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The Great Debate©: Deficits, Robert J. Samuelson vs. William K. Black

Introduction to the Debate

by John Lounsbury

Robert J. Samuelson, opinion writer at The Washington Post, believes that both presidential candidates are avoiding addressing the U.S. budget problems and are misleading the American public.  Prof. William K. Black, University of Missouri Kansas City, counters with the assertion that Samuelson is deliberately misleading his readers and violating economic theory and economic history.

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The truth deficit from both campaigns

by Robert J. Samuelson, The Washington Post, 30 September 2012

“You didn’t elect me to tell you what you wanted to hear. You elected me to tell you the truth.”

— President Obama at the Democratic National Convention, Sept. 6

Is anyone in America gullible enough to believe this? What defines this campaign, in part, is a yawning gap between the political rhetoric and the country’s budget problems. And it’s not just Obama. Mitt Romney is also playing. The consequences are that the victor will either sidestep those problems or, by attacking them forcefully, shock an unprepared public. Perhaps the first presidential debate, on Wednesday, will unmask and discredit the consensus against candor, though this seems doubtful.

It is said of war that truth is the first casualty; that also applies to this campaign. Let’s imagine what Obama would have to say to merit his claim of ruthless truth-telling.

“Fellow Americans. For years, your leaders — including me — have misled you. Your government has made more promises than it can keep, even if the economy returns to full employment. Your taxes are going up, and your public services are going down.

Read more at The Washington Post ….

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Robert J. Samuelson tries to create a moral panic about deficits

by William K. Black, New Economic Perspectives

The Washington Post leads the pack when it comes to generating what scientists term a “moral panic” about budget deficits. As part of that effort they generated the series of myths that Paul Ryan was “serious,” “courageous,” and “expert” about “solving” the “deficit crisis.” The newspaper’s theme is that anyone who doesn’t fall for their effort to create a moral panic is not “serious” and should be ignored. The paper runs a column by Robert J. Samuelson that is devoted to generating a moral panic about the deficit. Like Ryan, his central targets are imposing austerity and cutting Social Security, Medicare, and Medicaid.

Samuelson’s latest column claims that President Obama and Governor Romney are lying to the nation because they have not sufficiently embraced the moral panic as the transcendent campaign issue that will determine America’s future. Samuelson demands the candidates implore the American people to urgently adopt austerity and attack Social Security, Medicare, and Medicaid.

We have known for over 75 years that the key to recovering from a recession is to follow a counter-cyclical fiscal policy that will reduce unemployment. We have long exhibited the wisdom to adopt automatic stabilizers that increase government services and decrease taxes when a recession strikes.

What would have happened if Obama had adopted austerity as Berlin imposed austerity on the European periphery? It would have prevented any recovery, throwing the U.S. into an even more severe recession. Berlin’s austerity demands have thrown the Eurozone back into a gratuitous recession, increasing the budget deficit in many nations and plunging Greece and Spain into depressions. Europe has followed Samuelson’s and Ryan’s policy advice and the results have been disastrous. Samuelson’s and Ryan’s austerity policies violate economic theory, economic history, and a natural experiment in Europe with austerity that has proved catastrophic. Samuelson, however, makes bizarre odes to Irish austerity, emphasizing the necessity of “persuading ordinary citizens to tolerate austerity (higher unemployment, lower social benefits, [and] heavier taxes) without resorting to paralyzing street protests or ineffectual parliamentary coalitions.”

Samuelson shares Berlin’s belief in the redemptive power of suffering – by others. He doesn’t even feel a need to explain why any rational government would adopt a policy in response to a severe recession which it knew would cause “higher unemployment, lower social benefits, [and] heavier taxes.” He admits that Berlin (and Dublin) knew that austerity would make the recession far more severe. He doesn’t think that adopting austerity programs known to be self-destructive requires justification or even explanation. Insanity is normal in Samuelson’s world.

Samuelson is most amazing, however, in explaining how the victims of austerity should react to a response to a recession that will make the recession worse. Samuelson’s world of insane economic policies requires the victims to be political masochists. Samuelson demands that the victims of austerity suffer in silence without protesting austerity or using their democratic rights to form coalitions to reverse the insane economic policies. Samuelson is not afraid of “ineffectual parliamentary coalitions” – he is terrified of effectual coalitions that would end the economic insanity of responding to a recession with a pro-cyclical policy of austerity.

Samuelson, in a column decrying politicians who make misleading statements, suggests that Obama make the following statement to voters about ending the U.S. deficit.

“Can’t we just tax the rich even more? Unfortunately, this won’t work either. Third Way — a liberal group, mind you — estimated the effects of top income tax rates of 49.6 percent and 41 percent and a top capital gains rate of 38.8 percent. The budget still doesn’t balance….

“Third Way” is not “a liberal group” – and Samuelson knows it. It claims to be a “moderate” group, but that self-description is misleading. “Third Way” was created by, and is run by Jonathan Cowan, a Pete Peterson devotee. Peterson is a conservative, Republican billionaire who has spent 20 years using his money to create groups that will spread the moral panic about deficits in order to attack Social Security, Medicare, and Medicaid. Samuelson is a Pete Peterson devotee and journalist quoting Cowan’s group’s paper. Cowan is a fellow Peterson devotee and journalist. Third Way published a paper lauding Ryan’s proposals to end public health insurance and denouncing Brad de Long and Paul Krugman’s refutation of Peterson’s faux moral panic.

Samuelson deliberately misled his readers in a column devoted to denouncing Obama and Romney for misleading voters. It remains impossible to compete with unintentional self-parody.

Related Articles

More Great Debates©

Analysis and Opinion articles by William K. Black

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2 Responses to The Great Debate©: Deficits, Robert J. Samuelson vs. William K. Black

  1. Sigmund Silber says:

    Gosh I thought there would be some interesting content in this article not just the political campaigning of the author. Very disappointing.

  2. Derryl Hermanutz says:

    Sigmund,
    If by “political campaigning of the author” you mean that Bill Black is intelligently applying history, economic theory and arithmetic logic to the budget deficit issue in an effort to improve the economy and the lot of the middle class, and America’s brainwashed political right is campaigning on a platform of historically, economically and arithmetically counterfactual “moral panic” that will damage the interests of most of its misinformed acolytes, then I suppose Black is guilty of taking a “political” side in the issue. If Mao’s advocates recite myopic, malinformed and self-serving slogans from Mao’s Little Red Book in support of communism, and Mao’s opponents recite historical and theoretical and logical reasons why Mao’s programs won’t produce the results he claims, will you denounce those opponents as “political campaigners”? If one political camp is preaching fantasies, and the other is denouncing the falsehoods and promoting correct understanding, is it “politics” to denounce the propagandists preaching the counterfactual and illogical fantasies?