Members Only | May 19, 2022 | Reading Time: 3 minutes
The deficit is down. That’s good, maybe. But voters don’t care
Unless it’s a way of saying the other side is terrible.
Deficit reduction sounds like one of those nonpartisan measures of governing competence. That’s why Joe Biden has been touting it.
In fact, it’s largely irrelevant to voters – for good reason.
Deficit reduction says little about whether the government is helping.
Focusing on deficit reduction, whether rhetorically or ideologically, is at best a waste of time, at worst a barrier to meaningful change.
In any case, if the president did take deficit reduction seriously, he’d have to back off advocating for necessary programs and spending.
In recent remarks, Biden pointed out that, “the deficit went up every year under my predecessor before the pandemic and during the pandemic. It has gone down both years since I’ve been here.”
Overall the deficit fell by about $350 billion during Biden’s first year. He projects it will fall another $1.5 trillion by the end of his second. If that happens, it would be the biggest annual drop on record.
Biden argues that deficit reduction is good. It will lead to a decrease in inflation. He says it shows he’s working to reduce prices. He says it shows the promise of reducing prices should counter GOP criticisms.
The problem is this.
Deficit reduction or no, inflation hasn’t fallen that much. It was 8.3 percent in April. That’s slightly down from 8.5 percent in March.
Hardly anything to cheer about.
That lower deficits haven’t lowered inflation is no surprise, because the relationship between deficits and inflation is complicated and contested. A 2020 paper asking, “Do Enlarged Fiscal Deficits Cause Inflation,” for example, concluded that yeah, maybe and sometimes.
Deficits have fallen in part because unemployment is down, which means the federal government is taking in more tax revenue. This is obviously a good thing. The president can rightfully take credit for it.
But deficits are also down because the pandemic relief from late in Trump’s term and early in Biden’s are expiring. Most of that $3.1 trillion has already been spent. Government spending is lower because the government is no longer providing large amounts of covid relief.
It’s possible that reduced spending will reduce inflation.
But the real drivers of inflation are the sanctions on Russian oil and ongoing pandemic-related supply-chain issues — issues that have most recently contributed to a dangerous shortage of baby formula.
Meanwhile, less spending means less aid for the desperate.
The Child Tax Credit sent hundreds of dollars to poor families with children. It expired in January. Child poverty has spiked by 41 percent.
The US has also run through funds for free vaccines. Because Republicans are objectively pro-virus and pro-death, they won’t vote for additional aid. The US has money for a fourth booster for people over 65 and for initial shots for children under 5 (pending approval).
But the government can’t buy additional boosters for everyone else.
More broadly, Biden’s ambitious infrastructure agenda — including funds for clean energy, clearing up immigrant backlogs, economic expansion, for lead abatement — was derailed when West Virginia Senator Joe Manchin killed the Build Back Better Act in December.
Reducing the deficit hinges on not spending money on things we desperately need. We’re still in the middle of a historic pandemic, a historic climate catastrophe and the hollowing out of the middle class. Saying the deficit has gone down is an admission of failure.
Still, if you’ve failed, you might as well put a good spin on it. If people think low deficits are good, you might as well tout them, right?
The problem is that there’s little evidence that people think low deficits are good. Politicians don’t suffer electoral reversals when they run up deficits. Reagan for instance raised the deficit from $78.9 billion at the beginning of his term to $152.6 billion at the end; it didn’t stop him from a landslide reelection victory in 1984 and a Republican successor when George H.W. Bush won in 1988.
Surveys of voters don’t show much concern for the deficit either. Indeed, people say they care, but their concern is closely related to whether they can frame the other party as irresponsible. The deficit is just an excuse for partisan point-scoring; “I don’t like the deficit” is a way for Republican partisans to say “I don’t like Democrats.”
Some Very Serious People like George Will constantly burble about fiscal responsibility and the deficit. But it’s unlikely even they actually vote on it rather than on other issues or other partisan commitments.
No Biden-hater will vote for him because the deficit is lower. No Biden-lover will change their mind because of deficit reduction. No undecided is going to be decided because the deficit is down.
The Republicans have figured this out. They barely try to pretend that they care any more. As Bloomberg columnist Jonathan Bernstein explains, the Republicans use “deficit” to mean “stuff they don’t like.”
Boasting about deficit reduction won’t abash Republicans.
It won’t sway voters.
It might even annoy them.
Worst of all, if Biden really did take deficit reduction seriously, he’d have to back off advocating for necessary programs and spending.
Deficit reduction is a poor talking point and a poor goal.
The president should focus elsewhere.
Noah Berlatsky writes about the political economy for the Editorial Board. He lives in Chicago. Find him @nberlat.