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NRO’s eye on debt and deficits . . . by Kevin D. Williamson.

Forbes and the Frauds



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For my sins, and in hopes of clarifying the debate, I will respond again to the criticism of Forbes’s Ralph Benko, though I am no longer much inclined to do so, inasmuch as I believe him to be either incompetent or intellectually dishonest, if not both, and in any case a stain upon the Forbes name, which is one I have long admired.

Mr. Benko and some of his Forbes colleagues are displeased with your obedient servant for declining to adopt what I view as overly optimistic assumptions about economic growth. Taking too rosy a view, I have argued, allows congressional Republicans and presidential candidates to evade hard choices; wishful thinking is not a wise policy, or a conservative one. Assuming that atypically strong growth will do the hard work of getting our public debt under control is irresponsible, a fact attested to by the fiscal failure of the Gingrich revolution and the Bush administration. Better to make real cuts today based on plausible economic forecasts, and then treat any growth that exceeds our modest, realistic expectations as a pleasant surprise.

Mr. Benko responds:

Williamson goes so far as to state, shockingly, “Two percent average real GDP growth is far from disaster: It doubles the national economic output every 35 years. That’s not so bad.”

Zero per capita GDP growth — what 2% constitutes — was the very recipe that produced the Dark Ages. This embrace of secular stagnation is an invitation to return to medieval times.

Williamson’s bumper sticker for the GOP: Dungeons and Dragons, Not Just a Board Game Any Longer!

Set aside the puerile attempt at cleverness. (Also the fact that Dungeons & Dragons is not a board game.) Here’s what I wrote: “If you chart the growth in real per capita GDP of the United States — the growth in economic output relative to the size of the population — you will see a remarkably straight line indicating about 2 percent real growth per year.” What follows is a chart helpfully labeled: Real Per Capita GDP. Which is to say, Mr. Benko is upset that I have written something I did not write. Mr. Benko is not the first critic to have misstated my argument here. (Charles Kadlec, also of Forbes, has made the same error.) I have corrected their misstatement already. To make a false statement in ignorance is only error, but to continue repeating it after being corrected is plain dishonesty, something that ought to be of concern to Mr. Benko’s editors at Forbes, if not to Mr. Benko himself. Given that this is a matter of fact, not one of opinion, I invite Forbes to publish the appropriate correction.

I hope readers will forgive me for writing so much about myself here, but most of the argument has been ad hominem, necessitating that I reply ex hominem.

Mr. Benko adds: “Williamson is among the most irredentist living, soi-disant conservative, champions of the pro-stagnancy policies of Bob Michel and Gerald Ford. . . . Williamson’s stand for Progressive, stagnation-inducing, economic prescriptions is not just wrong. It is irresponsibly, dangerously wrong.” Neither Mr. Michel nor Mr. Ford to my knowledge advocated, as I do, reducing federal spending below 10 percent of GDP, ending the federal monopoly on currency, instituting a single flat tax, abolishing the departments of commerce, education, and energy, privatizing Social Security and Medicare, etc. If the word “progressive” has any meaning, it does not mean that. There is no scenario under which that is a plausible interpretation of what I have written or the policies I advocate. That, too, should be of concern to Mr. Benko’s editors at Forbes.

Which really gets to the heart of the matter: If Mr. Benko and his Forbes colleagues believe that our current forecasts of economic growth are flawed, they have not offered any rigorous argument for an alternative forecast. I suspect that this is because they simply are unable to do so. What that leaves them with is the argument (“argument”) that anybody who disagrees with them must be a secret progressive — which, I think I can say without immodesty, is in my case fairly ridiculous.

The deeper problem with the rosy growth scenario as advanced by Tim Pawlenty and articulated by Larry Kudlow is that it is treated as a self-fulfilling prophesy: None of them has made a rigorous case that we can in the immediate future expect real growth rates significantly in excess of our historical experience. No credible forecast predicts such growth. What they have said instead is that by adopting a high-growth target we are more likely to achieve higher levels of growth. But many of the polices they seek to advance — notably, tax cuts in the face of continuing unprecedented deficits — are potential fiscal catastrophes unless we build into our accounting the very unlikely growth assumptions that the policies are intended to produce: We can cut taxes without aggravating the deficit if we have 5 percent growth. How do we get to 5 percent? Cut taxes. (This is, at heart, only a variation on the tax-cuts-pay-for-themselves canard.) The argument is, in the end, circular: The policies intended to produce historically atypical levels of growth make sense only if we assume that atypical growth in the first place. If that sounds to your ear a lot like “Clap loud enough and Tinkerbell will come back to life,” then we are on the same frequency.

How unlikely is that 5 percent number? During the Reagan boom — the template for Mr. Benko et al. — growth failed to hit 5 percent in seven out of eight years. Real growth never hit 5 percent during the millennial boom. And the naïve partisans of the Unicorn Caucus are asking us to assume something on the order of a decade of 5 percent real growth, something that has never happened in this country. In the postwar era, we had a two-year run exceeding 5 percent from 1950–51, a three-year run from 1964–66, and another two-year run from 1972–73. (Figures here.) That’s it. These are facts, not products of theoretical speculation. Conservatives ought not be carried away on the pleasant breezes of theory when we have real experience to ground our expectations.

Mr. Benko, and the constellation of cranks, illiterates, and charlatans who amplify him, have mischaracterized my views and misrepresented my arguments. Well, boo-hoo, etc. What’s much worse than that is that their naïve, dessert-first approach to fiscal policy enjoys substantial support in the Republican establishment and helped to create the Republican-led spending-and-debt fiasco of 2002–06, which climaxed with the Republicans’ losing their House majority in a well-deserved thrashing before getting crushed in the 2008 elections, the results of which will weigh upon our debt-ridden republic for a very long time. That is an abysmal record as policy and as politics. Conservatives should not hope to repeat the experience.

— Kevin D. Williamson is a deputy managing editor of National Review and author of The Politically Incorrect Guide to Socialism, published by Regnery. You can buy an autographed copy through National Review Online here.


Tags: Debt , Deficits , Despair


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