't trickle.  This just Bush-o-nomics, and last time we tried it, we got the worst recession since 1929.  Please please please let's not go there again.  

Look, the deficit is scary, and the recession is awful, and we're all a little scared.  And I think these guys are well-meaning.  They're offering more or less specific proposals (a little misleading, but not too bad), and good for them.  But their proposals won't work. Let's try something that might.