I'm coming up on the 10th anniversary of when I started blogging, and it led me to chat the other day with a friend about what the political environment was like in February 2003. It was shortly before the U.S. invaded Iraq and I noted that, at the time, the discourse was dominated by two groups: those who leaned in favor of an invasion and those who leaned heavily in favor of an invasion.
There were skeptics, of which I was one, but their position was deemed "unserious." The merits of another war were considered obvious by the political establishment, and the public conversation reflected these assumptions -- to be considered "serious," one had to toe the party line on Iraq.
With this in mind, Paul Krugman had an item the other day that resonated with me.
Back during the early days of the Iraq debacle, I learned that the military has a term for how highly dubious ideas become not just accepted, but viewed as certainties. "Incestuous amplification" happen when a closed group of people repeat the same things to each other -- and when accepting the group's preconceptions itself becomes a necessary ticket to being in the in-group. [...]
We saw that in the run-up to Iraq, where perfectly obvious propositions -- the case for invading is very weak, the occupation may well be a nightmare -- weren't so much rejected as ruled out of discussion altogether; if you even considered those possibilities, you weren't a serious person, no matter what your credentials.
Which brings me to the fiscal debate....
It certainly does. The parallels are imprecise, but conspicuous -- for much of the political establishment, the notion that there's a fiscal "crisis" is no longer even questioned. Clearly the nation has to address its "crushing" national debt, we're told, and to deny the need for entitlement cuts to social insurance programs is to be, you guessed it, fundamentally "unserious."
In this new "incestuous amplification," we see another closed conversation -- on the Sunday shows, on Capitol Hill, etc. -- in which it's simply taken as a given that the deficit is out of control and getting worse, the debt poses an existential threat to our collective future, government spending is soaring at an irresponsible rate, and the only sensible course of action is to listen to wise fiscal hawks like Paul Ryan, whether his figures add up or not.
Greg Sargent calls it the Beltway Deficit Feedback Loop, and it seems to be getting worse.
The facts tell us that spending cuts are hurting economic growth considerably. The facts also tell us that the deficit is already shrinking quickly; there has been no surge in government spending; policymakers have already approved more than $2.4 trillion in debt reduction; and Paul Ryan's ability to do arithmetic is laughable.
And while we're at it, the facts also tell us there is no debt crisis -- interest rates are low, inflation is non-existent, and it's never been easier for the U.S. to borrow -- and those who insist otherwise tend to oppose new revenue that would improve the nation's finances.
The result is a dynamic that feels awfully similar to the one we saw 10 years ago this month: allegedly "serious" people whose certainty is belied by reality overpowering those who happen to be correct, albeit unpopular.
Neil Irwin had a great piece yesterday, which doesn't make the Iraq parallel, but frames the debate in a very constructive way:
On one side is the standard Washington wise man/centrist pundit view of the world, embodied by Scarborough and some of the people he cites, like former Joint Chiefs chair Mike Mullen and Richard Haass of the Council on Foreign Relations. On the other are a wide variety of economists -- avowed liberals like Krugman, but also the not-particularly-ideological analysts at places like the Federal Reserve, major bank economics shops, and business forecasting firms, who generally see wisdom in reducing the deficit over time but also see big risks to the economy if the effort moves to fast, and not much reason to fear an imminent debt crisis.
These worlds seem to be talking past each other, and for one reason in particular. There is, in the Washington conversation, a generalized aversion to deficits. It's an aversion with an almost moral dimension. In fact, sometimes the moral dimension is explicit: Mitt Romney often called deficits a "moral crisis."
But to economists, deficits are simply the difference between revenues and outlays. A large deficit could be a good thing if it's going toward a productive investment. A small deficit can be a bad thing if the economy needs more support. So if you're worried about deficits, you need to say why.
The U.S. is not in danger of becoming Greece; the deficit is not more important than the economy; spending isn't out of control. There's no reason in the world policymakers can't focus on job creation and economic growth now, while taking reasonable steps to reduce long-term fiscal challenges.
The establishment doesn't want to hear any of this, just as they didn't want to hear questions about the merits of invading Iraq, but it happens to be true.