While introducing his new budget director Jacob Lew, President Obama resorted to an old, tired, horrible analogy. Yes, it's the return of the dreaded Tight Belt.
Jack is going to be an outstanding OMB director. We know it because he's been one before. At a time when so many families are tightening their belts, he's going to make sure that the government continues to tighten its own.
This would be a perfectly appropriate analogy if belt-tightening were actually the president's policy. But it's not. Obama is writing letters to Congress calling for more stimulus. He's just come back from a G20 meeting where he begged the world to keep spending. Running a record deficit and calling for more is not at all like tightening your belt! And when you invite Americans to evaluate the quality of your belt-tightening, they're likely to conclude that you're doing a very bad job.
You might be thinking: Calm down Derek, nobody pays attention to OMB introduction speeches, anyway. You're probably right. But this isn't a one-time mistake. It's symptomatic of the White House's consistent failure to stand strong beside one, crystal clear economic policy to spend now and save later. In his State of the Union, the president delivered a nearly identical line: "Families across the country are tightening their belts and making tough decisions. The federal government should do the same."
Look, I'm all for digestible parallelisms, but it's crazy for any Keynesian to talk like this. When families tighten their belts, the government is supposed to loosen its belt. The stimulus was an $800 billion bet that looser government belts mitigate recessions. Also, families aren't like countries, anyway, and we should stop saying so. Countries don't die, so we can technically run manageable deficits practically forever, so long as we grow faster than we borrow and pay our creditors back on time.
The White House has a perfectly legitimate case to make for higher deficits in 2010, in exchange for lower deficits in the medium and long-term. Make that case. Lose the belt.
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