Breaking Down U.S. Spending During The Pandemic
NOEL KING, HOST:
Do the trillions of dollars that the Biden administration wants to pump into the economy signal the return of big government? I put this question to Zachary Carter, who wrote a book called "The Price Of Peace." It's about the economist John Maynard Keynes and the ideas that underpin our current understanding of what government's responsibility is in a time of crisis. Carter told me it's not really about big government versus small government anymore. It's about how the money is spent.
ZACHARY CARTER: There's always been, at least over the last 75 years, a fairly large government. But since the 1990s, there has been a different consensus about how we should organize that government, with Democrats moving closer to sort of the Reagan, conservative Republican understanding about how the state should be organized. And I think President Biden's been pretty clear about wanting to turn away from that. He's hanging a large portrait of FDR in the Oval Office. That's something new. So I think the size of the government is sort of a rhetorical issue. The real shift here is where the focus of that government is directed.
KING: I'm going to phrase this next question carefully because I know that authors of New York Times op-eds often don't write the headlines. You wrote in an op-ed in The New York Times that "Coronavirus Killed The Gospel Of Small Government." What did you mean by that?
CARTER: Well, I do want to credit the headline writers at The Times. That was their headline.
CARTER: But I approve of the headline. I think the gospel of small government has always been divorced from the reality of what conservatives have called big government, the belief that with the government out of the way, the economy will take care of itself and that individuals acting of their own sort of rational impetus, self-interest, will do things that are productive and prosperous. I think one of the important lessons, perhaps the most important lesson from the work of John Maynard Keynes is that, oftentimes, individuals, for their own quite rational reasons, decide to do things that are bad for the economy as a whole. If everybody stops spending, then nobody is buying any goods. And producers have to lay people off. If the economy is bad - right? - if things look pretty rough for the future, then it can be quite rational for everybody to save. So you need someone, some entity, to step in and coordinate this activity to give people confidence that the future is going to be brighter than today and give them the power to act on that.
KING: Did the era of small government lead us to problems that were hidden that the pandemic then exposed?
CARTER: I think so. I think most of these problems, however, were exposed during and after the financial crisis of 2008. I mean, this sort of way of thinking about the economy that the Biden administration is deploying is not new. It was very popular in the United States between the 1930s and the 1970s. But it has been out of fashion, certainly, for the past 25 years - and, I think, really, for most of the past 50 years. And so people could see that things were not working correctly or as well as they would have hoped in 2009 and 2010. But there was still this sort of belief that if the government got out of the way, the private sector would take care of these problems. And there are just some problems that the private sector not only can't take care of but needs the government's help to solve. The U.S. Chamber of Commerce is a conservative and, I think, broadly Republican Party-aligned institution. It's an organization of big business executives. And that organization has been pushing for a large infrastructure bill for quite some time now even though it constitutes big government spending.
KING: But this is an interesting point you make about the Chamber of Commerce, a normally very conservative organization asking for government intervention. Does that suggest to you that, broadly, minds are starting to change about what the role of government is?
CARTER: I do think so. I mean, I think politicians use ideas more cynically than ordinary people do. So...
CARTER: ...There will be - I don't want to say that the Chamber of Commerce and the Senate under Mitch McConnell is going to be acting like a wing of FDR's New Deal coalition. I think when they see, you know, opportunities for conservative goals to be advanced, they will take them. But you can even look at the way Mitch McConnell has responded to this proposal for an infrastructure bill to see evidence of a shift here. McConnell isn't saying $3 trillion is a terrible thing that the government can't afford and that it will all be wasted. He's opposed to raising taxes on - predominantly on the wealthy in order to pay for it. So he's still seeing this in a sort of conservative frame. He's looking out for the wealthy and also trying to avert tax increases. But he's not so worried about the government spending money. And he's not so worried about government debt and deficits. I think that is a change that you're going to see reflected broadly in the way both parties approach governing over the next few years.
KING: Zachary Carter is the author of "The Price Of Peace: Money, Democracy, And The Life Of John Maynard Keynes." Zack (ph), thanks for being with us. We really appreciate it.
CARTER: Thanks so much for having me, Noel.
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