Even if you try to play by the GOP's deficit reduction rules you still can't grow the economy.

Ezra Klein notes that the Tea Party and austerity wing of the conservative party has won a huge victory and the Democrats have suffered a huge loss. Now that Obama and the Democrats are part owners of the argument that we need to cut the short-term deficit immediately, and implicitly that we can get growth through austerity, it's worth a second to go through how this is supposed to work and how it will fail.

The History of Our Current Path

Tim Fernholz and Jim Tankersley have a great article, "GOP Prescription: Spending Cuts and Lower Wages Equal More Jobs", where they dig into the current economic rationality behind the push for short-term spending cuts. They link to a GOP report, "Spend Less, Owe Less, Grow the Economy", which is based on an AEI study, "A Guide for Deficit Reduction in the United States Based on Historical Consolidations That Worked." And that study is based on a 2009 study by Alberto Alesina and Silvia Ardagna of Harvard, titled "Large changes in fiscal policy: taxes versus spending."

This last study has a bit of a history in the economic blogosphere. David Brooks introduced it into centrist pundit commentary with his June 2010 article "Prune and Grow," noting, "Alberto Alesina of Harvard has surveyed the history of debt reduction. He’s found that, in many cases, large and decisive deficit reduction policies were followed by increases in growth, not recessions." Centrists rejoiced! But Ryan Avent at The Economist, whose BS detector is very sharp, immediately noted that Alesina was looking at cuts "without considering the dynamics of these adjustments... There is little reason to believe that sharp fiscal adjustments in the current American context will produce growth," and that the countries Alesina cited didn't seem to match up.

Around the same time, Roosevelt Institute Senior Fellow Marshall Auerback looked at the arguments about Canada's policy in the 1990s, which was being promoted by the English government as a kind of growth-through-austerity poster child, and found that Canada's experience was primarily the result of the growth of exports and expansive monetary policy. We all noted that this kind of drunk-under-the-spotlight approach to historical examination characterized a lot of the research on this topic.

With that in mind, Arjun Jayadev and I dug into the examples Alesina used that supposedly proved the case for growth-through-austerity in "The Boom Not The Slump: The Right Time For Austerity" and found that in virtually all the cases used the adjustments were made when the economy was healthy, and in the few cases where it was not there was export-driven growth or interest rates were lowered. Shortly after that, the IMF put out a paper called "Will it hurt? Macroeconomic effects of fiscal consolidation" that was also summarized by The Economist as "Does fiscal austerity boost short-term growth? A new IMF paper thinks not": "[The IMF] finds that the typical such episode is clearly contractionary: a fiscal consolidation equivalent to 1% of GDP leads on average to a 0.5% decline in GDP after two years, and to an increase of 0.3 percentage points in the unemployment rate. Spending cuts do less damage than tax rises."

The hits kept coming. Dean Baker and CEPR took apart the argument as well in their report "The Myth of Expansionary Fiscal Austerity" (full PDF here). And Roosevelt Institute Senior Fellows Thomas Ferguson and Robert Johnson tackled this argument as part of their paper on the deficit "A World Upside Down? Deficit Fantasies in the Great Recession", where they distinguished between budget whales and minnows (more on that in a second).

I had assumed the IMF and The Economist's writing that these austerity dreams were too harsh and too contractionary (the IMF!) would cause some people to back off relying on this argument. But in December, AEI redid the analysis and now it is the core of the GOP's argument.

(Side note: So if Arjun and I didn't do the last part of our analysis where we actually dug into larger economic reality of these "growth" episodes and did it like the conservatives did it, we could be running the GOP's economic policy? Huh. I may have to consider switching teams -- you'd keep all the stuff on this blog a secret between us, wouldn't you?)

How This Is Supposed to Work, And Why It Will Fail

Picture this growth-through-austerity argument as an elaborate version of that board game Mousetrap. Turn the crank, a boot kicks a bucket, a bunch of stuff happens, the net falls. In the conservative argument, you immediately cut the deficit in a fragile recovery, a boot kicks a bucket, a bunch of stuff happens, and then we get growth, lower unemployment, and a healthier economy.

