A Conversation with the New republic”s Jonathan Chait on Health Care and the deficit
I interviewed the New Republic’s Jonathan Chait yesterday, a few hours before the SOTU. The transcript is here. Chait’s very readable and relatively new bIog is here. I genuinely like Chait. He’s talented, funny and hard working, though rarely within shouting distance of correct opinion. Like all writers, he’s had his bad days, and his “Bush Hatred” rants diminish the influence he could otherwise have as a disciplined and perceptive voice of the left.
So too will his growing refusal to treat President Obama and the Congressional Democrats with anything approaching objectivity. I refer you to yesterday’s exchange on the deficit:
HH: Let me ask you, though, very seriously, this is a serious question. $1.4 trillion dollar deficit, maybe $1.35 trillion…
HH: No plans to control that, going to $9 trillion next year…
JC: Well, I don’t say no plan. The health care bill does do quite a bit to control the deficit, much more than, you know, we’ve seen from any politician since the 1993 deficit reduction act that President Clinton and the Democrats passed.
HH: And given that it’s now dead on arrival, or that it’s stuck there, the President is going to propose a spending freeze tonight…
HH: And that will not stop this deficit, Jonathan.
JC: No, you’re right. It won’t. It’s a very, very small measure.
HH: Are you prepared…are you prepared to admit we cannot spend this kind of money, and the Democrats seem incapable of taking serious action on this?
JC: No, I don’t think that’s a fair characterization. I think you’ve had Democrats who have made pretty significant efforts to reduce the deficit when they’ve had power, and you’ve had Republicans doing enormous, massive damage to the fiscal bottom line. And the Democrats’ ability to bail the water out of the boat is dwarfed by the Republicans’ ability to let more water come in.
HH: Do you think that’s going to persuade anybody that the deficit is the Republicans’ fault, when the last deficit under George Bush was $161 billion before the panic, and the first deficit for Obama after the panic is $1.35 trillion? Do you think anyone buys that, Jon?
JC: Oh, I think people who play close attention to fiscal policy will buy it, but that’s a very small minority of the country. So do I think it’s going to persuade a majority of the public? No, only people who pay close attention, because it’s obviously and absolutely true that the increase in the deficit has been due to several factors that dwarf everything else. In terms of the deficit after the first couple of years, when they’re deliberately trying to increase the deficit in order to stimulate the economy, but I’m talking about the permanent increase…
HH: The permanent structural $1.35 trillion dollar deficit, which is…
JC: Right, the structural increases that we’re seeing in the years after the stimulus wears away are overwhelmingly due to a couple of things. Number one, you’ve got the economy collapsing, right? So this causes expenditures to rise, and revenues to drop automatically. In terms of policy, it’s adding to it…it’s actually 100% George W. Bush’s policies. 100%.
HH: (laughing) Jon, I want you to argue that for the rest of the year, because the American people, you quotes Peter Hart…
JC: Which Obama policies add to the long term deficit? Name me one.
HH: You quoted…they won’t cut any spending. They continue to spend like drunken sailors. Everything went up.
JC: Name an Obama policy that’s adding to the long term deficit. Name one that’s adding to the long term deficit.
HH: All right, here’s one – the $787 billion dollar stimulus plan is actually going to cost, I believe the number was $50 billion more than advertised, because they miscalculated what was the unemployment rate going to be. Instead of 8%, it became 10%. Therefore, their calculations were wrong. Therefore, the deficit went up $50 billion dollars. I think that was announced today, Jon.
JC: That’s not because of the stimulus. That’s because higher unemployment leads to higher spending…
HH: Oh no, no, no. If you write a bill that says we’re going to pay higher unemployment benefits based on 8%…
HH: …and you’re wrong, you screwed up the bill. That’s the Obama…
JC: Okay, you’re right, but unemployment benefits are part, I mean, they are estimated before the stimulus.
HH: Wait a minute.
JC: In any case, that’s not long term spending.
HH: Did you just say you’re right?
JC: That’s not long term spending. I said long term spending, something after the…
HH: Wait, wait. But did you just say you’re right to me?
HH: You did.
JC: No, you’re totally wrong. You have not brought up a policy…
HH: Well no, you just a minute ago, you said I was right. I just wanted to pause and reflect. That may be the first time in five years.
JC: My question to you is name something that will increase the long term deficit that Obama has done.
HH: Let me explain this to you, because you’re a University of Michigan grad, so I may have to go slow.
HH: When you add $50 billion dollars to the deficit, and you don’t pay it off, interest is owed on that every single year going forward.
JC: You’re right. Okay, you’re right. There are some interest costs associated with, that are going to be some permanent. They’re very, very tiny. You’re talking about increasing the amount that we’re spending on long term interest by a couple percent.
HH: That’s just, you asked for an example, I gave you one.
HH: There are thousands of examples. They raised spending in every category.
JC: That’s tiny. That’s tiny. That’s a few billion dollars.
HH: But they did it in every single category across the fiscal appropriations process last year…
JC: No, they didn’t. You’re only talking…
HH: They raised, go back…
JC: The only example you have of Obama adding to the long term deficit is the increased interest costs from the deficit after it expires. That’s your only example, and it’s a few billion dollars.
HH: Here’s a second one. $161 billion dollar deficit before TARP, $1.35 trillion dollar deficit after TARP? Something happened in between. It’s called a Democratic budget. It’s not TARP. It wasn’t the stimulus. That’s structural increases in spending that he approved, that he signed, and that the Democratic Congress passed. You get the last minute, Jon. Why isn’t that the Democrats’ responsibility?
JC: No, those were automatic spending that was already in the budget. If you look at the huge increases in policy spending, you’ve got the wars in Iraq and Afghanistan, which are themselves much larger than the stimulus, you’ve got the Bush tax cuts, and you’ve got the Bush Medicare benefit, all of which were 100% financed by deficit spending. Unlike health care, which they’re actually paying for, they made no effort whatsoever.
If Democrats adopt the Chait’s position that the deficit is not their fault, the Massachusetts special election will be repeated across the country. The transparent attempts to dodge responsibility –for everything– when there are Democratic supermajorities in both House is telegraphing the Left’s incompetence as well as their contempt for the public’s intelligence. The GOP controls nothing, and on the budget especially, can defeat and obstruct nothing. Moreover, the GOP would support serious spending reduction, and everyone knows it.