With A Dem Back In The White House, Prepare For An Awakening Of The Austerity Alarmists

Will a President Joe Biden fall into the same budget scold traps that ensnared the last administration he served?
TOPSHOT - Democratic presidential nominee Joe Biden delivers remarks at the Chase Center in Wilmington, Delaware, on November 6, 2020. - Three days after the US election in which there was a record turnout of 160 mil... TOPSHOT - Democratic presidential nominee Joe Biden delivers remarks at the Chase Center in Wilmington, Delaware, on November 6, 2020. - Three days after the US election in which there was a record turnout of 160 million voters, a winner had yet to be declared. (Photo by Angela Weiss / AFP) (Photo by ANGELA WEISS/AFP via Getty Images) MORE LESS
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November 9, 2020 11:28 a.m.

Joe Biden’s victory last week has brought with it Democratic control of the White House and hopes for massive COVID-19 stimulus and deep reform bills. But Biden’s win, coupled with Democrats’ failure to capture a Senate majority, will come with an unfortunate hanger-on that conveniently disappeared during the Trump administration: calls for austerity. 

The ushering in of Democratic control of the White House will undoubtedly revive the harping of the budget scolds, who mostly went dormant during the Trump presidency after spending eight years heckling President Obama.

And those austerity hawks will have a powerful point of leverage, in the form of a GOP Senate majority (assuming Democrats can’t flip both the Georgia seats that are heading to a run-off).

The Obama administration’s willingness to play along with their anti-government spending temper tantrums was a calculus that the former President would grow to regret. That nary a peep was heard from the austerity alarmists for most of the following four years — during which Trump added nearly $4 trillion to the total government deficit, according to one estimate — reinforced the lack of sincerity of their chicken little routine.

But as Trump’s likely defeat grew more imminent, the groundwork for another round of budget hawkery began being laid afresh. 

An early and crucial test for the Biden administration is whether the former Vice President will give any of these bad-faith spending complaints any credence — and let them kneecap his ability to respond to the economic carnage that COVID-19 created, as well as a whole host of progressive agenda items he ran on. Or will he learn from the travails of the last administration in which he served, and pay them no heed?

Sen. Mitch McConnell (R-KY) is already bludgeoning the incoming Biden administration with austerity demands as negotiations around a second COVID stimulus package take shape.

“Something smaller, rather than throwing another $3 trillion at this issue, is more appropriate,” McConnell told reporters in Kentucky on Nov. 6.

It’s a familiar refrain that we’ll likely be hearing for the four years to come.

As Jared Bernstein, an economic adviser to Biden, wrote in August, caving in to budget scolding “is a recipe for losing progressive support and political power — something no Democrat should want.”

How ‘Mindless Austerity’ Plagued Obama

It’s long been a commonplace that patterns of freakouts over government spending reach their apex only when Democrats are in power, while such concerns were almost nowhere to be found when a Republican administration is adding line items to the budget. 

When Obama took office in 2009, he came in with huge congressional majorities and plans for sweeping reform and stimulus following the financial crisis. 

But amid that progressive ambition, he played along with bogus calls from the right that the federal government to tighten its belt, even going so far as to undercut his own party once Republicans retook the House in the 2010 midterms. 

Republicans that went silent about fiscal sustainability the moment Trump was elected spent the Obama years crowing about the debt. Rep. Paul Ryan (R-WI) exemplified that trend, complaining that, “given the magnitude of our debt burden, the size of the spending cuts should exceed the size of the President’s debt limit increase.” 

But rather than insist that he’d only sign “clean” debt ceiling increases — which is the mechanism Congress uses to avoid the government defaulting on U.S. debt — Obama engaged in negotiations that allowed Republicans to hold the credit of the United States hostage to secure more spending cuts.

Obama’s buckling to those demands undercut the priorities of his own party. But what did the Obama administration get in return for these concessions to those who bandy about horror stories of our grandchildren paying the debts we incur today? 

Nothing, apart from scolding for not showing enough “leadership” on spending to bring the intransigent GOP around. 

Obama wasn’t an outlier among leaders of this party in his willingness to play the spending games by Republicans’ rules. Senate Democrats tried to outmatch Republicans in the race to the bottom in the austerity wars — Chuck Schumer once bragged about his caucus’ 2011 spending plan having “more cuts” than John Boehner’s.

