The Deficit Hawks That Make Moderate Democrats Cower

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tags: austerity, fiscal policy, Federal Budget

This week, the first true headline-grabbing legislative battle of the Biden administration and the Democratic Congress has begun as the $1.9 trillion pandemic relief package takes center stage in the Senate. As with any piece of rock-star legislation, the bill’s movement through the Capitol has been accompanied by backstage maneuvering, bickering, and poor judgment. Senate Republican leader Mitch McConnell and his crew have been skulking around the political arena’s passageways and green rooms. They’re pushing a fishy bill of goods that tends to emerge whenever there’s a big fiscal blowout looming. Now it seems that mainstream Democrats can’t help but indulge their old weaknesses.

In a release sent last Friday, ahead of the stimulus’s passage in the House, McConnell offered up a hotshot of high-test deficit hawkery. And not just the stepped-on version that the seedy dealers from the Heritage Foundation or the American Enterprise Institute peddle in their conservative ghettos, but an austerity brand with a pedigree that’s been deemed to be totally acceptable in Washington’s polite and sophisticated quarters: Maya MacGuineas, the president of the Committee for a Responsible Federal Budget, or CRFB. In the report quoted by McConnell, MacGuineas warned that the legislation was dangerously bloated by pension bailouts, local government aid, and “poorly targeted rebate checks.” Sure enough, on Wednesday, centrist Senate Democrats forced the Biden administration and its chamber’s leadership to more strictly limit eligibility for stimulus checks that they promised to the entire country earlier in the winter.

Members of the mainstream political and media establishment are hooked on what the CRFB sells. It provides a comforting sense of economic policy savvy, a bit of soothing wonky warmth, and protection against all that nasty ideology out there. MacGuineas and the CRFB gang have been doling out media hits left and right since Biden was inaugurated on a promise of another massive spending bill. Just this February, the group (often identified as a nonpartisan nonprofit watchdog, or something similarly benign) was cited by both news and opinion writers in The New York Times, VoxReutersRoll CallThe Washington Post, USA Today, MarketplaceBusiness Insider, and FactCheck.org, among other outlets. Last week, Washingtonian magazine named MacGuineas as one of the 250 most influential people in D.C. civil society.

But the idea that CRFB’s brand of deficit scolding is sounder than what Rick Santelli might have bellowed in the Tea Party’s founding rant is a bit like the myth that powder cocaine is somehow less dangerous than crack. The nonpartisan whiff surrounding the CRFB may render it respectable, but that doesn’t mean the group’s long-running critique of more active fiscal policy has more basis in fact than the battle cry of the House Freedom Caucus. In fact, the CRFB has consistently whiffed on the most important economic calls since the 2008 crash. But it nevertheless commands the respect of centrist policymakers and prominent opinionmongers, and America is worse off for it.

The CRFB sets the standard of neoliberal consensus austerity economics. MacGuineas came to the cause from Wall Street during the early 1990s. During the early Clinton era, leading lights of finance and economic policy frightened policymakers with scary stories about the infamous “bond vigilantes,” investors who would ruin national finances by demanding higher interest rates on U.S. Treasury bonds as the federal deficit grew. Famously, Wall Street–aligned figures like Robert Rubin used the spectre of bond vigilantes to push President Bill Clinton to abandon his 1992 campaign promises for middle-class tax cuts that would have ameliorated the pain of the early 1990s recession.


Read entire article at The New Republic

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