Wall Street Journal Hack Fails Econ 101, Insists Spending Cuts Are The Only Solution (VIDEO)

Author: January 2, 2013 3:14 pm

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The Rupert Murdoch-owned Wall Street Journal used to be a beacon of news and information, second perhaps only to the New York Times, particularly for financial and economic matters. Used to be.

Oh, how the mighty have fallen. Demonstrating the general stupidity that surrounds so many News Corp. properties, it’s hardly novel to hear someone from deep within the bowels of the company’s many holdings say something … idiotic.

Today’s booby prize goes to a member of the Journal’s editorial board, Stephen Moore, for insisting that only spending cuts can reduce the deficit, as reported by Media Matters.


Here’s the video:

For those of you who can’t watch (or won’t … can’t say I blame you there), here it is in a nutshell:

 “Unless you cut spending … you can’t bring that debt down.”

Moore, it should be noted, has a Master of Arts in Economics, and not from the clown college you would expect after hearing that. He also has a notable history of associating with organizations like the American Legislative Exchange Council (ALEC) and the Heritage Foundation, two of the most mind-numbingly ultra-conservative institutions around.

While there’s certainly an element of common sense to reducing spending when you’re in debt, believing in it lock-stock-and-barrel is just … wrong. For decades, American’s have been told that government must run like a business, and we must cut spending in order to deal with the deficit, and you wouldn’t go on a shopping spree if you were in debt, and on and on and on. Moore’s brilliant revelation is just the latest shot in the 30-year right-wing firing squad of the same.

Unfortunately for those Americans who have swallowed this whopper, it’s a lie. It’s wrong and it’s wrong for several reasons.

  1. It should be obvious that spending cuts aren’t the only way to reduce the deficit. The immediate counter-argument to this is higher taxes – when you don’t have enough money, you need to get more.
  2. You don’t even have to raise taxes if you’re doing it right. By growing the economy, the inherent tax base will be larger, resulting in more funding for all levels of government. When things are going well, people spend more money, more transactions are taxed, income goes up – it’s a solid win across the board. I doubt any of us are surprised to hear a conservative not arguing for the proposition that’s good for everyone, though. Where’s the advantage in that?
  3. Government can do something no household or business can – print and coin money. While there are certainly aspects of this that can be highly problematic (see: 1920’s Germany), it’s an option. Done at a reasonable and controlled rate, it’s a critical tool in combating deficits, and one that can be responsibly managed to limit the effects on the entire system. For all the doom and gloom from the right about the impending financial apocalypse as a result of the Federal Reserve’s actions in recent years, the last time I checked, none of the Quantitative Easing actions had caused the end of end of the world. Let me check … yup, still there.

But that’s just the surface of it. What Moore and the rest of his conservative ilk miss is the bigger picture, the one that truly explains why we must do what we’ve been doing and why government must take the lead during tough times. It’s the lesson taught to us by the Great Depression – when the private sector collapses, when things go wrong the way they did in 2008 (Thank you, W.), the government has to step in to get things moving again. When businesses and citizens stop spending money, the government is the only institution left with the resources or the ability to do so.  To insist that a recession is the time when government must reign in all spending and tighten its belt is counter-intuitive to the capabilities of government, ignorant of history, and, worst of all, incredibly dangerous to the rest of us.

There is a time and a place for government to go after deficits and curtail its spending – and that’s when the private sector is taking care of itself, not when millions upon millions of Americans are unemployed and the nation’s richest and businesses are sitting on billions, not doing anything.

People much smarter than I have said this all before and, ultimately, that’s what it comes down to. Who do you believe – the corporate shill from ALEC or the guy with the Nobel Prize in Economics?

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