Not Bai-ing It

When Matt Bai first appeared on the scene, I thought, This looks like something interesting: a journalist who specializes in the center-left, doesn’t particularly identify with it, and can write about it with objectivity. It sounds like a nice idea—too bad the actual work is so shoddy.

I should have learned by now, but each new Bai essay sets out an appealing framework, an approach that promises some sort of new insight. Then comes the letdown.

This is how it went with his piece in this morning’s New York Times on how “the argument over fiscal policy represents the churning of a cultural fault line that has defined and destabilized Democratic politics pretty much since the onset of the Great Society”. Ah, I thought, now we are going to get to the political substructure behind Obamanomics, the deeper reason why this administration is kowtowing to fiscal conservatives and Wall Street barons.

No such luck. First off, the guy just doesn’t get the facts right.

1. A deficit projection for 2020 is not a meaningful guide to policy today (there will be a lot big surprises during the next ten years), and a public debt of 90% of GDP, while not desirable, is far from “staggering”. Matt should take a look around the OECD, or back into our own history for that matter.

2. If you wanted to reduce fiscal deficits, the least meaningful step would be to call for “scaling back entitlements”. Social Security runs a surplus, which it will live off of for another three decades or so. Medicare is a big worry, but mostly because health care costs have metastasized. The government currently pays over half of all health expenses in the US, but if we can’t control these costs we’ll be broke no matter who pays for them. Meanwhile, the big drivers of fiscal deficits since the Clinton-era surpluses have been tax cuts and wars. You want to stem the red ink? Start there.

3. “Fiscal responsibility” has nothing to do with modern political conservatism, at least not since Reagan. Republicans have pumped up deficits with their anti-tax, pro-war fixations, to an extent that surpasses the ambitions of even the most wild-eyed liberals. Take a look at those unreconstructed 60s Democrats: they want to undo the Bush tax cuts and even increase taxes on upper incomes and capital gains. They want to tax financial transactions. They want to tax carbon. In short, they want to stuff the “beast”, not starve it.

And the basic premise behind this article is just a cop out. The capture of the Democratic party by its pro-finance wing is not a “cultural” event. It has nothing to do with the songs on Obama’s iPod or whether Bill Clinton did or did not inhale. It has everything to do with the rise of the finance sector, the emergence of a new view of corporations as portfolios (and therefore congruent with finance), and the dominance of the wealth-holding constituency, the top tenth or so of households, in an era of ever-increasing inequality. Exactly how the tectonic forces within the national and global economy have their expression in politics is murky and complex. Journalists could do a world of good by illuminating it. In my imaginary parallel universe there is someone like Bai, but much more informed and aware, covering this beat.