For today, at least, and perhaps years hence, Wisconsin Gov. Scott Walker is the darling of the tribal right.
Here is New York Times columnist David Brooks, atop his high horse, and expounding on what the stakes of the recall vote are:
[I]f Walker wins today, it will be a sign, as the pollster Scott Rasmussen has been arguing, that the voters are ahead of the politicians. It will be a sign that voters do value deficit reduction and will vote for people who accomplish it, even in a state that has voted Democratic in every presidential election since 1984.
A vote to keep Walker won’t be an antiunion vote. It will be a vote against any special interest that seeks to preserve exorbitant middle-class benefits at the expense of the public good. It will tell the presidential candidates that it is safe to get specific about what they will do this December, when hard deficit choices will have to be made.
For Brooks, the dragon is Debt:
Over the past several years, society has oscillated ever more wildly though three debt-fueled bubbles. First, there was the dot-com bubble. Then, in 2008, the mortgage-finance bubble. Now, we are living in the fiscal bubble.
Scott Walker slew the dragon. Praise be!
Brooks is at his absolute worst when writing in this moralistic vein. While I’m the last one to soft-pedal the need for deficit reduction and reforms to our entitlement system, there’s an important distinction that needs to be made: Public-sector bloat did not cause the crash of 2008.
Brooks is right, of course, about debt and overindulgence being the root cause of our troubles. But I don’t think I’m crazy to suspect that Scott Walker and his financial backers believe this is a one-way street that leads to government’s doorstep.
Actually, it does lead to government’s doorstep — just not in the sense that Walker likely thinks it does.
Wearing his customary sociologist’s hat, Brooks points out that earlier, less materially secure generations had a “moral abhorrence about things like excessive debt.” Maybe so. But it’s also true that the federal government did not always actively encourage debt like it has since the 1970s.
In a 2009 column, the New Yorker’s James Surowieki counted several of the peculiar ways in which government “nudges” individuals and corporations to pile on debt:
Individuals are able to write off all their mortgage interest, up to a million dollars, and companies can write off all the interest on their debt, but not things like dividend payments. This gives the system what economists call a “debt bias.” It encourages people to make smaller down payments and to borrow more money than they otherwise would, and to tie up more of their wealth in housing than in other investments. Likewise, the system skews the decisions that companies make about how to fund themselves. Companies can raise money by reinvesting profits, raising equity (selling shares), or borrowing. But only when they borrow do they get the benefit of a “tax shield.” Jason Furman, of the National Economic Council, has estimated that tax breaks make corporate debt as much as forty-two per cent cheaper than corporate equity. So it’s not surprising that many companies prefer to pile on the leverage.
Then there’s the legacy of deregulation. Kevin Phillips wrote in American Theocracy:
Some of what we think of as the bubble of 1997-2000 was a side effect of massive, permissive deregulation — not just of finance but of energy and telecommunications, both in 1996. These were two other industries where egregious misbehaviors, Enron and WorldCom, became poster children of speculative havoc. During the boom, the energy and telecom sectors each issued roughly one trillion dollars’ worth of new debt, manna for the financial-services industry.
Phillips wrote that paragraph in 2006, before the extent of financial services industry malfeasance became clear.
Is this where Scott Walker is coming from when he talks about debt?
David Brooks believes Walker is treating the cancer. But the reality is, Scott Walker is more like a secondary tumor.