The Saga of the Golden Fleece: Why America Needs to Learn to Love Government Spending Once Again

“No one shoots Santa Claus.”

For generations of American politicians, that was as sturdy a truism as “what comes up must come down” and “‘i’ before ‘e’ except after ‘c.'” For Democrats, and especially for liberals, the injunction was intoned with glee; for conservatives, with agonized pain; and for those somewhere in between, like Richard Nixon with matter-of-fact resignation (which was the spirit of his remark that we are all Keynesians now).

It referred to what was, for liberals, a happy accident of enlightened economic policy. According to the demonstrations of John Maynard Keynes, the best way—the only way—to revive a sluggish economy, when private spending froze up, or to keep an economy from getting sluggish in the first place, was government spending. And so during America’s economic heyday from the late forties to the early 1970s, the natural inclination of politicians to get reelected by giving people stuff—a chicken in every pot, a car in every garage, a bridge over every river—coincided perfectly with enlightened public policy. This was one of the reasons, after Lyndon Johnson’s landslide defeat of Barry Goldwater in 1964, pundits predicted conservatism could never achieve a majority coalition in the United States of America.

A lot of water has passed under those bridges over every river since then, and now the political meaning of what it means for the government to spend money has flipped nearly 180 degrees. Even in a recession-unto-depresion like the one we’re facing now—when every responsible expert agrees that a massive program of government spending is the only imaginable way to save America from ruin— the mere whisper of the word “pork” makes politicians cower in a defensive crouch.

How did that happen, what did it mean, and why is it so, so, so imperative to educate the public to the new (old) way of thinking about the power of the federal purse?

One answer, of course, is that the conservative movement made it happen, through sedulous political activism and skillful public propaganda. That melodrama is the subject of all my books, “Before the Storm,” “Nixonland,” and also the one I’ll be starting work on next, about the years from 1973 to 1980. Their secret weapon, across this span of decades, was racial resentment: the chain reaction, as Thomas and Mary Byrne Edsall put it in the most authoritative single volume on the subject, of “race, rights, and taxes,” by which the white majority became convinced that when government got bigger it did so always at their expense, in the interests of enriching people of color.

There are other answers, though. Democrats, some of whom called themselves liberals, share some of the blame as well.

While re-reading old journalism by Tom Geoghegan, I found myself riveted by a piece of his from the New Republic in November of 1972, the same month George McGovern’s landslide loss to Richard Nixon marked a major lurch in the long, slow slide of liberalism away from ideological hegemony. The piece was a profile of Wisconsin senator William Proxmire. Reading it, I began to reflect whether Bill Proxmire wasn’t the most influential politician of the last 40 years—as the grandfather of the Clinton-era Democratic fetish for fiscal austerity.

Proxmire, who left public service in 1989 and died in 2005, may be best remembered—it’s what I remember—for a monthly publicity stunt called the “Golden Fleece Award,” bestowed upon what he would claim was the month’s most wasteful and ridiculous pockets of government spending. The pundits fell in love with the notion’s good-government pretensions, and for all I know the stunt did the nation some good paring the federal budget of waste, fraud, and abuse.

I suspect, though, the exercise was largely a silly waste of time. One of my professors in graduate school won a Golden Fleece award. Senator Proxmire awarded it for a supposed grant to fund her “mountain climbing hobby.” Actually, she’s one of the nation’s most distinguished anthropologists. She has never climbed a mountain in her life, but used her field work among the Sherpas of Nepal to arrive at some of the most incisive theorizing extant on how societies work. Second-guessing the peer-review process of National Science Foundation grants made for nifty headlines. But it was also numbingly reactionary. According to the Wikipedia entry on Proxmire, the prizes sometimes “went to basic science projects that led to important breakthroughs.”

It savored of the Reagan aide who once, defending cuts in higher education spending, said it wasn’t the business of government “subsidizing intellectual curiosity.” It savors, in fact, of one of Ronald Reagan’s most outrageous sins against the common good in his entire career, his 1967 decision to end free tuition at public universities—a program that helped make California the fourth biggest economy in the world and probably multiplied more value into America’s gross domestic product than any public policy intervention in history. Here was the beginning of the kind of budget-hawk numbskullery that, say, left the military-industrial complex without enough Arab interpreters, or much expertise at all about a place like Afghanistan in 2001 when we began to go to war there. How much has that sort of micro-managing budget hawkery contributed to the decline in America’s global competitiveness tout court?—but I digress.

Geoghegan’s article helped me understand the good intentions—those liberals! always with their good intentions!—that launched this numbskullery in the first place. One of the reasons Proxmire, who practiced his public relations from a perch chairing the formally powerless Join Economic Committee, made good copy was because he had a business degree from Harvard and had been an investment banker at J.P. Morgan. “How do you like that for a liberal Democrat?” he told Geoghegan. “Fondly alluding to Ricardo, Marshall, and Pigou”—grandfathers of neoclassical economics—he was Larry Summers before there was Larry Summers.

