Just a day before polls opened in the New Hampshire primary, former South Bend, Indiana, mayor Pete Buttigieg appeared at a town hall to convince residents of Nashua why they should vote for him. When a member of the audience asked how important the federal deficit is to the presidential candidate, Buttigieg replied that he believed it was "very important" even thought it's "not fashionable in progressive circles."
He went on: "I think the time has come for my party to get a lot more comfortable talking about the deficit. Because right now we got a president who comes from a party that used to talk a lot about fiscal responsibility, with a trillion-dollar deficit, and no plan in sight for what to do about it…This should concern progressives, who are not in the habit of talking or worrying too much about the debt."
That comment generated some strong reaction. New York magazine's Eric Levitz called it "fiscally irresponsible," and Paul Waldman at the Washington Post wrote that Buttigieg was "playing with fire—and playing right into Republicans’ hands." The American Prospect magazine was perhaps the most incendiary though, labeling Buttigieg "Austerity Pete."
How did we get from talking about the deficit to austerity though? In politics and economics, austerity refers to policies that governments use to lower public sector debt. Typically, this involves cutting social service programs, hence the "austere." But it can take a lot of different forms, like raising ride prices on public transit or cutting the pensions of public employees. It's a commonly used tool for reducing national debt, but it's not very effective just on its own. Bill Clinton, for example, famously balanced the national budget during his presidency, and while he did impose spending restrictions in his 1994 budget, the surplus generated under his administration came largely from new taxes on high earners combined with the dot-com bubble, which produced a lot of unexpected tax revenue.
But dramatic cuts in public spending can also be disastrous. The Greek debt crisis is probably the highest profile example. In 2009, Greece was struggling with a massive budget deficit, and the European Union agreed to bail the country out. In exchange for over $330 billion in aid, Greece was forced to implement deep austerity cuts that actually caused the economy to spiral, leading to more job losses, further drops in tax revenue, and even greater pubic debt. In addition to hamstringing the Greek economy, the austerity program also unleashed such chaos in the lives of every day people that Golden Dawn—a neo-fascist party with a modified swastika as its emblem—became the country's third largest political party by running on an anti-austerity and anti-immigrant platform.
Austerity is one of the ideas that economist John Quiggin calls, "zombie economics," concepts that are discredited yet somehow keep cropping up again and again despite the rationale for it being "absurd on the face of things." Nobel laureate Amartya Sen said in 2015 that austerity had "deepened Europe’s economic problems, [and] it did not help in the aimed objective of reducing the ratio of debt to GDP to any significant extent." And another Nobel laureate economist Joseph Stiglitz has said that in light of its failures, "It is remarkable that there are still governments, including here in the U.K., that still believe in austerity."
Right now, even Republicans aren't terribly concerned with the national debt. That's according to none other than Mick Mulvaney, Donald Trump's acting chief of staff and former head of the Office of Management and Budget. In audio of a speech on Wednesday night obtained by the Washington Post, Mulvaney said, "My party is very interested in deficits when there is a Democrat in the White House. The worst thing in the whole world is deficits when Barack Obama was the president. Then Donald Trump became president, and we’re a lot less interested as a party."
Former Wisconsin Republican Paul Ryan was one of the biggest deficit hawks in recent memory, and the 2015 budget he proposed as chair of the House Budget Committee cut more than $5 trillion from the national budget. The bulk of the proposed "savings" came by repealing the Affordable Care Act, making cuts to food assistance programs, and forcing mandatory budget cuts across federal agencies. Yet despite his long-standing aversion to public spending, Ryan championed the 2017 tax cuts which slashed the tax rates for corporations and the wealthy and swelled the deficit by a massive 26 percent in just a year, bringing the total to just shy of $1 trillion. Shortly after the Republican-controlled Congress passed those tax cuts, Ryan gave away the game, saying in an interview that next Republicans would have to target Medicare and Social Security for deep budget cuts "which is how you tackle the debt and the deficit," adding, "that's really where the problem lies, fiscally speaking."
That's actually not where the problem lies. Despite their obsession with cutting programs like Medicaid, the bulk of U.S. spending goes to the massively bloated military budget, which has increased every year for the last five years and hit $733 billion in 2019, deficit be damned. That's the highest level since the U.S. entered World War II and it's several times more than the next biggest military budget in the world. The 2017 increase alone, more than $80 billion, would have been enough to fund free public college. If the Republicans were concerned about the deficit specifically, rather than just ideologically opposed to public money going to public services, the military budget would be the obvious choice for cuts.
Stony Brook University economist Stephanie Kelton is a proponent of something called modern monetary theory (MMT), a new school of economics that argues that as long as a country is in charge of issuing its own sovereign currency, it can't "run out of money." According to MMT, if Greece were still using its own currency, the drachma, instead of the euro, then it could have printed more money to pay off its debts, especially if inflation was low to begin with. Instead, as part of the European Union, it had to turn to the European Central Bank which dictated the terms of Greece's bailout.
Kelton argues in the New York Times that the way we think and talk about deficit is entirely wrong. When governments run up deficits, it's because they're pumping money into their economy or spending it on social welfare programs. Kelton writes, "The problem is that policy makers are looking at this picture with one eye shut. They see the budget deficit, but they’re missing the matching surplus on the other side. And since many Americans are missing it, too, they end up applauding efforts to balance the budget, even though it would mean erasing the surplus in the private sector." Princeton economist Paul Krugman the obsession with a balanced budget keeps policy makers from thinking about positive results in the long-term, writing that "proposals like universal child care are far more likely than tax cuts to repay a significant fraction of their upfront costs, partly by freeing up adults to work, partly by improving the lives of children in ways that will make them more productive adults."
The evidence that a high deficit bad for the economy is shockingly thin. In 2010, for example, two Harvard economists produced a study showing that if a country's debt reaches 90 percent of its gross domestic product, then the economy abruptly stops growing. For three years that study was widely promoted by pro-austerity figures even while other researchers couldn't replicate its findings. When the Harvard economists finally let other researchers review their data, it came out that their results were based on questionable procedures and an Excel spreadsheet error.
Some Democrats have been imitating Republican concern about the deficit for decades now. Sometimes it's an attempt to woo moderate Republican voters ahead of an election, like when Bill Clinton vowed to "end welfare as we know it." Other times, it's because that politician believes in austerity politics, like former vice president Joe Biden, who has called for spending cuts to Social Security, Medicare, and Medicaid for decades. Buttigieg's comment might be an effort to peel off Biden's more conservative voters, coming less than a week after the former vice president's absolutely dismal performance in the Iowa caucus. As Biden's support has appeared softer and softer, Buttigieg has been moving further to the right over the course of the campaign, even voicing opposition to universal programs like free public college. But veering hard into anti-deficit territory before the general election has even started is a surprising turn. Whether it's an electoral strategy or a sign of Buttigieg's actual politics remains to be seen.
This time last year, you had no idea who Pete Buttigieg was. Now it's clear that whether or not he wins in 2020, he'll be shaping our politics for years. Jason Zengerle on the improbable arrival and urgent ambition of America's most famous mayor.
Originally Appeared on GQ