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Some Dems Brain-Dead on Deficits; Others Breaking Out Some Political Jiu-Jistu

There are times when the best policy isn't politically attractive, but this is a perfect example of bad policy that would certainly come back to haunt its advocates at the polls, as it absolutely should:

A growing number of Democrats believe reducing spending needs to be the party's No. 1 priority – even above fostering job growth amid record unemployment.

And they’re making sure their voices are heard.

Here's the context:

Last week, Democratic leaders announced plans to move forward on a new "Make it in America" agenda, which, as of now, is an undefined mix of bills designed to bolster the crumbling manufacturing sector through various tax incentives, trade policy tweaks and direct investments.

It was put together in response to the frustration with the pace of the economic recovery – a feeling that is shared among Americans and Democrats in Congress.

At the same time, many of the agenda items will cost money, and will require not just offsets -- if they aren't determined to be "emergency" measures -- but a further balancing of the stimulus-versus-deficit equation.

As leadership offices were beginning to put together their press kits on the "Make it in America" agenda, a group of four House Democrats, who are not known as fiscal hawks, were putting together a working group on deficit reduction.

What ever happened to 'It's the Economy, Stupid!'? Economist Mark Weisbrot, writing in The Guardian, took apart this deficit hysteria -- here's his lede:

In much of the world, including the United States and Europe, a debate is taking place about whether the government's first responsibility should be to reduce unemployment - which is at elevated levels - or to reduce government deficits and debt. Many of the arguments for deficit reduction are simplistic, based on ignorance, or ideologically-based. For example, there are inappropriate comparisons of government to household debt, a fixation on absolute numbers without any comparison to national income, or just right-wing opposition to government in general.

I go into that in detail in my book, The Fifteen Biggest Lies about the Economy (And Everything Else the Right Doesn't Want You to Know about Taxes, Jobs, and Corporate America). The short-version: the idea that the deficit is a pressing, immediate matter -- something that needs to be addressed now, during an economic downturn -- is absolutely incoherent.

Yet my understanding, from talking to people more tied into Washington politics than myself, is that it's a genuinely held belief for many Dems within the Beltway, even holding some currency with some progressives.

And, again, the American people certainly don't appear to hold it, even on the GOP side:

American voters overwhelmingly say lowering unemployment is more important than reducing the federal budget deficit, according to a Quinnipiac University poll released on Thursday.

The poll, conducted July 13-19, showed that 64 percent of respondents thought reducing the jobless rate should be a bigger priority versus 30 percent who favored focusing on cutting the budget deficit.

A majority of Republicans -- 58 percent to 38 percent -- also said reducing unemployment was more important, the poll said.

Now, in fairness, I should note that it's not all silly stuff coming from Dems on the fiscal front, as the Washington Post reported yesterday:

President Obama and Democratic leaders in Congress are setting the stage for a high-stakes battle over taxes in the final weeks before the November congressional elections, betting that their plan to eliminate tax breaks for the wealthy will resonate with voters who have lost houses and jobs to what many see as an era of Wall Street greed.

Raising taxes is usually a perilous move. But Democrats, facing the potential loss of their majorities on Capitol Hill, believe that the strategy will both force Republicans to defend tax breaks for a tiny, wealthy minority and expose GOP hypocrisy on budget deficits.

And progressive Dems are trying to leverage DC's deficit hysteria to revive the public insurance option:

Unveiled last Thursday by Rep. Lynn Woolsey (D-CA), Schakowsky, and more than 120 co-sponsors, the measure would give consumers a choice between private and public health insurance plans in the new law's exchanges. The nonpartisan Congressional Budget Office projects that it would cut the deficit by $68 billion between 2014 and 2020....

Republicans and conservative Democrats derided the public option as just another government program, invoking widespread distrust for government as a reason for their opposition. Their other opposing arguments, given consistent CBO projections that it would save money, were mostly without empirical backing.

That comes via Zandar (filling in at No More Mister Nice Blog), who calls the legislation a "simple and elegant plan to expose Austerity Hysteria for what it truly is: gutting social programs for the poor and elderly while adding to the deficit through tax cuts for the wealthy." Even if it doesn't make much progress on the floor of the House, it offers an opportunity to remind the American public, again and again, that we don't have a deficit crisis in the United States -- we face a staggering and disastrous health-care cost crisis. And, as liberals have been saying for quite some time, we'll continue to face  a war-financing crisis, and an under-taxation problem that has to be remedied.

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