NYT attack on FisCons overlooks Russia, other defaults

Chart from White House Report on Obama's Recovery and Reinvestment Act.One day before a 3-day holiday weekend when most Americans were daydreaming about BBQ, cold drinks and fireworks, the White House released a report on the American Recovery and Reinvestment Act of 2009. The report claims the usual—millions of jobs created or saved, etc.

By July 4, when most Americans were jumping on BBQ and fireworks, New York Times columnist David Brooks was jumping on something else—fiscal conservatives in the Republican Party. To be fair, Brooks may not have read the Obama administration report before he attacked the FisCons.

The Weekly Standard did read the report and columnist Jeffrey H. Anderson also did some basic math on that Recovery Act:
“[T]he ‘stimulus’ has added or saved just under 2.4 million jobs — whether private or public — at a cost (to date) of $666 billion. That’s a cost to taxpayers of $278,000 per job…In other words, the government could simply have cut a $100,000 check to everyone whose employment was allegedly made possible by the “stimulus,” and taxpayers would have come out $427 billion ahead.”

Brooks was busy assailing the FisCons: “If you ask them to raise taxes by an inch in order to cut government by a foot, they will say no.” For added emphasis, Brooks said the fiscal conservatives would say no even if you would cut government by a yard.

Then the NYT pundit went into overdrive. He really doesn’t care for FisCons:
“The members of this movement do not accept the legitimacy of scholars and intellectual authorities. A thousand impartial experts may tell them that a default on the debt would have calamitous effects, far worse than raising tax revenues a bit. But the members of this movement refuse to believe it… The members of this movement have no sense of moral decency. A nation makes a sacred pledge to pay the money back when it borrows money.”

Brooks is right about nations making a pledge to pay their debts. But the pledge is hardly sacred. As financial writer David Manuel points out, a number of nations have defaulted on debt (I don’t think many of those nations borrowed to bail the rest of us out).

For instance Russia’s default in 1998 was huge although many Americans ignored the impact. Manuel described that default as “a massive $72,709,000,000 default that rattled the entire global economy.”

Russia’s default had a direct impact on the U.S. I’ve mentioned before President Bill Clinton spent billions to bail out the Long Term Capital Management HEDGE FUND (all caps just to make sure you realize exactly how bizarre that bailout was). Time Magazine credited some of Clinton’s men, Larry Summers (who became one of Obama's men) among them, for saving the world and for avoiding a global economic meltdown.

The reason you didn’t notice the Clinton HEDGE FUND bailout too much, other than the fact media generally goes easy on Democrats, is that President George W. Bush didn’t focus on blaming anyone for challenges in the job he willingly took on.

Brooks’ hit job on fiscal conservatives is absurd. The college boys, the MBAers, the economic theorists and “intellectual authorities”—they’ve all had a swing at the bat.

The Weekly Standard pointed out, “[T]he unemployment rate was 7.3 percent when the 'stimulus' was being debated. It has since risen to 9.1 percent.” As for the national debt, it was $9.986 trillion when Obama took office. Now it’s $14.467 trillion.

NYT columnist Brooks might want to focus on that absurdity. His “intellectual authorities,” in fact, got us into this mess.

Related Link

The Economic Impact of the American Recovery and Reinvestment Act of 2009

(Analysis by Kay B. Day/July 5, 2011)

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