Suddenly, the media are once again obsessed with budget deficits. This always seems to happen when they cover Democrats, even though, as Joe Conason notes, 90 percent of the $11 trillion in federal debt run up in America's history can be attributed to Ronald Reagan and the two Presidents Bush -- and even though the only president to balance a budget in the last 40 years was Democrat Bill Clinton. Despite all that, the media are much more concerned about deficits when assessing Democrats' spending plans than Republicans' tax-cut proposals.
Now, in the abstract, it's helpful for the media to pay attention to federal budget deficits. Left to their own devices, most politicians would probably prefer to propose tax cuts rather than tax increases, and most -- even those who profess to dislike government spending -- seem to rather enjoy spending the money that, as a result of those tax cuts, the government isn't bringing in.
Unfortunately, the news media's approach to deficits tends to be remarkably shortsighted and simplistic. Take, for example, the tendency to analogize the federal budget to an individual's household budget. The American people have to balance their budgets, we are told, and so the government should do so as well, lest it go "bankrupt."
It's a poor analogy, for a couple of reasons. First, it doesn't make much sense to say the government shouldn't do what an individual citizen cannot -- that's a large part of the reason we have a government in the first place. Second, most people can and do run deficits. That's what credit cards, mortgages, and student loans are.
So the household budget actually could be a useful analogy, if only the media used it correctly. It demonstrates that there are good deficits and bad. If your teenage daughter wanted to borrow $50,000 to buy lottery tickets, you'd probably think that was a bad idea. A $50,000 loan to pay for college, on the other hand, might be a good investment. Both actions would create deficits -- but while one should be avoided at all costs, the other has a good chance of paying off in the long run.
In fact, in analogizing government and personal budgets, the media should understand that balancing a budget can sometimes cause more economic harm than running a deficit ever would.
Anyone who has read the 2001 book Nickel and Dimed, in which journalist Barbara Ehrenreich chronicles her attempts to get by on the wages she earned waiting tables, working in Wal-Mart, and cleaning houses, should understand this. Ehrenreich describes a perverse situation in which she and others like her must live in motel rooms because they cannot afford the up-front costs (first and last months' rent, security deposits) required to live in apartments that would actually be less expensive on an ongoing basis. As a result, they live in less comfortable, less safe housing that is often farther from work, thus increasing commuting time and costs. And they pay more than they would for an apartment. And since the motel rooms lack kitchens, they either spend more on food than they would in an apartment or eat meals with little to no nutritional value -- which can, in turn, lead to increased health-care costs and lost wages.
This is not a sustainable situation. The budgets are balanced in the short term, but provide no margin for error and don't work for long. Eventually, living in a motel becomes too expensive, so people end up living in shelters or in their cars. And remember: these are people with jobs; the situation is obviously worse for those struggling to find work. It certainly isn't the only thing keeping low-income workers from enjoying a comfortable middle-class life, but the inability to spend money now for the purposes of saving more money later is a significant part of a vicious cycle of poverty that is difficult to escape.
On an individual level, the inability to carry a short-term budget deficit can cause greater problems than the deficit would. Likewise, the fear of government deficits can actually lead to larger deficits. In 1993, Pete Peterson warned against an overhaul of the U.S. health-care system, arguing, "The issue is whether we can afford it. We can't." Since then, health-care costs have skyrocketed -- bringing spending on things like Medicare, and thus the budget deficit, along for the ride. It turns out we couldn't afford not to reform health care.
And yet Peterson and those who share his obsessive anti-deficit approach continue to see their views promoted by the media as though they were gospel. In January, CNN went so far as to broadcast a film backed by Peterson's foundation as part of a two-hour special about the need to take immediate action to reduce the deficit. At this week's presidential press conference, so many questions focused on the need for "sacrifice" and deficit reduction, journalist Matt Cooper noted: "MSM [mainstream media] is so deficit obsessed. Not that it's a small matter but they're all Pete Petersons."
It's not that, as Dick Cheney once said, "deficits don't matter." It's that not all deficits are created equal. Some deficits -- those created by, say, invading a country that didn't attack us while handing truckloads of cash to your former Halliburton cronies and others who are already fantastically wealthy -- stick future generations with the tab for budget decisions that don't really get us much in exchange. Those might reasonably be considered bad deficits. Other deficits, however, can actually save money in the long term -- or at least get us something worth having, like health care or new sources of energy. Or both.
In their obsessive focus on the deficit, reporters should keep that in mind. And they should remember that if history is any guide, "Can we afford to listen to Pete Peterson?" may be a more important question than "Can we afford to reform health care?"