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What kind of society do we want?

That was the question posed by Columbia University economist Joseph Stiglitz, former chairman of Bill Clinton’s Council of Economic Advisers and winner of the Nobel prize in a recent interview on NPR’s Morning Edition.

Now that deficit reduction has been become the crisis du jour, most of the current reporting and discussion are focused on how much and how quickly to cut federal spending—few are questioning whether to cut.  National Public Radio, therefore, deserves credit for broadcasting one interview at least that challenges the conventional wisdom. What Stiglitz said wasn’t new or unusual for him. It just wasn’t the kind of thing you hear very often in the echo chamber that the mainstream media have become.

I don’t need to summarize the points Stiglitz makes; you can listen to or read the interview. I will say this, though: His comments at the end on the role of government are a refreshing change from the rhetoric of the last 30 years, which has only gotten more shrill.

During the current federal deficit reduction debate, as the deficit hawks grow more righteous, it’s important to remember that we had this problem solved 10 years ago. Clinton raised taxes during his first term—despite dire warnings that it would destroy the economy—and by 2000 the federal government had a record annual budget surplus of $236 billion. According to Congressional Budget Office forecasts at the time, the public debt was projected to drop from $3.5 trillion in 2000 to $1.2 trillion in 2009.

When George Bush took office, he evidently saw no problem with leaving our children and grandchildren saddled with debt. Never mind that we still owed trillions of dollars, he said a surplus meant the government was taking in too much money, and pushed Congress to cut taxes.

It’s also worth noting here that in 2001 Bush correctly concluded that cutting taxes would reduce the amount of revenue flowing to the federal government. A couple years later, when the federal budget was back in the red, he reverted to supply-side economic theory and called for more tax cuts—this time, under the delusion that it would increase federal revenue.

We surely have enough evidence by now that cutting taxes and starving government does not produce prosperity for the large majority of Americans. It’s time to start addressing the questions that Stiglitz poses: “[W]hat kind of society do we want to create and how do we get there? What is the appropriate role of government and what does that cost and how do we best finance that?”

Posted by Jack Hoffman on May 20, 2011 at 3:51 pm

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