All politics is applesauce.
—Will Rogers
President Obama’s health care proposals put administration economists in a ticklish situation in 2009—strikingly similar to one faced by President Clinton’s economists sixteen years earlier, when I was one of them.
Among the more politically damaging criticisms of using a government mandate to expand health insurance coverage was the charge that forcing either employees (as in the Obama plan) or employers (as in the Clinton plan) to purchase insurance would destroy jobs. The accusation had superficial plausibility because mandating significant health care expenditures as a condition of employment is akin to raising the payroll tax and, for very-low-wage workers, to increasing the minimum wage. Economists in both administrations made this point internally, as part of their efforts to tweak the plans in ways that would minimize any job loss.
As usual, the truth was “two-handed.” There were also valid arguments why Obamacare might be expected to increase employment. Successful medical cost containment would reduce the financial toll the health care industry was levying on the rest of the economy, thereby spurring employment growth outside the health sector. Increased health insurance coverage would create many new jobs in the health care industry itself. Furthermore, near-universal coverage would reduce “job lock,” whereby fear of losing health insurance coverage keeps people in jobs they would rather leave.
What, then, were administration economists in 1993 and 2009 to do? Serenely turn the other cheek and answer the one-handed criticisms with two-handed, objective truth? That’s what academics do, but it would have given aid and comfort to the opposition. Act like advocates in an adversarial proceeding? Most of the politicos and spinmeisters pushed for that. They wanted to counter spin with spin by denying that any jobs would be lost as a result of health care reform. Don’t even think about it! But the economists argued that such a claim flunked the laugh test. After all, there were valid reasons to think health care reform might either increase or reduce employment.
After what I assume was a heated internal debate, the Obama team opted for a middle ground—if you are pretty generous in defining “middle.” The executive summary—which is all anyone ever reads (if that)—of a Council of Economic Advisers report on health care reform in June 2009 included the following bullet point:
Slowing cost growth would lower the unemployment rate consistent with steady inflation by approximately one-quarter of a percentage point for a number of years. The beneficial impact on employment in the short and medium run (relative to the no-reform baseline) is estimated to be approximately 500,000 each year that the effect is felt.
That sounded pretty good—if it didn’t lull you to sleep, which may have been its prime purpose. Only if you read all the way to here of the report did you encounter a brief section entitled “Potential offsetting effects,” which began by admitting that “not all of the effects of health care reform would necessarily work in the direction of raising labor supply,” and went on from there.
Thus the CEA adroitly managed to support the administration’s policy, to get very little press attention, and yet to maintain its credibility by recognizing some arguments on the other side—but only if you looked hard for them. Perhaps not intellectually pure. Certainly as much support as illumination. But a lot better than undermining the administration’s policy by stepping on the message.
This little example illustrates one of the central problems of policymaking in our democracy—and the central theme of this chapter. The American system of government, which was carefully designed to make it hard to change anything, frequently becomes adversarial when anyone tries to effect change. So policy wonks pursuing reform need lots of help from politicos, especially from spinmeisters, to accomplish anything. In fact, efforts to get a policy initiative enacted look a lot like political campaigns—replete with hoopla, slogans, and gimmicks. Instead of objective analyses of pros and cons, the public is more likely to hear pros perpetrating cons. Economists are not terribly useful in such debates. Often, the best thing they can do is get out of the way.
Blame it again on James Madison and Co. As we were all taught in grade school, the Founders created a unique form of government with multiple checks and excruciating balances. They did so for a good reason: to make it difficult for government officials to exercise power over the citizenry. Tyranny might have been fine for the mother country in 1787, but not for the brand-new United States of America.
Madison and his friends succeeded, maybe beyond their wildest dreams. The Constitution they wrote has given us what may be the most hamstrung form of government on the planet. It’s the little government that couldn’t, because it was too tied up in knots.
To be sure, the US Constitution is a remarkable document that has served the republic well. But it has a dark side. One distinguishing characteristic of the American style of government is that it is strongly biased toward the status quo. The Constitution created—by design—a form of government that is conservative in the deepest, nonideological sense of the term: it strongly resists change. Machiavelli understood the essential idea in the sixteenth century: “For the initiator has the enmity of all who would profit by the preservation of the old institution and merely lukewarm defenders in those who gain by the new ones.” But Madison did him one better.
Resistance to change has both advantages and disadvantages. On the one hand, the American system embodies extremely strong safeguards against errors of commission—which have served us well. Rarely does the US government embark on massive, ill-considered social crusades. (Prohibition comes to mind as an exception.) On the other hand, it has almost no safeguards against errors of omission. So while our national government finds it devilishly difficult to get anything done, it finds it amazingly easy to let nagging problems fester and grow.
To pick a fairly mundane example, compare the British and American ways of accomplishing something that every government must do: passing an annual budget. In Britain’s highly disciplined parliamentary system, the chancellor of the Exchequer submits the budget on, say, Wednesday. The parliament then debates the budget perfunctorily for a few days (if that) and passes it, generally with minimal amendments. No fuss, no muss, no bother—and, of course, none of the checks and balances that we Americans prize. The prime minister has his or her way.
Things are quite different in the United States. A few days? Rather, it takes the better part of a year to legislate each year’s budget. And sometimes we never get it done—as in 1995 and 2013, when parts of the US government shut down spectacularly, leaving passport applications unprocessed and tourists stranded at the Grand Canyon. Here briefly, and omitting many gruesome details, is how the budget process is supposed to work.
