Biden and deficit politics

Here are two podcasts addressing a dilemma that Democrats face with raising taxes to pay for the infrastructure bill. Because while raising taxes on the wealthiest is necessary and long overdue, there is a danger that in justifying it, they may be giving credibility to deficit hawkery and the kind of austerity thinking that often results from it.

The Majority Report featuring David Dayen on Biden's first 100 days, Assessing the Biden Administration's First 100 Days w/ David Dayen 4/29/21. David's segment begins just after 15:45.

David Dayen also has a new article on how the Biden team is now sending more messaging that the deficit is important, The Deficit Obsession is Back The American Prospect 04/29/2021

TYT 04/29/2021, Ben Shapiro: Poor Don't Pay Enough Taxes!

One encouraging development in recent years is that the economic theory known as Modern Monetary Theory (MMT) has become more familiar and popular with progressive commentators. And MMT advocates like Stephanie Kelton bring forward strong arguments against the kind of deficit worries that conservatives bring forward to justify austerity economics in good times and bad. In the US, the Republican concern about deficits is entirely cynical and instrumental. When it comes to spending or tax cuts a Republican President wants, they revert to the position Dark Lord Dick Cheney articulated privately during the Cheney-Bush Administration, "Reagan proved deficits don't matter."

But taxes are important is regulating the maldistribution of wealth, which has become increasingly concentrated at the top. Having a few extremely wealthy people and corporations with lots of money that can't be directly reinvested in a business leads to things like the kind of real estate speculation that not only has very negative effects in cities like Los Angeles, but also creates financial speculation that leads to crises.

So the Democrats need to find a redistributionist rhetoric, which the neoliberal viewpoint regards as heresy. (So do traditional conservatives, obviously!) If Franklin Roosevelt could campaign successfully against the "economic royalists" in 1936, the Democrats today can find a way to do it, too.

But one doesn't have to be an MMT adherent to recognize the problem with deficit fetishism. Neo-Keynesian Paul Krugman has been on that case for years: Nobody Understand Debt New York Times 02/09/2015; How (not) to pay for building back better Substack 03/07/2021; Return of the Phony Deficit Hawks New York Times 12/17/2020