But what's the bucket and what's the stuff that is supposed to happen? Broadly speaking, we found that this argument requires one of a few specific things to happen. You can cut your way out of a recession as long as you can lower interest rates. Or export your way out of the recession. Or if you are comfortable blowing up your debt-to-GDP ratio. Or if you let unemployment skyrocket further. Or if you are a really small country. The two largest factors are interest rates and exports, and neither are available at the zero bound or in a global recession. The normal way this is supposed to occur won't work for us because none of these things are options for the United States.

Now the Republican plan has several mini-buckets that get kicked. There's the idea that we can create unemployment to reduce unemployment, which has already been taken apart. There's also the option of government asset sales and the privatization of government-owned enterprises and commercial functions to both generate government receipts and increase economic efficiency. I'm sure this will in no way will be a crony-style clusterf**k designed to make campaign contributors happy. Crony privatization worked so well in Russia, I'm sure it'll be all growth all the time here.

It Fails Its Own Theory

But here's their real argument: "[Countries] would be better off with sharp and sustained reductions in government spending because 'cold shower' fiscal consolidations send convincing signals to financial markets about the political will of governments to achieve fiscal retrenchments. This approach is viewed as more effective than cuts phased-in or scheduled for the distant future."

This is what is supposed to kick the bucket: by having serious cuts enacted early and quickly, even if they aren't necessarily important cuts, we can prove to the financial markets that we are serious about our debt. I don't think this is relevant for our situation, but even if I did, there are three major problems with this, given what the GOP (and now Democrats) are trying to do.

1. If all we are doing is changing the balance of power in our society, then this can't work. If we are cutting money for Planned Parenthood and the Special Olympics, which are the kinds of cuts we see in this budget, and then immediately offsetting them with corporate tax cuts or with extending the Bush high-end tax cuts so that they function as deficit neutral, we haven't shown the bond market that we are serious. That's what Ryan McNeely saw in New Jersey -- no smaller government, not even smaller deficits, just a rebalancing of power. Spend less on poor people, give more to rich people. Not exactly "political will" to get serious.

2. In their paper, Johnson and Ferguson discuss the idea of whale watches and the budget. If we need a "cold shower" (shock treatment!) budget cut because the bond market is worried about both the US long-term debt and our political will, then these little spending cuts aren't going to make a difference. The important interests, the whales, are things like the military budget, long-term health care costs, the possibility of another financial crash, the broken Senate, money and politics, and I'd add the cost of the guard labor necessary to keep 1%+ of the population incarcerated.

These budget cuts are entirely minnows. If we release a minnow, it'll just be eaten by a whale. If we cut funding for the Special Olympics, do we honestly not believe it'll just be reallocated to the military, or health care costs, or to tax cuts for the top 1%? And if we know this, then you can bet the bond market knows that. This theory requires the bond market to be terrified of a permanent rent-seeking hegemony of people with challenges getting to compete in sports while being recognized as equals in a public space and poor women having reasonable access to pap smears, and thus we need to smash the Special Olympics and Planned Parenthood immediately to show "political will." It just doesn't make sense within its own theory.

The current path is sustainable. Run a short-term deficit to help with unemployment. Remove the Bush tax cuts for the medium-term deficit, tinker with Social Security at some point and deal with health care for the long-term deficit. That's what credibility looks like. All this other stuff is a sideshow.

Mike Konczal is a Fellow at the Roosevelt Institute.

Bradley Manning's treatment eats away at faith in our government and the confession it's meant to wring out.

Let's make up a potential headline: "Private Manning Confesses, Implicates Julian Assange." This hasn't happened, but we can imagine eventually reading that headline. Yesterday I wrote a bit about liberals and the security state and emphasized P.J. Crowley's points that harsh interrogation and severe detention policies don't produce good information, do not make us any safer and are counterproductive. That can come across as some pretty mercenary consequentialist stuff -- if torture produced excellent information, should we be on board? -- so I want to plant it in some deeper soil.

