The Washington Post (3/11/21) suggests that $2 trillion in tax hikes (to “offset the cost of some or all” of the infrastructure bill) would “hardly qualify as austerity.”
As soon as Democrats took over Washington with big plans for reviving the economy, corporate media started sounding the alarm about government spending (FAIR.org, 1/25/21). With the party’s infrastructure bill—which could come in around $2 trillion over four years—now pending, the media deficit hawks are on high alert, tossing around big, scary numbers to throw cold water on the bill.
It’s hardly surprising to find deficit hawkery from the Washington Post editorial board (3/11/21), which urged Democrats to “offset some or all of the cost [of the infrastructure bill], through higher revenues, reduced spending on lower-priority items or a mix of the two.” But proposals for government spending on long-overdue infrastructure investment are also spurring “straight” news reporting full of largely unfounded assumptions and concerns.
On ABC‘s This Week (3/14/21), host George Stephanopoulos framed his first question about the infrastructure bill to House Majority Leader Nancy Pelosi with bold certainty: “That’s going to require new taxes. Can you keep Democrats united behind a proposal like that and attract any Republican support?” When Pelosi avoided the question of taxes, Stephanopoulos pressed further: “But it is going to take new taxes, right?”
Journalists seem desperate to make this the big question. There’s nothing inherently wrong with asking corporations or the rich to help pay for infrastructure investments, given that they benefit greatly from those investments. But given that even so-called moderate Republicans have openly laughed at the prospect of supporting an infrastructure bill funded even partially by rolling back the Trump tax cuts, pushing Democrats to build taxes into the bill means an opportunity for more headlines about Democrats abandoning the bipartisanship media revere above all else (FAIR.org, 1/22/21).
The Hill (3/16/21) told readers that “one of the biggest questions—whether Democrats go it alone or ultimately make it bipartisan—will be how to pay for it.” The piece stated this as an incontrovertible fact, which makes the immediately following quote from Sen. Ron Wyden (D-Ore.)—that some in the party believe that with “interest rates being so low, their interest is not paying for infrastructure”—seem like fantasy.
Politico (3/11/21) devoted an article to conservative Democrats worried that the cost of infrastructure spending will be “put on our children’s credit card.”
Politico (3/11/21) gave away its take with the loaded headline: “Democratic Centrists Balk at More Red Ink After Covid Spending Spree,” accompanied by the subhead: “Some in the President’s Party Are Ready for an Infrastructure Plan That’s at Least Partly Paid For.” Reporters Sarah Ferris and Burgess Everett tsked-tsked that both Democrats and Republicans “have shrugged off oceans of red ink over the past year,” and noted that some “Democratic centrists…[are] arguing there has to be some limit to Congress’s deficit spending.” (Note: No politician is proposing limitless spending.) Later, they rephrased the idea of Congress’s irresponsibility slightly to hammer the point home: “Some moderate Democrats say it’s time for Congress to recover some semblance of fiscal pragmatism.”
Politico uncritically quoted several Democrat deficit hawks spouting guilt-inducing platitudes, like Angus King (I.–Maine): “It’s got to be paid for. It’s just a question of who pays. Are we going to pay or our kids going to pay?”
This kind of framing—”pragmatism,” moderation, avoiding “oceans of red ink” and not just passing the buck on to our kids—gives readers the overwhelming sense that anyone at odds with such ideas can scarcely be trusted with control over our federal budget.
The piece did eventually quote two such Democrats, who alluded to economic arguments that deficit spending isn’t actually a problem, but Politico didn’t bother to talk to economists themselves for any kind of expert take on whether deficit spending for an infrastructure bill should be a concern.
If they had, they would have had to write a different kind of article. First of all, infrastructure spending is an investment; the government puts money into upgrading public resources—everything from roads to green energy to broadband to education—which in turn increase productivity and the tax base. That means more money back in government coffers. As economist Noah Smith writes in Bloomberg (3/15/21):
Private companies borrow to fund big investments all the time; to demand that the government pay for the transition to green energy entirely out of tax revenues would be like insisting that companies pay for major capital projects out of current revenues. In other words, it makes no sense.
Media fret about the size of the national debt even though interest rates over the past few years are the lowest they’ve been in US history (New York Life/Visual Capitalist).
What’s more, as economist Dean Baker (Beat the Press, 1/13/21) notes, interest rates hit extraordinary lows with the pandemic, as the Fed dropped short-term rates to zero in an effort to prop up the economy. They’ve gone up slightly in anticipation of the impact of the stimulus bill, but they remain well below the rates in the US for decades before the Great Recession. This means borrowing is incredibly cheap.
More borrowing will raise interest rates a bit more—still below any level that should cause much inflation or much alarm, Baker explains. But it will make the stock market bubble more likely to deflate. The incredibly low interest rates have driven investors into the stock market as the only place to make money (which explains how the stock market could go up in the midst of a shutdown). So as interest rates rise, money will flow back out. Guess who that will mostly impact? The wealthy, which includes top media personalities like George Stephanopoulos: The top 10% in this country account for 84% of equity holdings (New York Times, 1/26/21).