The president submits his budget proposal—everyone knows it’s just a proposal—to Congress in early February. (President Trump didn’t submit his first budget until May.) It is first considered, separately, by the budget committees of the House and Senate, which are supposed to report out budget resolutions outlining the main features of the budget by April or early May. This deadline is often missed.
Then it is on to the floors of each chamber, where separate budget resolutions are supposed to pass, with a conference committee ironing out any discrepancies before additional floor votes in both the House and the Senate. All this is supposed to happen by summer; in reality, it may not happen at all. Meanwhile, the White House is in constant negotiation with the leaders of both chambers over differences between the president’s budget and the House and Senate resolutions—because everyone knows that the budget resolution is far from the final word.
Once the resolution is agreed to, supposing that happens, the budget moves down two separate tracks. The programs that need annual appropriations (called “discretionary spending”) are divided into twelve categories, each to be acted on by its own subcommittee of the Senate or House Appropriations Committee. Yes, that’s twenty-four subcommittees in all!* The rest of the budget—a vast mélange of all entitlement programs plus anything having to do with taxes—is handled by the Finance Committee in the Senate and the Ways and Means Committee in the House. The budget resolution gives these two powerful committees only vague, nonbinding guidelines. And the chairs of all the committees zealously guard their legislative fiefdoms. So, in a real sense, much of the budget work starts over from scratch.
When and if all these committees report agreements that hit the targets set forth in the budget resolution, each chamber is supposed to vote on as many as twelve separate appropriations bills plus one huge bill that bundles all changes in entitlements and taxes together. The political battle over this so-called (and badly misnamed) reconciliation bill can be the biggest and most contentious battle of them all.
Then guess what? If the House and Senate versions of several of the thirteen bills differ, as many as thirteen conference committees must go to work ironing out the differences. If and when they succeed, new floor votes are required in both chambers. That’s the climax of the whole process, and it is sometimes quite dramatic. In August 1993, for example, the first Clinton budget—having already been changed in a thousand ways—passed by a single vote in each chamber of Congress, with Vice President Al Gore’s vote needed to break a 50–50 tie in the Senate. Since then, the budget has rarely been passed by the October 1 start of the fiscal year—and often never passed at all. In December 2015, when Congress “made history” by passing the budget on December 18, a mere two and a half months after the fiscal year had started, there were congratulations all around. (Congress did not do so well in 2016 or 2017.)
Finished? Maybe not. While all this is going on, there are also parallel—sometimes seemingly endless—negotiations with the White House over what the president will or will not sign. In a good year, all the points of contention get settled amicably, and the president is prepared to sign what Congress sends up. That’s what happened in 2015. Then it’s on to the Rose Garden for proper photo-op etiquette: smiles, handshakes, and souvenir pens.
But as with wines, not every year is a good year. In bad years—which have become the norm—the president may veto several of the bills that arrive on his desk, in which case yet more negotiations ensue. In 2016, Congress never passed a budget. The House and Senate avoided a government shutdown only by agreeing, at the last minute (almost literally), to a stopgap resolution to keep the government running until April 2017—at which time, under a new president, Congress passed another “continuing resolution” that kept the government open for business through the end of the fiscal year (September 30). It looked like a shutdown was looming then, but President Trump cut a controversial deal with the Democratic leaders of Congress, “Chuck and Nancy” (Senator Charles Schumer and House Minority Leader Nancy Pelosi), to keep it open until December.
Exhausted? So are the president and Congress by the time it’s all over. By then, the Office of Management and Budget (OMB) is deep into the spadework for the following year’s budget.
Did Madison really intend to hamstring the US government this severely? Well, he’s not around to tell us. But while he did know about pamphlets and debates, we can be pretty sure he didn’t know about their steroidal descendants: talk radio, cable TV, the Internet, and Twitter.
One source of frustration to economic advisers is the incredible amount of time and energy devoted to message. When I joined the new Clinton administration in January 1993, I started out with the typical academic’s prejudice against this vaguely disreputable activity. But I soon learned there is a good reason for the preoccupation with message. Let’s start there.
When economists discuss policy issues in the classroom, they are usually careful to outline the pros and cons of various approaches. After all, there is rarely one clean, right answer. That’s fine when you are addressing students who are compelled to sit there for an hour listening, taking notes, and knowing they may be examined on the material later. But in the real world of markets and politics, people with short attention spans and much else on their minds are half-listening, at best. If you transmit a complex message, your audience may not receive it.
That is one reason why messaging is such a vital and delicate art form in a vibrant democracy. People in public life must care as much about what is heard as about what is said. They must craft their words so that listeners receive the right message. Among other things, they must keep their messages short, clear, and punchy because political discourse has limited room for complexity.
It’s a fine line to walk, to be sure—and a perilous one. If you are concerned with intellectual honesty, the absolutist dictum “the truth, the whole truth, and nothing but the truth” is the only safe haven. Once you depart from it, you are on the proverbial slippery slope. Even with the best of intentions, a slip in the direction of spin is all too likely—especially when your opponents are spinning furiously in the opposite direction.
Academics and other technocrats are predisposed by both inclination and training to look askance at messaging. It’s an unsavory activity suitable only for the vaguely disreputable. (Would you like your son or daughter to grow up to be a spinmeister?) And, believe me, a close-up view of a message mill in full throttle is not a pretty sight.
