Support 100 years of independent journalism.

  1. Business
  2. Economics
7 July 2011

The deficit? Clinton gets it but Obama doesn’t, claims Mehdi Hasan

The Bubba comes out against austerity.

By Mehdi Hasan

 

Here’s Bill Clinton speaking at the Campus Progress conference in Washington, DC, yesterday:

In the current Budget debate, there is all this discussion about how much will come from spending cuts, how much will come from tax increases. Almost nobody’s talking about one of the central points that everyone who’s analysed this situation makes — including the bipartisan Simpson-Bowles Commission — which said you shouldn’t do any of this until the economy is clearly recovering.

Because if you do things that dampen economic growth . . . And the UK’s finding this out now. They adopted this big austerity budget. And there’s a good chance that economic activity will go down so much that tax revenues will be reduced even more than spending is cut and their deficit will increase.

Sign up for The New Statesman’s newsletters Tick the boxes of the newsletters you would like to receive. A weekly newsletter helping you fit together the pieces of the global economic slowdown. Quick and essential guide to domestic and global politics from the New Statesman's politics team. The New Statesman’s global affairs newsletter, every Monday and Friday. The best of the New Statesman, delivered to your inbox every weekday morning. The New Statesman’s weekly environment email on the politics, business and culture of the climate and nature crises - in your inbox every Thursday. Our weekly culture newsletter – from books and art to pop culture and memes – sent every Friday. A weekly round-up of some of the best articles featured in the most recent issue of the New Statesman, sent each Saturday. A newsletter showcasing the finest writing from the ideas section and the NS archive, covering political ideas, philosophy, criticism and intellectual history - sent every Wednesday. Sign up to receive information regarding NS events, subscription offers & product updates.

He gets it. He understands the point that John Maynard Keynes made eight decades ago:

Content from our partners
Small businesses can be the backbone of our national recovery
Railways must adapt to how we live now
“I learn something new on every trip"

The boom, not the slump, is the right time for austerity.

But here’s Barack Obama — who came to office with a pro-Keynes, pro-stimulus mindset and advisory team (Christina Romer, Larry Summers) — speaking on Saturday 2 July, in his weekly radio address:

. . . We’re working to reduce our nation’s deficit. Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing and give our businesses the confidence they need to grow and create jobs.

I never thought I’d opt for Bill Clinton over Barack Obama (or “Barack Herbert Hoover Obama“, as Paul Krugman puts it) but, on the deficit, the latter has become an austerian in recent months. Clinton, on the other hand, remains a Keynesian — and it is Keynesian economics that can get us out of this mess.

[Hat-tip: Left Foot Forward and Andrew Sparrow]