Predisposed as I usually am to any ideas that are politically risky to advocate, and friendly as I always am to people I trust like Paul Simon or Martin Sabo taking unpopular stands contradicting their peers, the balanced budget has always seemed to me one of those eminently practical ideas without which, for example, my own liberal agenda of universal health care, and proper environmental protection, or federal support of education from Headstart to student loans, may be eternally crippled. Since these are the talking points good liberals like Simon and Sabo use to point out the necessity of a balanced budget, I have always accepted a budget in balance as one of those ideas touted by centrists and conservatives, like term limits, means testing of entitlements, and enterprise zones, which liberals would do well to get behind.
But I am starting to have my doubts.
Those doubts came to a head today when quite by accident I came across two separate articles, as a result of two separate and unrelated searches, which made very convincing arguments that a balanced budget might be more economic trouble than it was worth, and in fact might fight the very goals liberals like myself hold dear, like low unemployment and protection of the poor.
The first article was released by Reuter on Monday, January 15, at 157PM. Here are some sections from that article, which was written by George Lerner:
"But some prominent economists say the shortfall presents little danger to the economy and they worry that the fervor to balance the budget could actually present onerous economic problems should the United States slip into recession. The government should make an effort to reduce the deficit during fat years but should not be forced to maintain a balanced budget during recessions, these economists believe. "If the government is obliged at a time like that (recession) to force the deficit down by raising taxes or reducing expenditures, they will worsen that recession," said Robert Solow, economics professor at the Massachusetts Institute of Technology and winner of the 1987 Nobel Prize. Economists say deficits raise serious problems when they outpace growth on a sustained basis, but the federal budget deficit declined dramatically over the past three years, to $164 billion last year from $290 billion in 1992, while the economy grew steadily. The amount of the deficit is not as critical as its size relative to the economy as a whole, they say. And the U.S. deficit, as a percentage of the more than $7 trillion Gross Domestic Product, is only about 2.3 percent -- smaller than Germany's and that of many other industrialized nations...John Kenneth Galbraith, a Harvard University professor and adviser to past Democratic presidents, said expenditure to promote future growth, a concept considered normal for corporations or municipal governments, had taken on political implications when it came to the federal government. "The cliche about balanced budget is being used as an instrument against social expenditure and particularly an instrument against the poor," Galbraith said."
Before dealing with these arguments, let us look now at another article, an op-ed piece that appeared in the Washington Post on December 26. This article was unearthed by Jack, a thorough and helpful researcher who works with me. He was locating information concerning the Gang of Five, whose platform I described in my January 8th column. Here are some selections from this article, which was written by Robert Kuttner:
"Reformers in both parties must offer something better than budget balance to deal with people's economic distress...What we have [in the platform of the Gang of Five] is less a new centrist majority creed than a set of values dear to Tsongas himself and other patrician moderates. One issue is painfully conspicuous by its absence -- the problem of declining economic insecurity and stagnant living standards. The Tsongas group is reminiscent of...the...Mugwumps of the 1880s...These good government reformers largely ignored the gross economic abuses of the gilded Age, which in fact underlay much of the mass political turmoil...As long as the Federal reserve won't let the economy grow faster than 2.5 percent a year, budget balance will only lead to more pain. Nothing in the mugwump program addresses the great econnomic concerns that are making the electorate so disaffected...An austerity program will only make the debt that much more of a burden...Sen. Bradley...distanced himself from the meeting, pointing to "rising economic insecurity" as the real issue...Unless voters have greater economic security, clean government and clean air and social tolerance are tossed aside. Just ask a factory worker who lost his job what he thinks of the Clean Air Act and immigrants."
I will not pretend to be clear in my own mind as to how I feel about these arguments. One part of me still screams that as long as we continue to pile deficit upon debt, we guarantee a continuing rise in the cost of capital, and continuing upward pressure on interest rates, which primarily impacts young people trying to buy their own homes for the first time, an essential part of the American dream. On the other hand, for the first time I am encountering arguments here against a rigidly balanced budget which seem to have more at their core than simply a denial that there is any problem. Instead, these arguments seem to be sober attempts to formulate a responsible basis of opposition to the god of balance. Since the concerns these arguments raise are ones with which any good liberal like myself must deal, they deserve the most serious consideration possible from those progressives in the country today who are looking for a centrist coalition to lead us out of the current morass of governmental paralysis and popular disillusion, disaffection, and distrust.
So, folks, how about it? For those of you interested in the principles of progressivism, can you convince me that it is STILL in our interest to balance the budget? Or is it reasonable to rethink this whole assumption that absolute truths peddled by the right and the left in this country need to be leavened by the fiscal responsibility preached by centrist reformers? I'm concerned and confused. Help me out by writing to