The Council of Economic Advisers, where I once worked, is located within the White House complex. Though it’s a distance from the vortex of the message tornado, both literally and figuratively, it is close enough to feel the swirling winds every day. Inside the administration—any administration—the council is normally viewed as a sanctuary for academic economists whose political ears, if not made of tin, certainly have less than perfect pitch. Since the CEA cannot be trusted to stay “on message,” it is kept under constant surveillance by the message police. Donald Trump went even further early in his term: he went many months without even appointing a CEA!
One of my regular tasks at the CEA in 1993 and 1994 was to participate in early morning conference calls as each new piece of economic data was released—an almost daily occurrence. The ostensible purpose of these calls was to discuss the content of the statistical release and decide on the administration’s message for the day. That way, we could all “stay on the same page.” But I always suspected that these calls had a hidden agenda: to ensure that we economists did not stray off message—a place you were never supposed to be.
The academic’s snooty attitude toward message is a purist’s point of view, however. It leaves out something vitally important: that message is an indispensable part of government in our great democracy. You want to be truthful, sure. But a poorly chosen message can be distorted and spun against you.
The American system of checks and balances provides maddening roadblocks at every turn. Designing a good policy is just the first step, and rarely the most difficult one, along the tortuous road toward turning a policy idea into reality. You must then build a political coalition to get the necessary legislation enacted—and that means selling your policy to audiences both inside and outside the Beltway. Like it or not, message is the way official Washington communicates with the outside world and, in particular, how it enlists the support of the electorate.
That candidates are sold like hamburgers has long been a commonplace of American politics. Congressional, gubernatorial, and presidential campaigns are orgies of advertising. But in recent decades this practice—with all its virtues and vices—has spread to the selling of policies as well. Any realistic effort to approve a treaty, to reform health care, to overhaul the tax code, or to restructure entitlements is likely to resemble a full-scale political campaign—complete with message meisters, staged media events, war rooms, rapid-response teams, field organizers, and political consultants.
Such campaigns to win over public opinion may seem peculiar, since no vote of the electorate is ever required to move a bill through Congress. The right place to “campaign,” it would appear, is on Capitol Hill, not on the Internet and TV. Nonetheless each side in a major policy debate expends enormous amounts of time and energy building grassroots support—or tearing down the other’s. The reason is painfully obvious: many members of the House and Senate determine their positions on issues by watching the prevailing political winds.
Should we deplore that practice? A purist might say yes. Members of Congress should use their knowledge and best judgment and, when necessary, behave like a bunch of “profiles in courage.” That’s a nice image, but the reality is rather more complex. Paradoxically, there is truth in each of two diametrically opposed views of the role of message in our form of government.
One is associated with P. T. Barnum: there’s a sucker born every minute. This view casts a jaundiced eye on all the hucksterism, which it sees as deceiving the public more than enlightening it. It’s been said that you can fool most of the people most of the time, and that’s good enough for politics. Political spinmeisters, it appears, live by this dictum.
But there is another view of the matter, one that can rightfully trace its roots to Thomas Jefferson. (Rather better lineage than Barnum, I’d say.) Among those self-evident truths of which Jefferson wrote so eloquently was that “governments are instituted among men, deriving their just powers from the consent of the governed.” Catch that last phrase: the consent of the governed. Isn’t that what grassroots campaigns are pursuing, albeit in a less than high-minded fashion? America may have the most democratic form of government of any major country on earth—complete with all the joys and frustrations that brings.
So which view of message is more descriptive, Jefferson’s or Barnum’s?
The preoccupation with message certainly has its downside. One reason was mentioned earlier: slogans and shibboleths often sell better than messy, complex realities. Ideas that sound good—especially in eight-second sound bites—may not actually be good. This unfortunate fact opens the door to the P. T. Barnums of the world, who seek not to inform but to deceive—and to manipulate public opinion. Much political spin is so misleading that it resides just inches away from outright lying; some of it crosses that line.
Spin is nothing new, but modern media-centered politics has raised it to an art form—and to a profession. Spin doctors swarm around major speeches and other political events like bees around honey. They ply their wares on news broadcasts, on the apparently endless parade of political talk shows, via Twitter and targeted email, and in the blogosphere. The doctors of spin exemplify the idea of politics as sport so well that they are veritable human metaphors.
But no social phenomenon, not even political spin, should be judged solely by its worst manifestations. Some massaging of the message is inevitable in any society that is not populated by angels and saints. After all, it is only human nature to promote the virtues of your plan and downplay its vices, especially when the other guy is spinning madly against you, perhaps none too scrupulously. The trick is to avoid a race to the bottom in which truth is left at the starting gate.
After serving at the CEA for a while, I developed what seemed to me a workable—albeit less than lofty—principle for defining the limits of spin. I used to tell the staff that we should always tell the truth and nothing but the truth, but not necessarily the whole truth. Exposing the weak points in our arguments should be our opponents’ job, not ours—especially when dwelling on such details might step on the administration’s message.
One example of this principle, if you are generous enough to call it a principle, was illustrated at the start of this chapter in discussing possible job loss and the marketing of Obamacare. But there was more to the story.
In February 2014, enemies of the plan received an apparent gift from a Congressional Budget Office report that was portrayed as estimating that health care reform would cost more than two million jobs. Republicans had a field day trumpeting this conclusion. But it wasn’t what the CBO actually said. Almost immediately after the partisan attacks began, CBO director Douglas Elmendorf refuted the claim that the ACA was a job killer. He explained that a number of American workers might voluntarily reduce their hours of work, perhaps by retiring, because they no longer feared loss of health insurance. That’s something positive, he insisted, and very different from being fired.
