A short story by Arthur Conan Doyle has hero Sherlock Holmes solving a mystery because of the lack of reaction from a nearby dog.
Police Detective: "Is there any other point to which you would wish to draw my attention?"
Holmes: "To the curious incident of the dog in the night-time."
Detective: "The dog did nothing in the night-time."
Holmes: "That was the curious incident."
And so the fictional character teaches us something of the current state of contemporary conservative thought.
The Republican position on deficits is quite intuitive to most of the public. The most common analogy is that of the belt. Government should tighten its belt during hard times just as families tighten their belts. And then everyone nods their heads in agreement. It sounds so sensible.
Problem is this formulation, the same philosophy that got us into the Great Depression, ignores something very important. Individual families are not charged with the responsibility of reviving employment, getting the country moving again. Government does have that responsibility. Economists say the sort of proposed policy that Republicans insist on, that Republicans threaten to close down government twice a year over, the sort of policy that is predicated on getting us out of economic difficulty by ending deficits now, would put a very high proportion of us on street corners selling apples.
But it sure sounds right.
One question for those who take to heart economic history is whether Republicans actually believe what they are saying, and how they are voting, or whether this is for political effect alone. This is a serious question bordering on defamation if Republicans are behaving honorably, putting the well being of the nation ahead of narrow political gain. If they believe what they are saying, they are merely mistaken. Tragically, stupidly mistaken, but mistaken none-the-less. If they don't believe it, they are deliberately trying to keep employment high, hurting the country, in the hope that President Obama will be blamed.
Most Americans, indeed most Democrats, are willing to give them the benefit of the doubt. Which makes an interview Republican Mitt Romney gave to Mark Halperin for Time Magazine earlier this month especially revealing. Halperin asked the candidate why he hasn't yet proposed balancing the federal budget right away, as Republicans in Congress have insisted must be done. Here is how Governor Romney answered:
Well because, if you take a trillion dollars for instance, out of the first year of the federal budget, that would shrink GDP over 5%. That is by definition throwing us into recession or depression. So I’m not going to do that, of course. What you do is you make adjustments on a basis that show, in the first year, actions that over time get you to a balanced budget. So I’m not saying I’m going to come up with ideas five or ten years from now that get us to a balanced budget.
So Romney embraced simple Keynesian principles just like that. But those of us who care for the recovery of the country should be grateful.
It should have been in headlines everywhere. It wasn't, of course. But what is more newsworthy is reported virtually nowhere. It is what happened immediately following the Romney interview. Jonathan Chait is one of the few who catch it.
What happened was the startling reaction of Congressional policy makers, the ones willing to hold the country hostage every year, the ones demanding a balanced budget right now.
There was no reaction among those willing to put Romney on the rack over the slightest deviation from conservative extremism. Contraception must be made harder to get. Children of illegal immigrants must be deported. Gays must be kept from marriage and even civil unions. Social Security must be privatized. Medicare reduced, Medicaid nearly eliminated. Head Start must be ended. Breakfast programs for little kids must be terminated.
If Mr. Romney dials it down just a little howls are raised to the moon.
But the embrace of Keynesian economics? Not a peep.
Almost like they don't believe what they are saying. Almost like they know all those votes will actually damage the economy and hurt real people.
It's right out of Sherlock Holmes.
The dog that didn't bark.
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Still, we are left to wonder just how serious Republicans are about balancing the budget. If you want to suddenly pull over a trillion dollars from the economy, you are asking for economic disaster, which does not help with revenues and therefore does not help with deficits. Similarly, if you want to cut spending while also cutting taxes, you are simply asking for continued deficits as a result of lost revenue.
But perhaps those who demand a balanced budget right away simply do so to swing any compromise in their direction. If they expect to get only $20b in cuts if they ask for $100b, perhaps they think that they will get proportional results if they ask for $1t. It's like price anchoring.
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