As for that debt we’re saddling our children with? Journalists offered descriptions of the national debt that made it sound like a giant ticking time bomb. For instance, the Wall Street Journal (3/14/21), in an article titled “White House Weighs How to Pay for Long-Term Economic Program,” pointed to
a nearly $4.5 trillion increase in federal debt held by the public, to $21.9 trillion as of March 1. At roughly the size of the nation’s entire economic output, the debt is the highest since the aftermath of World War II.
Fortune (3/16/21) actually nodded briefly to experts like Baker who aren’t overly alarmed by deficit spending—but promptly dismissed them:
For all the talk about how budget deficits may not matter, the fact remains that even before Biden signed the American Rescue Plan into law last week, the federal deficit was on track to hit $2.3 trillion in the 2021 fiscal year—more than 10% of the US’s total gross domestic product, and the second-highest debt-to-GDP ratio since World War II.
And the Post‘s editorial pointed to “exponential growth” of the national debt as the justification for its admonishment to either go small or raise taxes. (The debt-to-GDP ratio rose 30 percentage points as a result of the Covid-19 pandemic, the worst disaster in US history; before that, the ratio had remained virtually flat since 2012.)
As Baker points out, all those big numbers tell us nothing about the actual burden of the debt—which, in fact, is a pretty small, unthreatening number:
Last year, we paid $338 billion in interest; this year we are projected to pay $290 billion. Measured as a share of GDP, last year our interest payments came to around 1.6%; this year’s payments are projected at 1.4%. By comparison, in the early and mid-1990s (a very prosperous decade), our interest burden was over 3.0% of GDP.
Such sober accounting would make borrowing for infrastructure investments seem quite pragmatic and responsible—so those voices are largely ignored by reporters addicted to austerity.
And there is the fact the interest we pay is a policy variable set by the Fed.
Our infrastructure (bridges, roads, etc.) admittedly needs a LOT of work. It would be far better to take on that debt now, at these very low interest rates, than to have to do it later when rates are likely to be much higher (and the costs of materials and labor be a great deal higher due to inflation).
Are upgrades and fixes for infrastructure really “debt,” or are they an investment?
Near me we have one huge chunk of the city which has been totally cut off from access to the rest, all because of a bridge closure that happened right at the beginning of the pandemic. Someone noticed a huge crack in the bridge, and the authorities completely shut it down. This is the only bridge that connects the two parts of the city. They’re saying it will be closed for at least the next five years.
I wonder if all those small Ma and Pop businesses over on the now isolated and cut off side where the bridge used to let out, consider fixing the bridge as “debt” or as investment?
The corporate media are not interested in logical analysis. Their trade is in vapid slogans.
We need to rid ourselves of both senators in Maine. Mealy mouth Angus King couldn’t find his fainting couch.
Are you ignorant?
“When Pelosi avoided the question of taxes, Stephanopoulos pressed further: “But it is going to take new taxes, right?””
This is a perfectly valid question for Pay-Go Pelosi.
Do you know who Nancy Pelosi is?
Hippo Family:
The issue, as is noted in this article, is that the Media is absolutely FIXATED on taxes being required to pay for this, to the exclusion of almost all other items, and any logic as to “why?”.
It may be a fair question, but not if it is obsessed upon to the exclusion of all other conversation on the bill.
No, a far more valid question for BOTH parties is – why don’t we stop wasting trillions of dollars in Iraq and Afghanistan to pay for this infrastructure plan?
The real problem is our so called representatives annually authorize massively bloated military budgets and refuse to audit the Pentagon which is a black hole for taxpayer money (and illegal as per 1996 law).
Anyone questioning this gets vaguely worded replies assuring them that they are in favor of eliminating Dod waste but our military must be modernized blah blah. No similar concerns are expressed over our infrastructure which has been compared to that of a 3rd world country. The term ”representative” needs to be redefined by whether one votes for bloated military “budgets ” (a misnomer of epic proportions) or underfunded infrastructure projects which actually could benefit far more citizens. From now on you’re either an M.I.B.C.-rep or an American Infrastructure-rep. in public discourse.
DoD makes up 15% or our federal spending. Medicare 14%, Medicaid 9%, SS 23%, interest 9%, all other 30%. Seems like cutting DoD by 100% won’t make much of a difference. We’re going to need hair cuts in EVERYTHING.
Tim:
You are doing it again. The DOD makes up over 57% of the Federal DISCRETIONARY budget, which is what matters.
Lumping in Medicare, Medicaid, and SS, which are all paid for with a specific, isolated budget, is conservative way to shield the DOD from scrutiny.
The DOD has been operating illegally since 1996, refusing to account for where public money is being spent, and hiding behind the idea of needing to “protect citizens by not letting anyone know what we are doing”. That kind of behavior is fine for dictatorships, but crap for democracy.
