Trump Budget Director: What, Me Worry (About the National Debt)?
No, Mick Mulvaney isn’t a newly converted Keynesian. But his sudden disinterest in deficits is deeply troubling.
It’s been the Republican Party catechism: We don’t have a revenue problem, we have a spending problem.
That was then, this is now.
On Meet The Press this Sunday, White House Budget Director Mick Mulvaney doubled down on last week’s announcement that “we need to have new deficits.” Telling host Chuck Todd that “I had come to Washington in 2011 and had hoped that would be the case, that we had a spending problem and not a revenue problem,” Mulvaney’s argument seemed to be that it is impossible to decrease spending, but that shouldn’t stop us from cutting taxes.
Cutting taxes (revenue, in budget terms) is, therefore, justified, even if it increases the deficit. That’s because these tax cuts will stimulate the economy, thereby growing our way out of trouble.
That’s the theory, at least.
What interests me about this is how Mulvaney is overtly advocating for more deficits. As I noted, last week, he literally told Chris Wallace “We need to have more deficits.”
As far as I can tell, Mulvaney doesn’t really believe budget deficits spur the economy. If so, he’s a Keynesian now—and he sure sounds like one.
But it seems that what he’s saying is that tax cuts (albeit, tax cuts that will increase the deficit) are what will spur the economy.
Still, I can’t fathom why Mulvaney is talking about deficits instead of tax cuts—or why he hasn’t stressed that he still wants to cut governmental spending. Perhaps this his attempt to somehow please Trump—a man who doesn’t even want to reform entitlement spending. Maybe this is Mulvaney repositioning to defend the Trump spending increase that will come with his infrastructure proposal? It’s unclear.
That didn’t stop pundits from pouncing, of course. Over at the conservative National Review, Veronique de Rugy said: “Maybe the new direction of the party has helped liberate some of its members from the tedious requirement of free-market principles and calls for spending cuts.”
RedState’s Patterico observed, “The people who advocate for deficit spending are measuring prosperity simply in terms of GDP. They are asking: is there a lot of economic activity? They are not asking if we are actually better off.”
HotAir’s Ed Morrissey noted: “Mulvaney has become a fan of deficits, as long as they’re ‘new deficits,’ which apparently means deficits run up by Republicans. And National Review’s Kevin Williamson called it “An Anti-Growth Tax Cut,” explaining: “Republicans want to cut taxes by $1.5 trillion—while the government already is running a deficit—and they propose to offset those cuts with wishful thinking.”
Of course, criticism came from all corners of the internet. Slate’s Jordan Weissman observed that “the next time you hear a Republican talking about how we’re on the road to fiscal perdition, remember that there’s no such thing as a deficit hawk in fox hole.”
It’s fun to debate whether Mulvaney has betrayed deeply held free market principles, in exchange for a belief that spending can stimulate the economy. But as Morrissey and Weissman suggest, the big story here seems to be the situational ethics. Just as homelessness seems to cease being a problem worthy of coverage when Democrats are in office, hand-wringing about spending our children’s inheritance seems to go out the window once a Republican is in the White House.
How many times did Paul Ryan say “we’ve got to tackle this debt crisis before it tackles us” during the Obama era?
Mulvaney was instrumental in making the point that this was an existential moral issue. “Anybody who is up to speed on budget issues should be scared to death by what’s happening with the debt and the deficit in this country,” he said in 2011. “If you’re not losing sleep over it, then you’re simply not paying attention.”
The idea that “we are all Keynesians now” may just be about Mulvaney’s clumsy language on the Sunday shows. After all, Ronald Reagan shifted away from a green eyeshade form of budget-hawkery into a Jack Kemp-style conservatism. Reaganomics was hardly Keynesianism.
I asked David McIntosh, the former conservative Congressman, who taught economics at Ball State and now heads the Club for Growth, for his take. “I think this is the correct application of supply-side economics,” McIntosh tells me. “What Mulvaney is saying is we need these tax cuts.” McIntosh theorizes that Mulvaney doesn’t believe the revenue loss will be as great as forecast, because the forecast is based on static (not dynamic) scoring.
McIntosh compares Mulvaney’s strategy to what Congressional Republicans did in the 1990s. “We didn’t cut so much as just put the brake on the spending level. But that was key. By keeping the spending relatively flat, you went from a deficit to a surplus.”
So why all the think pieces about Keynesianism? “They’ve heard that Keynesian economics likes deficit spending,” McIntosh says. “It’s not a full understanding of the Keynesian principles, nor the supply side principles.”
The Keynesian thing is a distraction. The bigger story is that Republicans seem to have given up on cutting spending. And this seems to be a very convenient argument to make now.
The shame is that some of the same people who were warning about a coming financial budgetary meltdown are now, apparently, not so worried about it.