It sure is. But was it different enough in the world of political messaging? As two Politico reporters noted at the time, “The Republicans just got a big gift from the Congressional Budget Office: It’s going to be a lot easier for them to call Obamacare a ‘job killer.’” The reporters noted correctly that “CBO said it’s in large part about the number of hours people choose to work, not actual job losses.” But then they went on to add, poignantly and correctly, that “what matters politically is how the numbers look in attack ads. And in this election year, ‘2 million lost jobs’ is a Republican ad-maker’s dream.” Indeed it was.
I have emphasized that there is often a huge chasm between policies that sound good and policies that actually are good. But political discourse thrives on—indeed requires—simple slogans. Hence politics often leads to what I call the T-shirt mentality: to be marketable in the political arena, an idea must be short and snappy enough to be emblazoned on a T-shirt—or on a baseball cap. (Example: “Balance the budget!”). But any economic idea expressed that tersely is almost certainly wrong; there are always qualifications. (Example: You don’t want to force budget balance during a recession.)
Sometimes the political slogan is an artificially selected number that somehow takes on a mystical aura. One clear example is the number zero, as in balancing the budget. A federal budget deficit of exactly zero is not a sensible goal in an economy that grows from year to year. Corporate debt grows larger every year. So does household debt, partly because there are more and more people. Why shouldn’t government debt also grow? The correct analogy to a balanced budget in a growing economy is a deficit just large enough (and just small enough) to keep GDP and the public debt growing at the same rate. By no coincidence whatsoever, stabilizing the debt-to-GDP ratio is the budgetary goal most commonly advocated by economists.
But what a horrible slogan! Imagine a political message contest between “Balance the budget!” and “Run a deficit just large enough to keep the debt-to-GDP ratio constant!” The latter might just as well save its exclamation point. It loses.
One of the more curious aspects of spin wars is what I call “dueling experts”—the use of recognized outside authorities to render allegedly disinterested judgments on competing policies. The practice is curious because knowledgeable Washington veterans all realize that mass media, grassroots organizing, and raw interest-group politics will determine the end result—regardless of expert opinion. They also know that the chosen experts are rarely, if ever, truly neutral third parties.
Nevertheless, each side in an issue campaign normally seeks outside experts to verify that its positions are kosher—or to attack its opponents’ positions. Competing validators, you might call it. Or using lampposts for support. Examples are legion. Just watch the op-ed pages of the New York Times, the Washington Post, or the Wall Street Journal. Or read influential magazines like the New Yorker, the National Review, or the Atlantic.
Ironically, open letters from dueling experts were de rigueur during the 2016 presidential campaign, even though expert opinion was being trashed by then-candidate Donald Trump. In late September, his campaign released a letter slamming Clinton’s economic proposals signed by 305 “of the country’s most prominent economic theorists and practitioners.” (Actually, I never heard of most of them.) A little over a month later, the Clinton campaign responded with two letters—one signed by 370 prominent economists (I was one of them) and the other, more exclusive letter signed by twenty past winners of the Nobel Prize. By any reasonable standard, Clinton had the higher-quality lists. But did any voters care?
A second huge problem created by the spin wars is the fixation with polling. Public opinion polling may be a good way to test-drive your message, though even here push-polling is designed to produce misleading results. But polling is an atrocious way to formulate public policy. If you pay attention to actual polling data, rather than to spinmeisters’ creative interpretations thereof, what you often find are utter confusion and lack of knowledge. Let me illustrate with a few examples.
As late as October 2015, only 21 percent of Americans thought the US economy had “completely” or “mostly” recovered from the Great Recession. But the objective truth was that it had. Some 44 percent told pollsters that we had “only somewhat recovered,” while an amazing 34 percent said we had “not really recovered at all.” Not recovered at all? Yes, some people were still doing badly, but that’s always the case. The nation as a whole had recovered so much that the Federal Reserve was thinking about raising interest rates to slow the forward momentum a bit—which it started to do that December. Should the government have bent to public misperceptions and promulgated aggressive antirecession policies, such as easy money and tax cuts in October 2015? Certainly not. But poll respondents would have applauded such actions.
Or take another example: polling results consistently show that Americans have a totally distorted view of how much the federal government spends each year on foreign aid—which just happens to be their least favorite expenditure item. Should the budget-cutting ax therefore be wielded ruthlessly against foreign aid, thereby pandering to mass public opinion but saving a comparative pittance? Of course not. And presidents didn’t—until Donald Trump.
Or consider one of the most contentious design elements of health care reform, mentioned earlier: whether the government should achieve universal coverage by requiring either employers (Bill Clinton) or individuals (Barack Obama) to purchase health insurance.* In the Clinton case, our side opted for an employer mandate despite urgings from me and others that the individual mandate (later chosen by Obama) would work better. Why? Largely because it sounded like our plan “made businesses pay,” whereas an individual mandate “made people pay.” It also did not help that the ultra-conservative Heritage Foundation was pushing an individual mandate at the time. It was guilt by association.
But the Clinton administration’s choice led the health care plan straight into huge, and ultimately fatal, problems. For one thing, it set the small business lobby 100 percent against us, and the National Federation of Independent Businesses and related organizations proved to be a formidable lobbying force. For another, it forced the health care task force to invent one Rube Goldberg contraption after another to provide subsidies to small businesses, which allegedly could not afford health insurance, when our real goal was to reduce the cost of policies bought for low-wage workers. If those sound similar to you, stop and think about “struggling” small businesses like hedge funds or boutique law firms.