Let's say that tomorrow Manning confesses to being the source for classified Wikileaks documents. And not only does he say that Assange gave him a bag full of $20 bills for those documents, better, he says Assange encouraged him to undertake whatever is the legal minimum for a conspiracy charge and also would leave the least paper trail. Should we trust it? Or should we assume that the extensive solitary confinement and forced nude inspections were instrumental in getting this confession?

One of the sharp moves of modern progressive and liberal thought is to shift moral weight away from premises to procedures, processes and rules. Rules where the enforcement of procedural integrity, rather than any specific outcome, are key for its justification. Where outcomes are justified not because they correspond to immutable principles but instead because they adhered to the correct procedures. The emphasis is usually that this levels playing fields, provides access to individuals, holds people accountable, etc. What's equally important is that it provides legitimacy for the system itself.

Take the rule that Miranda Rights ("You have the right to remain silent...") have to be read to people in custody. On the first approximation, that protects people being interrogated, informing them of their rights and also clearly demarcating a space in which they are interacting with a police authority. But in a more crucial manner it protects police officers. It provides ground rules for them to follow and establishes that if they follow them then subsequent actions are justified. A confession, even a shaky one, can be justified by saying "the suspect was aware of his or her rights; we read the Miranda." It protects the legitimacy of the system.

This is why so many liberals are quick to point out that a key problem of the Bush administration, a problem continued into the Obama administration, is the lack of congressional accountability over key programs. This is part of but not the complete picture of the surveillance state as vast, secret and dangerous, blurring into the corporate sector with high-tech "fusion centers", and actually producing too much information to be of any use in preventative action. (Frank Pasquale informs me that the concept of Cryptopicon is starting to replace the metaphor of a Panopticon in internet privacy discussion circles as information collection is too wide, ubiquitous and fragmented to be symbolized by the logic of a solitary figure watching for instrumental ends. Less Orwell, more Kafka.)

There are people who are considering the argument that Manning might deserve special protection from the law on account of the moral weight of what he disclosed. That's not the argument here. It's why Crowley can think that Manning is in the "right place" (under custody) but that his treatment in that place is cruel and counterproductive. It's counterproductive because it doesn't achieve the ends it needs to but also calls into question any type of legitimate conclusion. When there's a court trial, we are all less likely to think it reflects the actual mechanisms of justice, even for a military trial. And if Manning actually wants to confess, if he suddenly feels wrong about his actions and wants to say that to the public and the government, he's even robbed of that too, since nobody will believe its his actual thoughts. The legitimacy of our institutions have enough problems without this.

FYI: This isn't the conservative response. I think there's a sense that conservatives are like liberals in this situation but want a slightly more tilted playing field, one more in favor of prosecutors and against suspects. There's that element to it, but for conservatives the point of coercive power isn't to establish fair procedures to hold it in check, but instead to maintain order.

If you've never read it, the actual James Q. Wilson 1982 Atlantic Monthly article popularizing "Broken Windows" is important here. It's arguably one of the most important wonky magazine articles written, giving an intellectually driven wonk gloss to the beginning of an aggressive incarceration state.

For a neoconservative, I assumed Wilson blamed the Warren Court, Great Society liberalism and the New Left because thought criminals get too many rights, didn't praise nuclear families enough, didn't appreciate Great Books enough, weren't interested in policing woman's sexual autonomy enough, etc. etc. etc. But that's not the critique at all:

A stable neighborhood of families who care for their homes, mind each other’s children, and confidently frown on unwanted intruders can change, in a few years or even a few months, to an inhospitable and frightening jungle. A piece of property is abandoned, weeds grow up, a window is smashed…

The process we call urban decay has occurred for centuries in every city. But what is happening today is different...

