That Deficit Spending Bullshit

The big lie told over and over again becomes truth. This was an observation of Herman Goebbels, and a lesson learned well by Ronnie Raygun, Roger Ailes and their heirs commanding the current right wing lie machine.
The biggest and most effective of the Raygunner’s many lies is the mythic evil of deficit spending.  This notion is now accepted as gospel by nearly every purveyor of conventional beltway wisdom. NPR loves it, NBC News courts it, and no one is heard to question its value who expects any respect on Sunday morning television… Paul Krugman excepted, although it is not clear how much actual respect he gets.

The deficit lie is a particularly pernicious and especially suited to the purposes of the GOOP. After all, if the government is forced to balance its budget it cannot spend in an economic downturn, and it cannot effect the programs it needs to carry out its most important missions. Infrastructure spending, maintenance of the social safety net, and most important for the GOOP… regulation.
The best lies work because they carry some kernel of truth that the masses can identify with… such as the notion that a government budget should be like a household budget. Doesn’t every responsible household balance its budget? People think they do because frugality is among the bedrock common sense values of the USA… and all bedrock common sense Americans honor it. The problem is this is not true.

Since the beginning of modern times, deficit spending has been the secret to accruing wealth in the middle class. It is access to credit, and the educated use of it, that makes the middle class. People who do it well join the club… people who screw it up are the people right wingers didn’t want the government to help with their mortgages back in 2009.
The financier Felix Royhatyn is said to advised young couples to buy a house they could not afford and plan to grow into the debt. Indeed, the heart of the middle class portfolio is the family home, still the engine of the economy and still acquired by deficit spending. Like the government, betting that someday, if necessary, the money can be raised to manage the debt, the middle class family bets it will always be able to manage the thirty-year motgage. Indeed, smart families take on more debt, buying additional real estate, laying it off on accruing equity over time. The more real estate you manage, the more middle class you become.

As I have already pointed out, this can get you into trouble. Just look at the recent real estate mess. None-the-less, and liberals hate this… the loans that got people in trouble were taken out by people who should not have been getting them. They were the work or sharpers and fraudulent sellers and mostly banks that would steal from their grandmothers. Still, people who were not naive found better lenders, bet on a rising market and managed to get out before the bubble burst , made money.  Deficit spending will make you rich if you know how to do it. That’s how family fortunes, some big ones, but mostly small, carefully cultivated ones, are grown.

One advantage that the government has over the average homeowner, of course, is its ability to boost its income any time it wants to. Raising taxes is unpopular, but RESPONSIBLE governments have done it many times over the years to pay for wars, for example, build infrastructure and do the other things necessary. Of course, people who believe we need to “balance the budget” do not believe in responsible government.

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