Tuesday, January 26, 2010

Winning Arguments

About that spending freeze...

On the policy merits, I think it's pretty clear that this is a small-bore gimmick that's unlikely to make much of a difference either way. 

On political grounds, I suspect the whole thing blows over pretty quickly, whether it's a marginal plus or minus.  Seth Masket is right that there aren't all that many real deficit hawks within Congress (I'd add Kent Conrad -- he would protect ag subsidies, but otherwise I'm confident he'd support real deficit reduction).  However, there is a real constituency in the Congress for the appearance of deficit reduction.  And Seth is right that "there are no real deficit hawks among the population at large."  But, again, there are a lot of people who think that they're deficit hawks, and they might react positively towards a deficit-reduction gimmick (whereas they wouldn't react positively to real tax increases or spending cuts).  Against that are elite liberals who won't like it, and rank-and-file liberals who follow them.  I don't know if that adds up to a net plus or minus, but either way it's pretty minor.  At any rate, I disagree with Seth's headline: I do think there's a spending freeze constituency, even if there are no real deficit hawks.

More interesting to me is Ezra Klein's claim that this constitutes an admission that Obama has lost "the argument" on deficits, spending, the stimulus, and the deficit side of health care.  Here's John Judis making a similar point:
[T]he administration’s announcement is an admission of abject failure. Obama was, after all, a professor, as were two of his main economic advisors, Larry Summers and Christina Romer, but in the past year, they have failed utterly to explain to Americans (let alone the bond traders) how deficits function in recessions. Yes, it is hard to do so, but no harder than it was for Ronald Reagan to explain to middle class Americans how regressive tax cuts would actually benefit them.  For better or worse--and mostly the latter--Reagan actually tried to explain to Americans what his policies were about. The Obama administration has abdicated...Or the need for financial regulation. Obama turns out to be a wonderful orator, but, to date, a lousy professor.
I certainly agree that Obama has not convinced the American people of the folly of their thinking about the deficit.  I disagree, however, that it's his job to do so. 

Here's how it really works.  Barack Obama will get the credit if the economy rebounds, and he'll get the blame if it stays in the tank.  Regardless of whether they wind up trusting and liking Obama or not, the American people will continue to believe a hodgepodge of trite slogans and incompatible nostrums when it comes to macroeconomic policy.  It's not within the capacity of presidents to change that.  Reagan didn't convince people that the minimum wage is bad or that free trade is good or, for that matter, that rich people should pay less in taxes; however, when times were good, people thought Reagan was doing a good job despite his inability to win those arguments. 

To my memory, the most important argument any president ever tried to win of this type was FDR's attempt to convince the nation that Hitler was a threat.  He mostly failed, despite all the ammunition that a popular president could bring, and despite the rather obvious fact repeated daily in all the newspapers that Hitler really wasn't a very swell, trustworthy, peaceful kind of guy.  It still took Pearl Harbor and a German declaration of war to get what FDR wanted.  It doesn't matter how good a professor the president is; his class is just not going to be attentive enough to give him a chance.

What presidents can do (what Richard Neustadt called "teaching") works around the margins, and is more about managing expectations.  Obama did a very good job last winter in telling everyone that things were going to get worse before they got better; I think he probably helped lower expectations, as can be seen by polling that shows most Americans still blame Bush, and not Obama, for the state of the economy (the famous graph showing that unemployment would peak at 8%, on the other hand, was a teaching mistake).  George W. Bush did a great job in his post-September 11 speech, in which he told the American people that the fight against terrorism would be long.  He blundered terribly, of course, with "Mission Accomplished." 

But that's about the limit of what presidents can do.  It's not that the American people aren't smart; it's just that they don't care very much, especially since they don't expect to have much use for macroeconomic (or geopolitical) expertise.  I mean, I'd rather not have a president talk a lot of nonsense, but on balance it just isn't going to matter a lot.

So I wouldn't worry a whole lot about winning arguments over policy.  And I don't think that the actual policy implications of this freeze are very important, although of course the details may matter.  No, what this one comes down to is the (short-term, marginal-effect) politics of it.  Either way, it's not likely to be very important. 

2 comments:

  1. I disagree.
    Presidents CAN teach if the students want to learn that particular lesson.
    Reagan "taught" us that we could have our cake and eat it, too. 30 years later, people still believe the crap he spouted, namely, that tax reductions lead to revenue increases for the government. Look at the support Republicans STILL give that cockamamie idea. Republicans are still trying to pressure the CBO to put voodoo economics into their projections for tax cuts. They drank that Koolaid.
    Obama has a similar opportunity. YES, the freeze he's proposing won't work and wouldn't make a real difference in the debt or deficit if it did. However, he faces a public that WANTS to believe that. Never underestimate people's capacity for self-deception, especially when the argument says you can have your cake and eat it, too.
    The flip side of this coin, however, is that you can't teach people something they don't want to learn. Take, for example, how could expanding health care coverage possibly save me money? People don't want to think that you can save money by spending money. Thus, Obama has been behind the 8ball on the entire health care debate, because "expanding care" sounds like "spending money" to people, and the logic of it can't penetrate.

    In other words, Presidents have VERY little capacity to actually make the public smarter. But, they do have the ability to sell the public bills of goods. It's not "learning" as we would normally describe it, but who says we have to learn the truth?

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  2. Matt,

    I'm going to disagree with you here. The two cases are both, on the surface, similar: in both cases, the president is promising a free lunch. So they should have the same results...and, I think, they did. I *don't* think that Reagan convinced ordinary voters that cutting taxes will increase revenues. He did convince some conservative elites, or at least some of them decided that it was smart to act as if they believed it. The same is essentially the case with Obama & health reform. Who knows? Maybe if health reform passes and the Democrats win elections and believe health care was the reason, then future Democrats will claim that all new programs will save money. But rank-and-file voters won't buy it, because they aren't paying attention.

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