Word Play

In his opening remarks during his televised press conference on Tuesday evening, President Obama described his proposed budget as leading "to broad economic growth by moving from an era of borrow and spend to one where we save and invest."

As with most of the president's lines, this sounds great. But where is the saving? And where is the investing? I am not asking, in this instance at least, as someone who worries about economic sanity but rather as someone who worries about the English language.

How can anyone, even someone who is totally onboard with Obama's budget and its priorities, keep a straight face when hearing it described as representing saving and investing? The president is quite correct when he insists that borrowing and spending got us into the mess where we currently find ourselves. But let's face it, his solution is to have even more borrowing and spending. Now a lot of respected economists see massive borrowing and spending as exactly the right thing to do. Why not defend that position honestly instead of misrepresenting his strategy? Probably because the president and his advisers know full well that most people recognize intuitively that growing the deficit to be even huger cannot be a good thing in the long run. They also know that, if a politician repeats something often enough, even if it is not true, a lot of people will come to accept it as true.

When a member of the press points out the inconsistency, the president is ready with a sure-fire rhetoric deflection. Rather than defending his position, he transfers the question into the mouth of a phantom Republican critic and then pronounces that this phantom has no standing to speak because of the mess in which the Republicans left the country. There never seems to be a follow-up question about how problems stemming from irresponsible deficit spending will be solved by additional, massive amounts of deficit.

The tactic of referring to government spending as "investing" is something that has caught on in the past few years. Politicians have found that they can get away with more if they simply substitute words or phrases that have positive connotations for most people for ones that tend to get more negative reactions. For example, tired of mocking comments from skeptics every time Al Gore gave a talk during an unseasonal blizzard, people concerned about the environment shifted from talking about "global warming" to "climate change." And politicians sensitive to the public's concern about public debt found they got more mileage talking about "investing" instead of "spending." It leaves the impression that all those taxpayer dollars will eventually come flowing back, bringing lots of greenback friends with them. No, the Democrats had it right when they were in the opposition and kept talking about "pay as you go."

Now, don't get me wrong. Personally, I like the idea of spending and investing being the same thing. It means that, if I have some cash in my hand, it's really all the same whether I spend it on a Mediterranean holiday or put it in a mutual fund. Cool.

So, clearly, the investment-for-spending gambit is alive and well. The president has refined it by also making "stimulus" a synonym for "spending." Last month at the annual retreat for House Democrats in Williamsburg, the president ridiculed Republican opposition to the stimulus bill, on the grounds that it contained huge amounts of wasteful spending, by saying, "What do you think a stimulus is? It’s spending. That’s the whole point! Seriously."

It was a good applause line, given the audience, but it was the sort of one-liner calculated to drive people with analytical personalities crazy. It implied that all spending is stimulative, i.e. that the phrases "spend money" and "stimulate the economy" are essentially equivalent. True, all stimulus is spending. But not all spending is stimulus. It's like dismissing critics of junk food by saying, "What do you think nutrition is? It's food. That's the whole point! Seriously."

The truth, which Obama knows full well, is that, all things being equal, the economy will recover regardless of what the government does or does not do. Government and business collectively affect economic cycles, but no one leader or political party can override the laws of economics. All presidents who find themselves in office at this point in a recession know that their main job is to position themselves to take credit for the eventual recovery. (And, as former President Bush knows, presidents who find the end of their term corresponding with the beginning of a recession are stuck forever with the blame.) And, as the new administration has signalled clearly from the beginning, the crisis atmosphere of a recession is an opportunity to put through initiatives that might not get passed in calmer times.

But the president runs a risk. It is not beyond the capability of a government to turn a recession, especially one as serious as this one, into an unqualified disaster. There is a tipping point at which so much of the gross domestic product becomes committed to serving debt that the economy cannot recover. And, even if it does start to recover, there is another danger. In a report yesterday, the Federal Reserve indicated that it had increased the money supply by more than $33 billion. Metaphorically, the Fed has cranked up the printing presses and is churning out dollar bills, thereby reducing the value of every dollar you and I hold. This is the sort of thing that more commonly happens in Argentina than in the U.S. When the recovery does start to happen, those extra dollars out there will be like so much tinder waiting for the spark of economic growth to ignite a conflagration of inflation.

The good news is that the checks and balances of our political system may keep things from getting completely out of hand. And the American economy is so large and resilient that it usually weathers even very bad economic policy. If so, we will all be relieved and more than happy to give the president credit for ending the recession.