Bobo, in “The Great Gradualist,” says Ted Kennedy’s ability to forge compromises and champion incremental change created the legacy everybody is celebrating today. Prof. Krugman, in “Till Debt Does Its Part,” says the budget projections showing a deficit of $9 trillion over the next decade are worrying, but the real concern is how the nation’s politicians deal with the debt. Here’s Bobo:
In the days since Ted Kennedy’s death, the news programs have shown and re-shown the unforgettable ending of his 1980 Democratic convention speech — the passage from Tennyson and the beautiful final lines: “The work goes on, the cause endures, the hope still lives, and the dream shall never die.”
But if you go back earlier into the heart of that speech, you see how bold Kennedy’s agenda really was. His central argument was for a policy of full employment. Government should provide a job for every able-bodied American. His next big goal was what he called “reindustrialization.” The computer revolution was just getting under way, but Kennedy called on government to restore the industrial might of America’s cities.
The third big goal was national health insurance. “Let us insist on real control over what doctors and hospitals can charge,” Kennedy cried.
There were other proposals. He vowed to use “the full power of government to master increasing prices.” Kennedy was proposing to fundamentally transform America’s political economy. He knew he had lost the nomination by this time, and his liberalism was unbound.
The speech was radical, and he could have gone back to the Senate, content to luxuriate in his own boldness. He could have excoriated his opponents for their villainy and given speeches about dreams that would never come true.
But Kennedy became something else. He became a compromiser. He became an incrementalist.
Those words have negative connotations. But they shouldn’t. Kennedy never abandoned his ambitious ideals, but his ability to forge compromises and champion gradual, incremental change created the legacy everybody is celebrating today: community health centers, the National Cancer Institute, the Americans With Disabilities Act, the Meals on Wheels program, the renewal of the Voting Rights Act and the No Child Left Behind Act. The latter law, by the way, has narrowed the black-white achievement gap more than any other recent piece of legislation.
Kennedy’s life yields several important lessons. One is about the nature of political leadership. We have been taught since, well, since the days of Camelot to admire a particular sort of politician: the epic, charismatic Mount Rushmore candidate who sits atop his charger leading transformational change.
But the founders of this country designed the Constitution to frustrate that kind of leader. The Constitution diffuses power, requires compromise and encourages incrementalism. The founders created a government that was cautious so that society might be dynamic.
Ted Kennedy was raised to prize one set of leadership skills and matured to find that he possessed another. He possessed the skills of the legislator, and if you ask 99 senators who was the best craftsman among them, they all will say Kennedy. He knew how to cut deals. He understood coalitions and other people’s motives and needs.
I once ran into John McCain after a negotiating session with Kennedy on an immigration bill they had co-sponsored. McCain was exhausted by the arduous and patient way his friend negotiated. In my last interview with Kennedy, I asked about big ideas, and his answers were nothing special. Then I asked about a minor provision in an ancient piece of legislation, and his command of the provision and how it got there was jaw-droppingly impressive.
There is a craft to governance, which depends less on academic intelligence than on a contextual awareness of how to bring people together. Kennedy possessed that awareness.
A second lesson involves the nature of change in America.
We in this country have a distinct sort of society. We Americans work longer hours than any other people on earth. We switch jobs much more frequently than Western Europeans or the Japanese. We have high marriage rates and high divorce rates. We move more, volunteer more and murder each other more.
Out of this dynamic but sometimes merciless culture, a distinct style of American capitalism has emerged. The American economy is flexible and productive. America’s G.D.P. per capita is nearly 50 percent higher than France’s. But the American system is also unforgiving. It produces its share of insecurity and misery.
This culture, this spirit, this system is not perfect, but it is our own. American voters welcome politicians who propose reforms that smooth the rough edges of the system. They do not welcome politicians and proposals that seek to contradict it. They do not welcome proposals that centralize power and substantially reduce individual choice. They resist proposals that put security above mobility and individual responsibility.