The Clinton effort to design subsidies for small businesses was wasteful, expensive, a public relations disaster, and ultimately impossible. But we sure tried! Sixteen years later, the Obama administration made the opposite choice—subsidies would go to low-income people, not to small firms—and won despite bitter political opposition.
So polls are the bane, make that a bane, of the policy wonk’s existence. But polling is not the only way message tramples substance—or tries to. Here’s an old and slightly absurd example where spin failed.
Just before President Clinton’s first big economic address in February 1993, the White House held what amounted to a pep rally in the auditorium of the Old Executive Office Building. The putative purpose was to launch the Clinton budget and explain it to the many high-ranking officials who knew little or nothing about the young administration’s first big policy rollout. Up to that point, the planning had been pretty much limited to the economic team.
The star of the show that day was neither the secretary of the Treasury nor the head of the National Economic Council, but rather a delightful and quick-witted young Texan named Paul Begala. Yes, the same guy you now see regularly as a TV commentator. Along with his partner James Carville, Begala had been instrumental in the 1992 campaign but held no official position in the administration. Nonetheless, he was the designated message man that afternoon.
In tones a Texas preacher might recognize, Paul explained that this was not a deficit reduction package. (“That’s news to me,” I murmured to a colleague seated next to me. The economic team had been working nonstop on deficit reduction for six exhausting weeks.) It was, he insisted, an economic growth package, and we were never to call it a deficit reduction package. Never! At this point, I thought about my mother slapping her ten-year-old son and warning him, “If you say that filthy word again, I’ll wash your mouth out with soap!”
To help us along, Paul gave us a slogan to use in selling our deficit reduction—er, economic growth—package to the public: “This is change. This is good.” Catchy, huh? Elegant in its simplicity. Two masterfully composed sentences, each of only three syllables, and yet pregnant with nonmeaning. I felt uplifted. Were we all now supposed to chant “Hallelujah!” and dance toward the exits? Wearing a pin-striped suit, rep tie, and wingtips, somehow that didn’t feel right. So I walked out shaking my head instead of shaking my arms.
Postscript: About thirty seconds after the president finished delivering his masterful speech on the economic program, media commentators everywhere were talking about his “deficit reduction package.” Well, even the best spinners can’t win ’em all.
Barnum had a point, but there is also a nobler and more benevolent role for message in our democracy, one more consistent with Jeffersonian principles. To put it plainly, the governed cannot give their consent if they haven’t a clue about what is going on. Someone must explain the issues to ordinary citizens. Who will that be?
Here technicians and experts labor under a severe disadvantage, for the public neither draws inferences nor makes policy judgments the way we do. Economists, at least those with no ax to grind, take positions on policy issues after weighing economic analysis and statistical evidence—and then consulting their value judgments. As an illustration, consider a basic question that has been debated in Washington for decades (and still is today), one that frequently divides Republicans from Democrats: Should the federal budget deficit be reduced?
The first step toward answering such a question is analytical; call it “theoretical” if you like. Deductive reasoning is used to think through the likely implications of any proposed decrease in the deficit, including the important question of whether we cut the deficit by spending less (and if so, on what?) or by taxing more (and if so, which taxes do we raise?). To most economists, the strength of the economy will be among the leading considerations. If the economy is booming, then raising taxes or cutting expenditures may make sense. If a recession looms, the same policies may court disaster.
Next, economists bring empirical evidence to bear on the issue: What can historical and other data tell us about the likely magnitudes of the effects of lower spending or higher taxes on, say, GDP, employment, interest rates, and inflation? Here, statistical inference and modeling are likely to play crucial, if not dispositive, roles in molding expert opinion.
Finally, we trot out our value judgments. Some economists will be more favorably disposed toward deficit reduction if the higher taxes are on the rich and the spending cuts are on unjustified subsidies. Others think upper-bracket tax rates should not be raised because of daunting incentive effects, and favor less spending on entitlements. When it comes to value judgments, economists and other citizens stand on equal footing, for training in economics does not sharpen your moral sensibilities. Unsurprisingly, liberal economists tend to worry more about distributive consequences than do conservative economists.
This approach sounds incredibly neat and tidy. It is not always practiced as preached, of course. Nor does it lead all economists to the same conclusion, because we have different value judgments and because the theoretical and empirical evidence is often equivocal. Nevertheless, the common approach that economists share does narrow the range of disagreement. And we all speak a common language. Unfortunately for us, however, the body politic neither speaks this language, nor understands it, nor shares our way of thinking about social policy. What economists find natural, ordinary citizens often find strange. Our advice frequently elicits dissent—or even bewilderment.
Perhaps most fundamentally, the concept of economic efficiency is foreign to most voters. What’s more, I suspect that few people would place it high on their list of priorities, even if they understood it. Instead, the average voter is viscerally concerned with fairness—which is a terrible blind spot for some economists.
Furthermore, economists and other analysts tend to think abstractly and generally about social policies, whereas ordinary citizens think concretely and specifically. To an analyst, the right sorts of questions are: “What will deficit reduction do to capital formation and GDP?” or “How would this change in Social Security influence national saving?” But these are cold, bloodless questions that carry little meaning for the average voter. He or she is more likely to wonder: “How would this affect me—or Aunt Nellie?”
An even more dramatic difference in perceptions arises when it comes to weighing statistical evidence. Economists, like other scientifically minded people, not only believe in but rely on statistical inference. Maybe too much. We are trained to ignore “anecdotes,” sneer at “stories,” and dote on means and standard deviations instead. But John and Jane Doe are rarely persuaded by statistics, which they neither understand nor trust. Personal experience counts for much more, as does whether a particular argument “sounds right.”
