The liberal approach that wasn’t tried

THE LIBERAL APPROACH THAT WASN’T TRIED…. When the Bush presidency started to implode, and the entire Republican agenda was exposed as a tragic farce, the right came up with a novel defense: the conservative agenda wasn’t really the conservative agenda.

Mark Schmitt wrote an item for us three years ago this month about the GOP attempts to escape the consequences of their own failure: “‘Oh, that?’ they will say. ‘That wasn’t conservatism. That was something completely different.’ It started out as conservatism, they say, but was corrupted….”

Most reasonable people rolled their eyes, knowing that Republicans got everything they wanted — tax policy, regulatory policy, fiscal policy, etc. — and it failed on a spectacular level. Suggesting that conservatism wasn’t actually tried was silly.

I can see us heading towards a very similar debate very soon. As we talked a bit about yesterday, the right will now say, “Well, we tried the left’s way, and the economy is still in deep trouble, so liberalism has been discredited.” When progressives respond, “Wait, this really wasn’t the liberal approach,” we’ll probably see more eye-rolling.

But progressives will happen to be telling the truth. As Paul Krugman noted this morning, “Here’s the narrative you hear everywhere: President Obama has presided over a huge expansion of government, but unemployment has remained high. And this proves that government spending can’t create jobs. Here’s what you need to know: The whole story is a myth.”

[T]he big government expansion everyone talks about never happened. This fact, however, raises two questions. First, we know that Congress enacted a stimulus bill in early 2009; why didn’t that translate into a big rise in government spending? Second, if the expansion never happened, why does everyone think it did?

Part of the answer to the first question is that the stimulus wasn’t actually all that big compared with the size of the economy. Furthermore, it wasn’t mainly focused on increasing government spending. Of the roughly $600 billion cost of the Recovery Act in 2009 and 2010, more than 40 percent came from tax cuts, while another large chunk consisted of aid to state and local governments. Only the remainder involved direct federal spending.

And federal aid to state and local governments wasn’t enough to make up for plunging tax receipts in the face of the economic slump. So states and cities, which can’t run large deficits, were forced into drastic spending cuts, more than offsetting the modest increase at the federal level.

The answer to the second question — why there’s a widespread perception that government spending has surged, when it hasn’t — is that there has been a disinformation campaign from the right, based on the usual combination of fact-free assertions and cooked numbers. And this campaign has been effective in part because the Obama administration hasn’t offered an effective reply.

Something to keep in mind for the crowd that says, “We need to break with sensible economic policies, since they clearly didn’t work.” That crowd is wrong.