In 1980, Kennedy proposed an agenda that jarred with the traditions of American governance. In the decades since, a constrained Kennedy and a string of Republican co-sponsors produced reforms in keeping with it. The benefits are there for all to see.
Here’s Prof. Krugman:
So new budget projections show a cumulative deficit of $9 trillion over the next decade. According to many commentators, that’s a terrifying number, requiring drastic action — in particular, of course, canceling efforts to boost the economy and calling off health care reform.
The truth is more complicated and less frightening. Right now deficits are actually helping the economy. In fact, deficits here and in other major economies saved the world from a much deeper slump. The longer-term outlook is worrying, but it’s not catastrophic.
The only real reason for concern is political. The United States can deal with its debts if politicians of both parties are, in the end, willing to show at least a bit of maturity. Need I say more?
Let’s start with the effects of this year’s deficit.
There are two main reasons for the surge in red ink. First, the recession has led both to a sharp drop in tax receipts and to increased spending on unemployment insurance and other safety-net programs. Second, there have been large outlays on financial rescues. These are counted as part of the deficit, although the government is acquiring assets in the process and will eventually get at least part of its money back.
What this tells us is that right now it’s good to run a deficit. Consider what would have happened if the U.S. government and its counterparts around the world had tried to balance their budgets as they did in the early 1930s. It’s a scary thought. If governments had raised taxes or slashed spending in the face of the slump, if they had refused to rescue distressed financial institutions, we could all too easily have seen a full replay of the Great Depression.
As I said, deficits saved the world.
In fact, we would be better off if governments were willing to run even larger deficits over the next year or two. The official White House forecast shows a nation stuck in purgatory for a prolonged period, with high unemployment persisting for years. If that’s at all correct — and I fear that it will be — we should be doing more, not less, to support the economy.
But what about all that debt we’re incurring? That’s a bad thing, but it’s important to have some perspective. Economists normally assess the sustainability of debt by looking at the ratio of debt to G.D.P. And while $9 trillion is a huge sum, we also have a huge economy, which means that things aren’t as scary as you might think.
Here’s one way to look at it: We’re looking at a rise in the debt/G.D.P. ratio of about 40 percentage points. The real interest on that additional debt (you want to subtract off inflation) will probably be around 1 percent of G.D.P., or 5 percent of federal revenue. That doesn’t sound like an overwhelming burden.
Now, this assumes that the U.S. government’s credit will remain good so that it’s able to borrow at relatively low interest rates. So far, that’s still true. Despite the prospect of big deficits, the government is able to borrow money long term at an interest rate of less than 3.5 percent, which is low by historical standards. People making bets with real money don’t seem to be worried about U.S. solvency.
The numbers tell you why. According to the White House projections, by 2019, net federal debt will be around 70 percent of G.D.P. That’s not good, but it’s within a range that has historically proved manageable for advanced countries, even those with relatively weak governments. In the early 1990s, Belgium — which is deeply divided along linguistic lines — had a net debt of 118 percent of G.D.P., while Italy — which is, well, Italy — had a net debt of 114 percent of G.D.P. Neither faced a financial crisis.
So is there anything to worry about? Yes, but the dangers are political, not economic.
As I’ve said, those 10-year projections aren’t as bad as you may have heard. Over the really long term, however, the U.S. government will have big problems unless it makes some major changes. In particular, it has to rein in the growth of Medicare and Medicaid spending.
That shouldn’t be hard in the context of overall health care reform. After all, America spends far more on health care than other advanced countries, without better results, so we should be able to make our system more cost-efficient.
But that won’t happen, of course, if even the most modest attempts to improve the system are successfully demagogued — by conservatives! — as efforts to “pull the plug on grandma.”
So don’t fret about this year’s deficit; we actually need to run up federal debt right now and need to keep doing it until the economy is on a solid path to recovery. And the extra debt should be manageable. If we face a potential problem, it’s not because the economy can’t handle the extra debt. Instead, it’s the politics, stupid.