Uh oh. There we go again. As I have emphasized several times, what sounds right can be quite different from what is right. That’s a big problem. Personal experiences and those of friends and relatives are poor substitutes for statistical evidence. Unfortunately, most of the citizenry knows nothing of statistics, believing instead in what I call “proof by example.” A particular type of operation is deemed to work because it cured Uncle Max. Never mind that a study in the latest New England Journal of Medicine says it’s an expensive placebo. A Ford is considered “a good car” because your brother-in-law’s lasted fifteen years. Who needs Consumer Reports? The stock market is seen as a “good (or bad) investment” because your neighbor made (or lost) money in it. You don’t have to study articles in the Journal of Finance to decide.
On all these counts and more, the typical citizen sees the world quite differently than economists do. If we economists stubbornly stick to our own language and frame of reference, we can talk ourselves blue in the face without persuading anyone. (In fact, we do that.)
But politicians are not handicapped by training as technicians or analysts. For better or for worse, they generally share the people’s attitudes, not the economists’, on all these matters. They don’t understand either economic theory or statistics. They naturally think about fairness before efficiency. Their world is full of anecdotes and stories, and they are convinced by examples. They may actually know Aunt Nellie or Uncle Max! And they have a strong sense of what sounds right to the voters.
So who do you think is better suited to carrying the message to the public?
If you live in the country, the incessant din of chirping crickets is omnipresent, except in winter. You get so accustomed to it that you barely hear it. If you live in a busy city, the clatter of traffic never stops. You get used to that, too. The corresponding background noise in Washington is the endless cacophony of political messaging, which wafts all over town. It emanates from the White House, the Capitol, all sorts of government agencies, and countless lobbying and interest groups—a thousand points of noise, you might say. Save for the message meisters, who listen with professional interest, the cognoscenti tune most of this out. The person on the street barely hears it, having developed a natural immunity—just like to cricket chirps or traffic.
But one particular type of political message is special. It rings far louder than all the others, commands a vastly greater audience, occasionally rivets the nation, and sometimes even alters the course of policymaking—not to mention the course of history. I refer to the heavy artillery of political message: the major presidential address.
These are staged events, to be sure, explicitly designed to produce sound bites and photo ops. They share much of the hoopla and manipulative trappings of a Hollywood extravaganza. They have more than their share of spin. But do not dismiss them as mere pep rallies staged by immature adults. In fact, major presidential speeches and similar media events are big deals that influence the political game on many levels.
Most obviously, they help set the national agenda. Significant policy initiatives are rarely launched or even gain important political impetus without a strong push from a presidential address—or, of course, a presidential campaign.* Especially when an administration is young and its agenda not yet firmly established, different constituencies within the administration will lobby hard to get the president to make a major address on their issues. If he does, they are cheered and energized. If he does not, they fear, their issues may drop off the agenda.
On September 9, 2009, less than eight months into his first term, President Obama delivered a nationally televised speech to Congress on the need for health care reform—not on, say, climate change or immigration policy or income inequality. His speech received huge attention and kicked off a heated debate on health reform—both inside the Congress and outside it. About six months later, after much political sound and fury, the president signed the Patient Protection and Affordable Care Act of 2010 into law.
I don’t mean to imply that the path from the president’s speech to enactment of the ACA was easy, straightforward, or in any way inevitable. It was none of those. (Remember the nonpendulum theory.) But it was no coincidence that health care passed while, say, climate change went nowhere in Congress.** Agenda setting matters, and no one can set the national agenda quite like the president of the United States.
Inside the administration, the approach of a major presidential address has a way of concentrating minds and serving as a focal point for staff efforts. (This has to be ready before the president’s speech.) On the Hill, a big speech may be viewed with anticipation (Once the president has spoken, we can really get the ball rolling) or foreboding (The president is going to beat us over the head tonight)—depending on party affiliation. Presidents often use such occasions to prod Congress to act. In the hinterlands, landmark events like the State of the Union address are among the rare instances in which a significant share of the television audience turns away from sporting events and sitcoms and actually pays attention to political discourse. A few even stop texting.
Enormous amounts of time and energy are appropriately lavished on the preparations for such rare addresses. Speechwriters and spinmeisters hone the message. Policy people submit ideas and check the many drafts for accuracy. Politicos fret over the timing, the setting, and the audience. (Don’t compete with Monday Night Football!) Media specialists dote on the lighting, the sound, and the colors of the president’s shirt and tie. Cabinet officials and other designated spinners are armed to the teeth with bulleted talking points and prepped for the pre- and post-speech spin shows. And much, much more.
It’s easy to poke fun at these spectacles, for, at some level, they surely constitute political theater of the absurd. But there is a serious side as well. Americans are not a very political people, and our citizens are almost innately cynical about all things political. They are also preoccupied by a thousand other pressing matters, like earning a living, finding a babysitter, or taking the kids to soccer. So the body politic rarely finds either the time or the inclination to tune in to the political debate. The rare moments when it does are therefore precious opportunities for small-d democrats to communicate with the electorate.
Such moments are not to be squandered, and politicians understand that. A well-timed, well-crafted, and forcefully delivered speech by the president of the United States, beamed into tens of millions of living rooms from the Oval Office or from the well of the House of Representatives, can invigorate the president’s team, sway public opinion, and create a political force that puts pressure on Congress—all at the same time. A dud or a missed opportunity can let the air out of the incipient balloon.
