Pete Buttigieg is an old person’s idea of a young candidate. You see this in the demographics of his support and even how he talks in perfect Obama-ese. But he’s not just the young man older voters wish their Sanders-supporting children and grandchildren would be. His rhetoric about budgets and deficits is in line with Democratic administrations of years past, even as the circumstances and politics that encouraged deficit hawkery have evaporated.
“I think the time has come for my party to get a lot more comfortable talking about the deficit,” Buttigieg said at a campaign event in New Hampshire on Saturday, according to Mother Jones. The deficit, Buttigieg explained, “should concern progressives, who are not in the habit of talking or worrying too much about the debt.” Fiscal imbalances would “start crowding out investment in safety net and health and infrastructure and education programs.” And, using the argument long favored by deficit hawks in their attempts to make the issue seem “cool” or at least relevant to younger voters: that his concern is “largely generational” because “I am going to be here when a lot of these fiscal time bombs that have been set by leaders in both parties—but especially under this president—go off.”
Buttigieg is embracing a tradition within the party wherein progressive candidates signal that they can be trusted with the nation’s finances by moderate voters. It’s actually the Republicans, with their taste for higher military spending and high-end tax cuts who are the real budget busters, not Democrats who assiduously pair their new social programs with new taxes to pay for them (as Buttigieg’s plans generally do).
But it’s not 2010, or even 1993, and many of the Democratic Party’s leading economic lights have downgraded the country’s fiscal picture to a secondary concern. The Democratic fixation on fiscal discipline is in keeping with Buttigieg’s back-to-the-future approach to winning as a Democrat.
When President Bill Clinton entered office in 1993, deficits stood at about 5% of GDP. Five years later, the budget was in surplus. Strong economic growth and low unemployment in the mid-to-late ‘90s played a part. But Clinton’s 1993 budget, which included a combination of new taxes and spending limits, also deserves credit. According to the Center for American Progress’s Michael Linden, the budget was “the single largest contributor to the 1998 surplus” and almost immediately shaved $143 billion off the Congressional Budget Office’s deficit projections.
But the story of Clinton-era deficits isn’t just about one president’s love of fiscal rectitude. His administration got a shove from the bond markets and Republican Federal Reserve Chairman Alan Greenspan. Early in his presidency, Greenspan endorsed Clinton’s deficit-reduction goals and, maybe more importantly, interest rates on government bonds dropped too, a key signal of how credible Clinton’s plans were.
The White House had actively courted Greenspan, hoping his approval would mean no interest-rate hikes and a quiescent bond market. Clinton adviser James Carville famously captured the bond market’s power over politicians when he told the Wall Street Journal: “I used to think that if there was reincarnation, I wanted to come back as the president or the pope or as a .400 baseball hitter. But now I want to come back as the bond market. You can intimidate everybody.”
Today, the 30-year Treasury yield isn’t below just below 7%; it’s around 2%. That’s despite a growing deficit thanks to the Trump spending spree and tax cuts. The CBO projects the 2019 deficit to be just over 4% of GDP and for deficits in the next decade to be larger, as a portion of the economy, than any postwar period beside the Great Recession, when the deficit approached 10% of GDP. It’s not just rates that are low; inflation expectations are still comfortably under the Fed’s 2% target. The Fed under Chairman Jerome Powell makes noises about being concerned with the deficit, but it has also been perfectly happy to keep rates low as employment grows.
While you can’t take politics out of policy, ultimately economic decisions need to be made in reference to economic facts—and the facts have changed considerably since the early ‘90s.
The policy of deficit reduction looks less favorable to progressives. Many Democrats feel like they’re locked into a damaging political-economic cycle where Republicans choke off revenue increases and insist on spending restraint when a Democrat is in the White House, while Democrats are more than happy to sign off on higher spending when proposed by a Republican, as long as their priorities stay funded as well.
But it’s not just Republicans who have sung the siren song of deficit reduction to a Democratic White House. Even the Obama administration’s signature social-insurance bill, the Affordable Care Act, was scored as reducing the deficit. By as early as 2010, President Barack Obama was talking about the need to reduce the deficit. He tried to reach a “grand bargain” with Speaker John Boehner where future entitlement spending would be reduced in return for some tax increases.
The Trump White House regularly releases budget proposals that pay lip service to Republican orthodoxy on spending. (The latest pencils in almost $2 trillion of unlikely-to-happen discretionary spending cuts cuts by 2030.) But Trump is more than happy to sign expansive spending bills that House Speaker Nancy Pelosi and Senate Majority Leader Mitch McConnell put on his desk. A quick look at the employment and growth figures would show why: The economy has grown by at least 2.3% every year Trump has been in office, with the contribution from government spending and investment growing throughout.
After Buttigieg’s strong showings in New Hampshire and Iowa, the prospect of a millennial self-described data-obsessive in the White House is not entirely fantastical. No president makes budgetary decisions on their own, especially not Democratic ones. The good ones at least listen to the data, not their new ideas about what older voters—even flinty New Englanders in early primary and swing states—might want to hear.
Matthew Zeitlin is an economics journalist in New York.
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