As a young legislator he became known as “Billion Dollar Bill” for his endless disquisitions on the minutia of the federal budget. There were a lot of billions to discuss. Here’s Geoghegan in the Proxmire profile: “The Depression, he believes, accustomed liberals to regard any public expenditure as in the public interest. Jerry Jasenowski, as [Joint Economic Committee] staff economist notes, ‘Liberal Keynesians kept saying, ‘The public sector is starved.’ Whenever there was a problem, say, with housing, you simply pointed money in the direction of the problem, no matter how complex its social design.’ The result was ‘to reinforce the most irresponsible kind of political behavior. They were for every expenditure and…every tax break.”

And indeed it’s not hard to imagine how during the high tide of no-one-shoots-santa-claus-ism, things might have become rather decadent. The moral hazard is plain: If spending is good in itself, the door opens to boondoggles. The field was ripe, in other words, for Golden Fleeces.

Enter William Proxmire, filled with liberal good intentions, introducing a new story into the American political culture: We can do better. That the problem wasn’t spending as such, but the misdirection and corruption of spending. Proxmire would quote his hero, the late liberal senator Paul Douglas, chastising their fellow liberals: “Say ‘spend,’ and they salivated.” The source of the quote is significant: Even Paul Douglas,—who, in his days as an an academic economist, had done much the work establishing that it was sound fiscal policy to stimulate consumer spending—understood that things could go too far.

In my post last week I wrote of the not-so-tongue-in-cheek argument of J.M. Keynes that if government sets out to spend in order to keep an economy humming, even burying bottles of money from the Treasury for idle hands to dig up is preferable to doing nothing. Proxmire was saying that the jape was becoming a little too literal. One of his books was called “Uncle Sam: Last of the Big-Time Spenders,” in which he argued that as late as 1960 “it was virtually impossible to get reputable economists to criticize the quality of federal spending.”

His argument became a kind of fiscal version of John Rawls’ “A Theory of Justice”: We should judge budget expenditures by whether we would have wanted them there had we designed the entire budget from scratch, from behind the proverbial veil of ignorance—”He talks as if he would like to shut down the government for a year,” Geoghegan wrote in 1972, “find out where ‘the bodies are buried,’ then build a budget carefully from zero.” His key concept was that the budget was a “priorities document. ” “He considers himself more interested in questions like, ‘How do the programs work? What are their objectives? Which groups pay?'”

In 1972, such attitude made him a Washington curiosity, an object of affection precisely because he was so rare a beast. (The lead of Geoghegan’s profile played into Proxmire’s legendary 18-hour days, abstemious consumption habits, and, back when jogging was a weird thing only athletes did, practice of donning sporting togs and running around the nation’s capital: Washington denizens competed to catch fleeting glimpses of him. So Geoghegan compared him to the Loch Ness Monster.) He was most notorious in 1972 for his work as point man in killing a bipartisan, public-private partnership to create an American supersonic transport plane to compete with the Concord. “Proxmire wants sophisticated spending—on public-service jobs, spending that starts fast and ‘automatically tapers off as the economy recovers.'” He “seemed to invite a taxpayer revolt against government itself,” the TNR profile observed, something that felt, in the fiscal context of 1972, weird, weird, weird indeed.

It wouldn’t seem quite so weird as the 1970s ground on.

You may know the next part of the story: stagflation—the heretofore unheard of, and heretofore theoretically impossible, simultaneous combination of inflation and flat economic growth. In the wake of the OPEC oil shocks and the Vietnam War, the very foundations of Keynesianism were being called into question—even, according to a Time magazine cover from 1975 that read “Can Capitalism Survive?”, the entire global economic order itself. Maybe a government all too eager to spend, spend, spend, even if it meant burying bottles full of money in mine shafts was the problem.

Indeed, Jimmy Carter seemed to agree. Turning down the White House thermostat and being ferried in modest government sedans instead of limousines (a practice pioneered before him by another “liberal” politician famous for his abstemiousness, California governor Jerry Brown) was part of his political appeal. The notion that the federal budget itself was a beastly Proxmirean horror show—that “Waste Will Bury Us,” as an early-70s Proxmire-for-Senate bumper sticker read—was becoming hegemonic. Everyone remembers that Bill Clinton declared in his 1996 State of the Union address, “The era of big government is over.” Few remember that Carter said it before him, in his State of the Union in 1978: “Government cannot eliminate poverty or provide a bountiful economy or reduce inflation or save our cities or provide energy.”