Presidents therefore have a unique ability to educate the public or to mislead it, to galvanize the electorate or to lull everyone to sleep, to break through the inertia that is the essence of American government or to be entrapped by it. Theodore Roosevelt famously said that the president speaks from a “bully pulpit,” a phrase with pretty clear religious overtones. If that was true then, in the days before radio and television, think how true it must be now, in the age of instant mass communications and social media. Amid the seemingly unending din of tweets and posts, the presidential bully pulpit stands out.
So those who ascend the national bully pulpit, and lesser political pulpits all over America, bear a special responsibility. As the principal points of contact between the government and the governed, they shape retail politics. Will they sell substance or sizzle? Will they keep message in its place, or let it run roughshod over substance? Can they stay on the high road if their opponents insist on traveling the low road?
The low road, the one with an excess of sizzle and spin, is by far the easier route. Unsurprisingly, it is also the road most commonly traveled. The central reason, it seems to me, was mentioned earlier: complexity is a hard sell, especially when attention spans are short and trust in government is lacking. Simplistic remedies and snappy slogans that sound right, being easier, enjoy a huge strategic advantage. In fact, it’s a lopsided battle. When sensible but complicated solutions to social problems get into the political ring with sound bites, the referee is likely to stop the fight in the early rounds with the policy wonks bleeding profusely.
Examples abound. Consider a policy that virtually all Americans favor, at least since the financial crisis and probably even before: ending the “too big to fail” doctrine, the notion that the government will bail out any financial giant that threatens to go under. With the possible exception of some big bankers, nobody likes bank bailouts. Yet variants on too-big-to-fail were used to justify government rescues of Bear Stearns, Fannie Mae, Freddie Mac, AIG, and others (but not Lehman Brothers) during the crisis. Those bailouts may have been necessary to limit the collateral damage—look what happened when Lehman failed. But most Americans hated them, still view them as policy disasters, and don’t want to see such bailouts ever again. The Obama administration and members of Congress knew all this when they sat down to write what became the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.
And in fact, Dodd-Frank did abolish “too big to fail.” The problem is that most people don’t know that because the law did so in a complicated way that is difficult to understand—especially for a public that was (and still is) bombarded by claims that “too big to fail” lives on, while the Obama Treasury barely tried to explain why that claim was wrong. Specifically, Title II of Dodd-Frank created something called Orderly Liquidation Authority (Are you nodding off yet?), which gives regulators, led by the FDIC, the ability to lay sick financial giants to rest gradually and gently—rather than let them die in violent spasms, the way Lehman did.
The key word here is liquidation, a polite term for financial death. Interestingly, the Obama Treasury in 2009 had recommended giving regulators a choice between liquidating an ailing bank and resolving it, which means keeping it alive, though in modified form. Congress, however, firmly rejected the resolution option. Sick financial giants would not be rehabilitated; they would die. That’s the law.
Unfortunately, it took the FDIC and other agencies about three and a half years to translate Dodd-Frank’s grant of Orderly Liquidation Authority into specific rules and procedures, which it named the Single Point of Entry approach (don’t ask) and published for comment only at the end of 2013. Trust me (I won’t bore you with the details), it’s a pretty good plan, though no one really knows how it will work in practice until it gets put to the test.
Finally, just in case something goes wrong, Section 214 of Dodd-Frank (Caught you napping again!) states clearly that “taxpayers shall bear no losses from the exercise of any authority under” Title II. Let me repeat that: no losses, as in zero. How can that be enforced? Should the orderly liquidation of a firm’s assets leave a hole that the Treasury must fill temporarily, the law provides that paying the Treasury back “shall be the responsibility of the financial sector, through assessments.”
Got all that? I didn’t think so, and that’s the problem. It’s a pretty complicated message. Compare the preceding paragraphs to misleading rants that the too-big-to-fail doctrine lives on, or that going back to the 1930s separation of commercial and investment banking under the Glass-Steagall Act will somehow set things right. (Will someone please explain how?) Now you see how accurate-but-complicated messages are at a severe disadvantage when competing with inaccurate- but-simple messages.
A second example, which comes up again and again, is the rationale for reducing the federal budget deficit. Over the years, both Democratic and Republican politicians have been guilty of selling deficit reduction as a job creator—or, what amounts to the same thing, attacking deficit-increasing fiscal policies as job destroyers. The truth is closer to “it all depends”—which ranks pretty low in the pantheon of sound bites.
Whether smaller or larger budgets deficits are better public policy at any point in time depends on a myriad of factors, including whether the economy is booming or stagnating and the size of the preexisting public debt, relative to GDP, at the time. (Now, there’s a snoozer.) But the fundamental reason to favor lower deficits in the long run is neither to create jobs nor to destroy them. It’s to boost real wages.
Come again? The reasoning is somewhat involved, so please bear with me. (Political debate, of course, won’t—which is my point.) Smaller deficits mean that the federal government borrows less. Reduced federal borrowing should lead to lower real interest rates, which should, in turn, promote higher levels of business investment. As businesses invest more, workers get more, and newer, and better capital to work with. So their productivity on the job should rise and, with it, real wages. End of (long) story.
But what about jobs? Should deficit reduction be expected to have much of an impact on total employment? The answer is no, provided the Federal Reserve does its job, for in normal times the Fed has primary responsibility for managing short-run variations in the size of the GDP and therefore of total employment.
