Chris Christie: Economic Genius

Welcome back, Ian. – promoted by Rosi

New Jersey Governor Chris Christie’s lack of understanding of economics appears to approach the level of John McCain.

Christie, like many Republicans, claims to believe in fiscal responsibility, and says that government shouldn’t spend more than it has, just like real families. (I’d like to meet these families). The problem is, these ideas don’t work for families and they don’t work for our government.

On Meet The Press this past Sunday, Christie said,

I mean, we made real hard decisions, and I cut some programs that we would’ve liked to have kept…But we’re broke. We don’t have the money anymore.

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So, Governor, I guess that means your family would never, say take out a mortgage? Or borrow money to send your kids to college? Oh, but that’s different, you say? How? Seriously. How is that not spending more than you have? Of course you’d do those things because that borrowing and spending brings more benefits in the long run that not doing so. So let’s get past the false ideology.

Next, let’s talk about economics in a recession. In the same interview as he brags about cutting spending, he also says that we shouldn’t raise taxes on income above $250,000 in a “weakening economy.” When David Gregory asked about the budget, Christie fought with him about whether a tax cut was actually a tax cut but never answered the question how he’d offset the revenue lost.

According to Christie, the budget matters so we have to cut government spending that directly creates jobs, but the economy matters so we have to keep income tax rates on the richest low. Huh? The problem is that doing so won’t create jobs, according to most economists, including former Vice-Chairman of the Fed,  Alan Blinder .

“Some have a lot of bang for the buck, and some have very little. The GDP increase per dollar of budgetary cost is in the range of 1.6, 1.7 for things like food stamps and unemployment benefits, and in the range of .35 for extending the Bush tax cuts. We could get some substantial job creation by simply reprogramming the $75 billion that would be saved over the next two years by not extending the upper-bracket Bush tax cuts and spending it instead on unemployment benefits, food stamps, and the like.”

The reality is that when private sector demand is weak, the government can prime the pump. This increases demand for the things companies sell, leading them to hire more workers to make more products to meet the demand. That hiring creates more demand, as workers spend money, and it creates a virtuous cycle. My only training in economics is reading Paul Krugman, but he explained this pretty well. It is almost so simple that it’s amazing anyone doesn’t understand it.

By contrast, cutting government spending, which Blinder shows is effective in creating jobs, in favor of tax cuts for the rich, which is not, is simply a bad idea. It doesn’t work. Yes, when times are flush, government spending can crowd out private spending. Yes, when times are flush we should run a surplus and cut some spending to save it for when we need it. That’s what Bill Clinton and the Democrats (without a single Republican vote in the House or Senate) did in the 1993 budget plan. And it led to “surpluses as far as the eye can see” by 2000.

But Christie doesn’t get it. Not spending now will only make the government poorer by keeping revenues down, and the long term cost, both human and economic are even worse. Christie embodies Republican thinking on the economy, and that’s why his ideas need to be exposed for what they are.

Wrong.

Comments (20)

  1. Ian Reifowitz (Post author)

    Sorry that I haven’t posted here in 2 years. I was helping out Josh Zeitz in 2008. But I wrote this diary over at DailyKos and wanted to publish it here as well, considering the topic. I’ll check back for comments ASAP.

    Reply
  2. cwood123

    Most developed countries are undergoing some type of austerity measure.  England, France, Germany, Greece, Ireland, etc are all pushing for cutbacks in government spending.

    The country experiencing the best economic growth (Germany) was the first major country to embrace these austerity cuts.

    I’m not any type of economist, and I understand the point of increased government spending during a recession but maybe (just maybe) the repubs are on to something.

    Reply
  3. johnleesandiego

    (it sounds better when I say that subject line in the Soup Nazi accent)

    I stumbled upon this brilliant reality piece just as Chris Christie’s padded expense account stories are breaking all over the place. IMHO, he’s in it for himself and to hell with anyone who actually works for a living.

    Reply
  4. William Weber (WjcW)

    What led to the boom of the ninties was the widespread adaptation and advances of the personal computer and the growth of the internet, not government policy (one way, or the other), the PC revolution coupled with the internet were the innovations of the century and drove the economy and our national debt into the black.

    If your premise above were true, the 800 billion stimulus spending would have had a must greater effect on unemployment (and I’m not saying it had no effect), I’m just saying it has no effect when compared to the economic engine that our technological advnaces provided in the ninties.

    Due to those technolgical advances, the world became much smaller, outsoucing of many, many, jobs became feasible, and the result was the flow of jobs from America to the rest of the world (as they came up to speed on our technology) during the last decade.

    Going forward (long term), there will be a leveling out of wages across the globe as American workers compete with the rest of the planet. (China now churns our more millionaires than anywhere on the planet) Our strategy to remain ahead of the curve should be to foster new technologies and once again try to lead the world in the latest innovations, such as the cell phone and/or internet.

    Reply
  5. bluescat1

    The PC is more responsible for doing away with jobs then any thing in history. Most people sit in cubicles in front of one of those things all day. Is that any way to grow an economy?

    Reply
  6. brendanod

    It was plain to see that Christie was a trickle down guy as a candidate.  As governor, there can be no doubt in Christie’s belief in the the theory.  The proof is in the pudding, his refusal to raise the income tax on the wealthy demonstrates his desire who he wants to insulate.  

    Christie hates public sector labor unions because the private sector  has been successfull at deteriorating the labor movement over the years.  Public sector has maintained and grown its ranks. It has been successful at maintaining decent wages and benefits for their members.

    Christie wants to continue and grow the chasm between the rich and everybody else.  Union busting and demoninzing labor unions to those who have lost wages and benefits is immoral.  It is the cruelest and best trick in the GOP playbook – creating an enemy in order to get people to vote against their own self interests.

    Reply

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