Look at the slight of hand Josh plays. The DoD accounts for 15% of the federal budget. Josh introduces discretionary spending. What Josh doesn’t mention is that the other spending (Medicare, Medicaid, and SS) may not be paid for by your federal taxes, they are paid for out of taxes that the feds apply to employers and employees on every check. As if somehow, that tax is one you shouldn’t care about.
Nice slight of hand Josh, but unfortunately, you bumbled it like a three year old street magician.
Tim,
Sounds like you are for government spending, only if it funds the military, and that you are vehemently against having a social safety net.
You don’t consider money set aside that goes toward people’s retirement, and old-age needs as investment?
Seems way more expensive, and way more of a suck on society as a whole, to ignore these needs, by not funding them at all, than it is to at least put a little money aside for them.
You tell me.
I am for short term safety nets. I am not for generational safety nets. It is the role of local charities to help people out. If we didn’t tax people as high, they would have more money to save for themselves and to give to charity. Giving to a charity allows the charity to make sure that the person is trying to better themselves. Giving to charity makes better people when they give voluntarily than at the point of a gun.
As for old age, I have offered to house both of my parents and my wife’s parents (they declined). Most of us can do that. There is one place where SS would not be needed.
I don’t see a place for most government programs. You don’t see a place where government isn’t the solution. That sums the two of us up pretty well.
The bigger the government, the smaller the person – Dennis Prager
Tim,
Here’s another oldie but a goodie:
“I’ve never read Marx’s Capital, but I have the marks of capital all over me.”
– Bill Haywood (founding member of Industrial Workers of the World aka The Wobblies)
There’s a free documentary that chronicles state and corporate repression of the labor movement, titled “War At Home – Rebellion.” thought you may be interested in (it’s actually pretty good.)
Sounds like Mikela Jay, the narrator of the 2003 movie “The Corporation,” does the voice narration in “War At Home – Rebellion,” as well.
Hmm… After being badgered about ‘do you want our children to pay for’ infrastructure spending, I wish at least one politician with brains and cojones had schooled these bad-faith actors in…
(a) the difference between spending and investment;
(b) the question, “Do YOU want our children to inherit a crumbling, unsafe and unlivable infrastructure in a broken, shit-hole country?”, and
(c) the difference between seeking insight and knowledge on behalf of one’s audience vs. parading your political agenda in loaded questions posing as legitimate journalism.
I could envision AOC or Katie Porter ripping back with points like these. Sadly, few other Congress members have the requisite intelligence and spine.
“No politician is proposing limitless spending” Yes, no politician has ever said, “I am for limitless spending.” That doesn’t mean they have a maximum in mind. Has any journalist ever asked, “What is the maximum prudent amount can our debt be above our annual tax stream?” NO Democrat Senator or Representative has ever gone on the record with a number. Only a few Republicans have and I’m not certain their voting records would support their rhetoric.
If we pass $2T bills with the ease at which I breathe, why have tax increases? Tax increases, with a debt as large as we have and the rate at which we’re increasing that debt, are mostly symbolic – a way to show constituents that you’re still “puttin’ it to the man.” If we taxed everyone at 100% this year, we could not pay for our debt.
If we taxed everyone at 100% this year, we could not pay for our debt.
____________________________________________________________
OK, but we don’t need to pay off our debt this year. Or possibly ever. Some kinda debt is part and parcel of being an operational business or national economy. There’s no way I could afford to take on the debt my neighbor with the landscaping business does, but General Motors could take it on easily. The more important thing is to make sure we’re growing enough to sustain the debt and make sure we pay it down when we can.
Right now, interest is 9%. What happens when interest rates are no longer low?
John, our income is $3.5T income. Our debt is $28T. We’re about to add $2T. That will be nearly 10x our income. My number is 1x. What is your number?
Clarity: interest rates are not 9%. The percentage of our national spending is at 9%. If interest rates double or triple, so will this number. It will no longer be a slightly small number. It will be larger than the DoD and Medicare.
Tim,
I don’t know about you, but I’m ready for the forever wars to stop, and think the U.S. government needs to find more productive and peaceful ways to invest its money.
“War Is A Racket!” – Smedley Butler, USMC
Absolutely ready for the wars to stop. The irony is that during the past 20 years, only one man has done anything about it.
Just because I’m for a strong defense, does not mean that I want to use it.
Oh, I think it’d be good if we got the GDP/debt ratio back into the 40-50% range.
I could sign onto that if it were an amendment. We both know that will never happen (40-50% or an amendment). The way things are going, we will experience hyper inflation, our economy will suffer, the dollar will no longer be the world currency and China will dominate. Nothing good in that last sentence.
The DOD Milcon construction budget is $35Bn/year. That’s just for military infrastructure, mostly domestic/CONUS. Why can we afford that, but not for public infrastructure – you know, the people and companies that actually use the roads, bridges and rail?