When I was in the Clinton administration in 1993, our carefully honed deficit-reduction message, the product of a tug-of-war between the economic truth squad and the political message police, respected this underlying reality—if you listened carefully. (Thank heaven, most people didn’t.) Our claim—now pay attention, please—was that the US economy would create eight million new jobs in four years with our program. We were careful not to claim that the economy would create eight million additional jobs because of our program, which would have been a terrible exaggeration. But neither did we bother to mention that the economy was also likely to create close to eight million jobs without our deficit-reduction program! Well, that seemed like an unimportant detail. In any case, our message was certainly less misleading than the Republicans’ nearly hysterical claims that higher taxes would throw the US economy into a tailspin.
A similar dialogue arose in 2009, when the Obama administration recommended a large fiscal stimulus package consisting of higher federal spending and tax cuts—as a way to “save or create” millions of jobs. Because the economy had so much spare capacity at the time, their claim of job creation was eminently reasonable. Nonetheless, the Republicans, led by then Speaker of the House John Boehner (R-OH), branded the increases in federal spending as “job killers,” even though it was not clear how that could happen. When the government spends more, it does one of three things: It puts people on the government payroll. Or it buys products from private businesses (computers, aircraft, and so forth), which in turn hire more workers. Or it makes transfer payments to people (Social Security, unemployment benefits, and so on), which enable them to spend more money on private products, thereby creating more jobs. How can any of this kill jobs?
To be sure, more federal spending is not always the right answer. There are legitimate reasons to oppose particular spending programs. They may be wasteful (too many highways in West Virginia), useless (bridges to nowhere), foolish (President Trump’s voter fraud commission), or simply too expensive. They may get the federal government involved in activities that are better left to state and local governments or to the private sector. They may balloon the budget deficit when it should be shrinking. And so on. There are many potentially valid arguments against any particular sort of government spending. But the claim that it “kills jobs” is not one of them.
Is all lost? Must the spin wars continue the race to the intellectual bottom, leaving the truth behind like roadkill? Must Barnum’s suckers outnumber Jefferson’s consenting governed? Must politicians worry more about being “on message” than about being truthful? Modern American history suggested affirmative answers to all of these questions even before the 2016 election. Now such answers may seem axiomatic. They are certainly what most politicians appear to believe.
But I have an iconoclastic theory of the future of political message, one that points precisely in the opposite direction. It is based on the time-tested economic principle that scarcity creates value, which fades away as a commodity becomes too abundant. The surplus commodity I have in mind is political spin, which has proliferated at an alarming rate since about 1980. At first, it worked splendidly. President Reagan’s handlers were justly celebrated as masters of the art. (Reagan’s television skills didn’t hurt, either.) But that was then, and this is now. After more than three decades on a diet of heavy political spin, the American people, I believe, have had their fill. They hunger for the commodity that is currently so scarce: straight talk.
According to this admittedly speculative hypothesis, politicos have carried the fine art of spin well past the point of diminishing returns. Voters have grown to be weary of, jaded with, and distrustful of the whole business, which they increasingly view as a con game. They eagerly await unconventional politicians who will speak to them plainly, like the folks they deal with every day, not like spinmeisters reading talking points from teleprompters. Such unconventional politicians would, of course, need to hone their messages carefully, for all the legitimate reasons discussed in this chapter. But they would sharply delimit the realm of spin and would talk to the public the way ordinary people converse across a kitchen table, not the way most politicians talk when the klieg lights go on.
Can I prove that this hypothesis is right? Certainly not. The vast majority of political experts—there’s that oxymoron again—will assure you that I am dead wrong. That alone makes straight talk a risky strategy. But think back to the 2016 presidential primaries, when Senator Bernie Sanders (I-VT) showed astonishing political appeal and property magnate (and TV celebrity) Donald Trump triumphed over sixteen competitors. Sanders, who hailed from a state with three electoral votes, was seventy-four years old, a self-proclaimed socialist, and not even a Democrat. Trump, who was not obviously a Republican either, gained fame as a foul-mouthed billionaire who fired people on TV. Those were winning formulas?
But Sanders and Trump had one thing in common: when they spoke, their words sounded like what ordinary people (albeit people with chips on their shoulders) might say, not like poll-tested prose that emerged from spin machines and was transcribed onto teleprompters. Could that have been why so many voters were seduced by Sanders and taken in by Trump?
Of course, the plain-speaking President Trump has gone way beyond political spin to “alternative facts,” aka lies. But, gradually, the American public seems to be seeing through that fog—and not liking what they see. In the next stage of political talk, might we be blessed with plainspokenness that is actually truthful? At least we can hope.
My hopeful—and hopefully not fanciful—hypothesis that there is a strong latent demand for straight talk from politicians faces several daunting challenges. One is that every communication requires both a sender and a receiver. Only a few politicians, and essentially no economists, have the privilege of communicating directly with a broad swath of the American public. All others must go through the media. So to this crucial intermediary I now turn.
* The reality is even more labyrinthine. In many cases, there are separate authorizing committees to establish and/or change programs in addition to the appropriating committees that come up with the funds. It is not uncommon for spending to be authorized but not appropriated. Less commonly, appropriations are made without authorizing legislation.
* The third way to ensure universal coverage, a Canadian-style national health plan financed by taxes, was ruled out early by both administrations.
* I speak here and throughout of presidential speeches. Very rarely, a speech by another political figure—such as a congressional leader—can have such an effect. Very rarely.
** The president later took a number of major steps through executive action. But when Donald Trump succeeded him, most of these executive orders were overturned.