Obama's Biggest Blemish

Yesterday, I complained that political media presents debt reduction as a no-brainer—something we must do, for the sake of our solvency—and not as a choice that may or may not be warranted in the current environment (hint: it’s not). There’s no mystery as to why that’s the case; the major mainstream news outlets are heavily influenced by elite opinion, and elite opinion is dominated by the views of successful businesspeople.

Businesspeople, among other things, want lower taxes (to keep more of their income), fewer protections for labor (to spend less on workers), less spending (again, taxes), aggressive debt reduction (to avoid higher interest rates), and price stability (to avoid inflation). What’s more, they tend to be less concerned with joblessness—full employment diminishes the flexibility and power of people who own businesses.

Because these things are treated as self-evidently good, mainstream media outlets tend to heap praise on politicians who commit to this agenda. The rapturous admiration for Alan Simpson and Erksine Bowles comes largely from the fact that they speak the language of CEOs, with an added folksy twist that makes it seem more “authentic.”

Of course, different outlets offer varying degrees of this, and some—such as The New York Times—even provide a little balance in the form of op-eds and editorials. But there are places where you can get a pure fix of conventional wisdom, and for my money, Politico provides the best in uncut boilerplate. Today, for example, lead reporters Glenn Thrush and Reid Epstein provide their readers an unadulterated hit of received opinion:

President Barack Obama won’t be able to enjoy much of a victory lap from his win over congressional Republicans on the fiscal cliff fight.

There are about 16.4 trillion reasons why.

The staggering national debt — up about 60 percent from the $10 trillion Obama inherited when he took office in January 2009 — is the single biggest blemish on Obama’s record, even if the rapid descent into red began under President George W. Bush.

The national debt is only a “blemish on Obama’s record” if you buy the idea that debt is the chief danger to our economy. Yes, in general, it’s not a good idea to run large deficits. But that’s an all-things-equal calculation, and at the moment, all things aren’t equal. We are still climbing out of a downturn that cratered the global economy, wiped out consumer demand, and as a result, has left us with high unemployment—more than 14 million people are out of work—and sluggish growth.

There’s a scene in the latest Batman movie where Selina Kyle tells Batman that he’s given “everything” to the people of Gotham, to which Batman responds, “Not yet.” It’s a hokey moment, but it’s the right way to look at our debt. The large deficits of the last four years reflect our attempts to fix this mess, and get our economy back on track. And it’s been working; first rapidly, with the $800 billion stimulus package of 2009 and 2010, and then more slowly, as the stimulus and its supplements were spent down in 2011 and 2012.

What this strongly implies is that the economy needs more spending, not less, and Politico notwithstanding, Obama should be focused on finding ways to avoid spending cuts and austerity. And ideally, he’d be working towards more spending on infrastructure, tax credits and other stimulus programs.

In other words, as far as domestic policy is concerned, Obama’s biggest blemish remains the ongoing tragedy of mass unemployment. Not only does this have a human element—the countless lives harmed our destroyed by poverty and desperation—but it is a huge drag on our economy. Mass unemployment reduces spending—the engine of our economy—which in turn, reduces growth. And without meaningful growth, there’s no way to reduce long-term debt without inflicting a large dose of harmful austerity. That, in my view, is unacceptable.