[T]he police in this earlier period [pre-1960s] assisted in that reassertion of authority by acting, sometimes violently, on behalf of the community. Young toughs were roughed up, people were arrested “on suspicion” or for vagrancy, and prostitutes and petty thieves were routed. “Rights” were something enjoyed by decent folk, and perhaps also by the serious professional criminal, who avoided violence and could afford a lawyer.

This pattern of policing was not an aberration or the result of occasional excess. From the earliest days of the nation, the police function was seen primarily as that of a night watchman: to maintain order against the chief threats to order -- fire, wild animals, and disreputable behavior. Solving crimes was viewed not as a police responsibility but as a private one. In the March, 1969, Atlantic, one of us (Wilson) wrote a brief account of how the police role had slowly changed from maintaining order to fighting crimes. The change began with the creation of private detectives (often ex-criminals), who worked on a contingency-fee basis for individuals who had suffered losses. In time, the detectives were absorbed in municipal agencies and paid a regular salary simultaneously, the responsibility for prosecuting thieves was shifted from the aggrieved private citizen to the professional prosecutor. This process was not complete in most places until the twentieth century.

For the new conservative intellectual movement, the problem is that the role of police went from one that maintained order to one that enforced and implemented rules based on the acknowledgment of individual rights. The problem isn't that the rules are tilted one way or the other; the problem is that enforcing rules is front and center in what state power does.

Two last block quotes. Emptywheel pulls a great quote from the CAP paper Crowley wrote in 2008 (my bold):

Restore Government Transparency and Recommit to the Rule of Law

Terrorism, while a serious threat, does not require altering the fundamental relationship between the government and the American people. Even during the Cold War we did not succumb to our worst fears. We should continue to rely on constitutional standards that as Supreme Court Justice Anthony Kennedy put it in Hamdan v. Rumsfeld, “have been tested over time and insulated from the pressures of the moment.”

U.S. courts have consistently demonstrated their ability to deal with complex terrorism cases, even those involving secret and sensitive information. Rather than being a constraint, treating terrorism as primarily a criminal matter in fair and transparent legal proceedings adds to our political legitimacy at the terrorists’ expense.

A key objective should be preserving continuity of and public confidence in government at all levels. Unless the United States is under an overwhelming threat of additional attack, or the impact of an incident completely overwhelms local and state government, the federal response should be to support rather than supplant civilian authority, particularly at the local level.

Public access to information and open debate is not dangerous, but rather is the essence of democracy that we present to the world as the antidote to violent extremism. The removal of large quantities of public information since 9/11 is counter-productive. Rather than provide information to attackers, excessive secrecy more likely inhibits the development of effective countermeasures.

An effective homeland security program may require wider governmental access to personal information, such as telephone calls and emails. But privacy protections must keep pace. Otherwise, perceived intelligence dots may actually be stray bullets that wrongly implicate ordinary citizens.

Anyone who emphasizes the idea that Al Qeada isn't the Soviet Union v 2.0 but instead a few thousand thugs who can't even find a safe harbor in the Muslim country they claim to represent, and America has faced far worse without betraying our core beliefs, gets an A in my book.

And the conclusion of this post by Adam Serwer:

The underlying dynamic here is that the Obama administration has already asked the left to acquiesce to an uncomfortable level of policy continuity with the Bush administration on national security. Now, for many on the left, the administration seems to be asking that they accept that the administration's dissenters are not to publicly speak their conscience, and that the abuse of those accused of terrible crimes is no vice. This is a request in some ways greater and more terrifying than any Obama has made before, because it is a demand that the left accept more that just the Bush administration's policies but their internal moral logic as well.

My worry is that, just as the GOP began to embrace the moral legitimacy of torture in order to defend Bush, the left may embrace similar logic in its defense of Manning's treatment -- or even simply to defend Obama. It has already found itself struggling to defend Obama's failure to fulfill his promises on national-security issues as a candidate. If this happens, I fear that this country's voyage to Dick Cheney's Dark Side will be irreversible.

Mike Konczal is a Fellow at the Roosevelt Institute.