WASHINGTON — The policy mystery of our time is why politicians in the United States and across much of the democratic world are so obsessed with deficits when their primary mission ought to be bringing down high and debilitating rates of unemployment.
And since last week saw a cross-party celebration of the opening of George W. Bush’s presidential library, I’d add a second mystery: Why is it that conservative Republicans who freely cut taxes while backing two wars in the Bush years started preaching fire on deficits only after a Democrat entered the White House?
Here is a clue that helps unravel this whodunit: Many of the same conservatives who now say we have to cut Social Security to deal with the deficit supported Bush’s plan to privatize Social Security — even though the transition would have added another $1 trillion to the deficit. The one thing the two positions have in common is that Bush’s proposal would also have reduced guaranteed Social Security benefits.
In other words, deficits don’t really matter to many of the ideological conservatives shouting so loud about them now. Their central goal is to hack away at government.
This goes to the larger argument about jobs and deficits. For a brief time after the Great Recession hit, governments around the world, including President Obama’s administration, agreed that the immediate priority was restoring growth. Through deficit spending and other measures, the 20 leading economies agreed to pump about $5 trillion into the global economy.
Obama and Democrats in Congress enacted a substantial stimulus. The package should have been bigger, but Obama — thinking he would have another shot later at boosting the economy — kept its size down to win enough votes to get it through Congress.
The second chance didn’t come because conservatives stoked anti-government deficit mania — and never mind that the deficit ballooned because of the downturn itself, the stimulus needed to reverse it, and those fiscally improvident Bush-era decisions.
Then along came academic economists to bless the anti-deficit fever with the authority of spreadsheets. In a 2010 paper cited over and over by pro-austerity politicians, Carmen Reinhart and Kenneth Rogoff argued that when countries reached a debt level above 90 percent of their GDP, they almost always fell into slow growth or contraction.