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Question: What ideas should inform the stimulus package?

Miller:    You know, the whole idea of the stimulus package is to run up bigger deficits that, you know, this is sort of, this is akin with the critique of the Democratic proposals that are emerging now that says, you know, Obama’s stimulus, how is he going to pay for it?  That’s an unintelligible question.  If you pay for it, it’s not a stimulus.  The only way you’ll have an economic stimulus is to spend more or cut taxes more than the government was planning to so that there’s more money going into the economy.  That’s the nature of a stimulus.  The idea that you would ask the states to pay all this money back, I think it just sort of confuses, it’s a very confused idea.  It’s one of those ideas that’s kind of a sound bite that makes a Republican able to posture as fiscally conservative, when in fact it has nothing to do with the reality on the ground.  I guess the political side of me is sympathetic to the idea that to avoid being tarred with any label that says you’re raising taxes during the recession, you might let that go for 18 months.  And so, even though I think it’s a [IB] matter if you let the tax rates on the wealthier folks go up again, I don’t think it would hurt the economy in the near term, but, you know, it’s not something that I would tell the Obama people you must do this now, you know, whether it happens now or in two years, I think that doesn’t matter.

Question: Should balancing the budget be a priority?

Miller:    In the near term, it’s not, we don’t want to do that and I say that as a… I’m a very old deficit hawk who went into the Clinton administration, you know, to fight deficits, and about a month ago, I wrote a column for Fortune called “How I stop worrying and learning to love trillion dollar deficits” because given the crisis we have now and the collapse and demand we’re seeing from consumers and business investments, government is the only place that we have to prop up the economy so we need trillion dollar deficits for a few years and we shouldn’t worry about it.

Question: What’s your take on protectionism?

Miller:    I don’t like protectionism.  You know, I think that we need, trade, in the long run, is beneficial.  I think what we need is a new level of honesty about the price that the people who lose out from trade are paying and we have to, again, come together as a society to say, if we want to have a consensus for the kind of free markets and technological change, that, in the long run, benefits us all, we just have agree, there’s a certain set of social protections that everyone gets as a matter of being an American citizen.  And, again, there are a lot of other countries that are ahead of us on this because social insurance is essentially the flipside of the open economy, and I think the fact that new trade agreements are so difficult to pass now, you know, CAFTA, the Central America Free Trade Agreement, which involved, you know, a handful of countries with very tiny amounts of trade, it got barely any Democratic votes.  It shows you how people, you know, politicians reflect what their constituents are feeling.  People are nervous and anxious.  You know, polls now show dramatically different than 10 years ago, that most people think globalization is bad for the US economy or bad for their job, and unless we give people a certain sense of security, basic, specially around healthcare and pensions, then we’re never going to sustain a consensus for open markets, and I think economists in particular, professional economists, while they pay lip service to the idea that we should take care of trade’s losers, it’s always an afterthought.  You know, they’ll make a big speech about the importance of free trade, and they view themselves, for some understandable reason, as sort of the keepers of the free trade flame through the ages against the self-interested, you know, mercantilist who want to shut down trade to protect their own bottomline, but the truth is, unless economists are leading with the idea that we need to revisit the safety net and have a new social contract in the country, they’re doing their own ideals a disservice, and I think right now economists themselves are guilty of politicizing the trade debate in a way that undermines the goals they seek.


Matt Miller Reflects on Dea...

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