The next era would belong to Ronald Reagan. “Government is not the solution, government is the problem,” he intoned in his infamous 1981 inaugural. But here was the difference from Proxmire, Jerry Brown, and Carter. They were well-intentioned liberals, disinclined to throw out the baby with the bathwater; their message was ultimately that the government could spend better, not that it shouldn’t spend at all. Even more, they said what they said in sanctimoniously grating preacher tones, wearing sweaters and preaching personal restraint. Reagan’s anti-spending language was structurally different. He didn’t shoot Santa Claus. He pretended Santa Claus was real. He named the enemy in his 1980 acceptance speech as those “who say that the United States has had its day in the sun, that our nation has passed its zenith,” who “expect you to tell your children that the American people no longer have the will to cope with their problems, that the future will be one of sacrifice and few opportunities.”

He made his enemy the same “responsible” Democrats who had primed the ground for his argument that government itself was evil.

And, of course—this is where the “Santa Claus” idea transformed itself from a witty little metaphor to literal Republican principle—”conservatives” didn’t cut spending at all. They ballooned it. Here were some contrasts between Reagan and Proxmire: His most useful Golden Fleece awards went to Pentagon expenditures. When Richard Nixon, in the spirit of Republican fiscal responsibility, proposed to lower the federal government’s debt ceiling to $250 billion, Proxmire did him one better, saying it should be only $240 billion. Ronald Reagan, and George W. Bush after him, provide the plain contrast: Make the idea of reigning in Pentagon spending anathema, utterly unpatriotic, and ignore responsible debt ceilings altogether. They did away with fiscal responsibility, under cover of the rhetoric of fiscal responsibility, only changing government spending into a channel for private pilfering instead of a function of the public good.

Alack and alas, William Proxmire: like it or not, your “critique of pork barrel Keynesians” greased the skids for this big con. You and your enlightened Dem budget-hawk comrades made the usual mistake: presume good faith on the part of the modern Republican Party. “One of Proxmire’s favorite statistics,” Geoghegan reported in 1972, “compares the rate of return on government investment with the rate of return on private investment. (The public sector falls short by five percentage points.) Rather than spend tax money to reach a social goal, he urges the use of tax policy to the same end.” Sound familiar? Says today’s well-dressed wingnut: tax cuts are the only responsible stimulus. Thought Proxmire: “Neither the Executive nor Congress is organized to make spending ‘cost effective.’ That rankles him.” He convinced a nation. Now, concludes the well-dressed wingnut, government spending is inherently irresponsible. And the well-dressed Democrat half believes he must be right.

This is a story that has put liberals—”responsible” ones, “populist” ones, all of them—into a terrible bind. At this late date, decades since anyone in Washington would admit to believing that any government spending is useful spending, when flesh-and-blood Democrats in the White House like Bill Clinton proved themselves such responsible stewards of the public purse that the federal payroll went down under their watch, Barack Obama wants to do some spending. He wants to do it in a way Proxmire the liberal budget hawk would surely have signed off on: targeted, responsible, scientifically—sophisticated spending, on public-service jobs, spending that starts fast and automatically tapers off as the economy recovers.

And what is his reward? Republicans are able to parade themselves before our supposedly most responsible media commentators and proclaim, “Not in the history of mankind has the government ever created a job.”

At least when Keynes talked about burying bottles in mine shafts what was talking about at least would have served a fiscal purpose. It was a neat little metaphor for the de minimus conditions for what government could do effectively to revive a stalled economy. What Republicans want to propose don’t even meet the standard of that reductio ad absurdium.

There’s an interesting line in the Geoghegan profile: He describes one of Proxmire’s identities as “a populist demagogue railing against new taxes that ‘responsible’ politicians accept as inevitable.” What the line reveals about the shifted battle lines of our present politics are fascinating: Notice how hard conservatives have worked to seize that sort of “populism” for themselves in the interests of making tax cuts that turn out to be radically anti-populist—that is, they redistribute income upward—while simultaneously making even the most responsible tax-raising, even the populist sort that redistributes income downward, politically prohibitive. Now there are precious few “responsible” politicians who accept new taxes as inevitable; Reaganism killed them all off. Now, you can only offer any kind of tax hike with excruciatingly careful apologies, while cutting spending means never having to say you’re sorry: it’s seen as always already virtuous—even “populist”: letting people do what they want with their own money and all that.

Now a public perfectly conditioned to believe increased government spending is some kind of evil in and of itself floods senators will calls running 100 to 1 in favor of doing nothing in the face of an imminent depression. Who’s been fleeced? We have. The public sector has been starved. Make the phone call. Do it now: 202-224-3121 or 866-544-7573. Tell the operator you need to speak with your senator. Tell them to pass some stimulus, and refuse all bad-faith conservative amendments.

Even William Proxmire would be proud.

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