But Obama eventually came to rue the policy in a budget request towards the end of his administration, deriding it as “mindless austerity.”

The Supposed GOP Distaste For Budget-Busting Disappears When It’s Trump Doing The Spending

Eschewing the usual GOP fear-mongering about government spending — including promises not to cut the social safety net programs Republicans derisively call “entitlements” — helped catapult Donald Trump to the top of the 2016 primary and eventually the White House.

Within days of Trump being sworn in as President, Republicans were already backing down from their budget belt-tightening crusade. When Congress’ GOP leaders were asked by a reporter at the Jan. 2017 GOP retreat to commit to not adding to the end-of-the year government deficit, no such commitment was made, beyond general platitudes about their commitment to being “fiscal conservatives.”

The biggest legislative achievement of Trump’s first term, the 2017 tax cuts, cost the government $1.5 trillion in revenue while benefiting primarily the rich. Vows that the tax package wouldn’t add to the deficit were set aside for vaguer predictions that over the course of several years the tax cuts would  prove to be revenue neutral. Promises that it would pay for itself eventually disappeared as well.

The budget-busting continued through several end-of-the-year appropriations deals. Only within the last year or so has Republican murmuring picked up again about their alleged distaste for government spending. When Trump’s reelection still appeared salvageable, Senate Republicans agreed to upwards of $2 trillion in COVID-19 response and economic stimulus. 

Yet a Senate GOP interest to stand up to big White House spending demands began to reemerge in the final weeks of a campaign, when President Trump was consistently several percentage points down in the polls and in spite of a global pandemic that was hobbling the U.S. economy in historic ways.

Republicans who were, either publicly or privately, finally willing to put some daylight between themselves and the President pointed to his big spending ways as something with which they supposedly never fully agreed.

McConnell made clear that his caucus would not sign on to the size of the COVID-19 follow-up package the White House and House Democrats were negotiating, and rank-and-file Republicans began saying out loud that suddenly deficit spending concerns could outweigh the urgency of responding to the coronavirus.

The newfound GOP focus on the deficit in the more recent coronavirus negotiations were aimed at laying a foundation to hamper the kind of government spending an incoming Biden administration might want to do, a Republican strategist told Bloomberg. It came with the acknowledgement that rediscovering fiscal concerns literally overnight might be politically untenable, so the seeds needed to be planted at least while a few months remained of the Trump presidency. 

Biden — For Better Or For Worse —Avoided Any Promises For How He’ll Approach The Deficit Scolds

During the campaign, Biden and his advisors stayed mostly mum on spending and deficit issues. 

In some ways, his campaign offered a blank slate, allowing voters to project their own desires onto it while leaving them free of commitments. 

But at least one offhand remark from a longtime adviser — former Sen. Ted Kaufman (D-DE) — suggested that the President-elect and his team may be vulnerable to these long-debunked talking points. 

“When we get in, the pantry is going to be bare,” Kaufman told the Wall Street Journal in August. “When you see what Trump’s done to the deficit … forget about COVID-19, all the deficits that he built with the incredible tax cuts.”

“So we’re going to be limited,” Kaufman added. 

Yet, the Biden campaign has also signaled that its ambitions are on the scale of FDR. 

Both sets of comments came when polling projected that Democrats were likely to take over the Senate. The fact that Republicans significantly over-performed on those expectations further complicates Biden’s calculus in how he navigates the demands that deficit concerns outweigh all else. 

To wit, before the the presidential race was even affirmatively called in Biden’s favor, top Trump allies were fear-mongering around debt to take the possibility of lame-duck COVID-19 relief off the table.

“Trump does not want the last thing he does in office a $2 trillion debt spending bill. We want Biden to own that, not Trump,” Stephen Moore, a top Trump advisor, said Thursday.

Whether Biden gives austerity-based concerns the light of day is up to him and his advisers. But President Obama warned in 2016 that Democrats will be “doomed to keep on making more and more mistakes” so long as politicians “can’t puncture some of the mythology around austerity politics.”

Defeating the deficit hawks outright is likely now off the table for Biden. Puncturing their mythology is perhaps the best he’ll be able to do.

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