Crises Fiscal And Financial

Felix Salmon makes a point about the debate that I missed:

“The number of undecided voters who understand the difference between financial and fiscal is minuscule, and the number of those who think that the difference actually matters is probably zero. But from a technocratic standpoint, the fact that McCain twice referred to the financial crisis as a “fiscal crisis” is telling. It means (a) that he doesn’t really understand it, and (b) that insofar as he does, he thinks that government is at least as much part of the problem as it is part of the solution.”

He’s right: I just checked the transcript. Possiby McCain just misspoke, although the fact that he said it twice argues against that. Possibly he just doesn’t understand what “fiscal” means. But if he thinks this is a fiscal crisis, then he really, really doesn’t understand it at all.

If McCain thinks we’re in a fiscal crisis, that would explain why he keeps insisting that the solution involves cutting government spending. For instance:

“Lehrer: Are there fundamental differences between your approach and Senator Obama’s approach to what you would do as president to lead this country out of the financial crisis?

McCain: Well, the first thing we have to do is get spending under control in Washington. It’s completely out of control.”

But that’s really, deeply, totally wrong. When you’re going into a recession, let alone a depression, you want to get more money into the hands of people who will spend it, lend it, or in some other way help the economy get back on its feet. It’s the last time to be wondering how to cut spending.

I don’t mean to say that there aren’t programs that should be cut because (say) they are ineffective or counterproductive, or that we won’t have to cut anything to compensate for the additional debt we seem to be about to take on. I do mean to say that cutting spending, per se, is not a solution to the problems we face; under the circumstances, it is at best an unfortunate necessity. That McCain thinks it is a solution is really worrisome.