“You can spin your political base, but you cannot spin the economy or the bond market. Those two are unforgiving – and eventually voters might be too.” Those are the words of Manhattan Institute scholar Jessica Riedl in a recent Washington Post opinion piece.
Riedl was critiquing Republican spin related to their tax bill. As she has long seen it, Republicans overstate how much tax revenue their bills will yield, and that troubles the deficit and debt worrier in Riedl.
Without defending the happy talking nature of a GOP that naively finds economic growth in a tax bill largely geared toward relief for middle and low earners (economic growth is an effect of investment, not “putting money in the pockets” of the middle class), Riedl could possibly be persuaded that she doth protest too much? She might acknowledge that she’s long spun budgetary matters herself, albeit in scolding, the future is bleak fashion.
As my upcoming book, The Deficit Delusion, argues, the so-called deficit hawks have mistaken the deficit and debt story every bit as much as the supply-side happy talkers. Consider Riedl’s focus on deficits themselves.
It implies that budgetary balance is an achievement or, much much problematic, that a lack of budgetary balance is the problem. No, not even close. Budgetary balance in the U.S. is the baseball equivalent of a pull, right-handed hitter loudly celebrating a home run over an eight-foot tall left-field wall that is 100 feet from home plate. Lest Riedl et al forget, the U.S. Treasury has taxable access to the earnings and wealth of the most productive, enterprising and entrepreneurial individuals on earth.
It's a just a comment that there’s nothing limited government, or parsimonious about budgetary balance in a country like the U.S. In fairness to Riedl, the response to her requires saying every bit as much to supply side happy talkers who exult in soaring tax revenues that they say result from their tax cuts. Please stop! Jeff Bezos, Mark Zuckerberg and Elon Musk would and will work feverishly at all manner of tax rates. Just the same, none of the individuals mentioned can innovate without capital.
Which is a point missed by the deficit hawks and supply siders alike. With one side obsessed with budgetary balance, and the other side obsessed with rising tax revenue on the wholly naïve supposition that deficits and debt are an effect of insufficient tax revenue, the warring budgetary ideologies whistle past the real crisis that is unseen, but that is very much with us in the here and now. Think Musk, Zuckerberg and Bezos once again.
Contemplate how much more all three could have achieved in the past, and how much more they could be achieving in the present and future if Congress weren't such a size consumer of privately-produced resources. And how many more of their kind would attain funding if Treasury weren’t extracting gargantuan amounts annually so that Congress can consume what’s precious. There’s your crisis, and there’s your burden for the “grandchildren": Much less economic advance now paired with much bigger government inherited by “grandchildren” who will similarly inherit a much less evolved U.S.
As this happens the scolds and happy talkers fight about the best way to fund government and service the debt? It’s so very much not the point, and it’s yet again a reminder to Riedl of her own spin over the decades about a “future” crisis related to the debt; one that the economy and bond markets have been laughing at haughtily for as long as Riedl has been issuing her many dire warnings, and long before that.
