Bill Black: Lawrence O’Donnell Aims at Buttigieg, But Hits New Democrats

Yves here. What Black calls the New Democrats have more recently been called Blue Dogs and even (gah) frontliners, but whatever you want to call them, they are corporate stooges loyal to bad economic ideas, most notably deficit hawkery and austerity.

By Bill Black, the author of The Best Way to Rob a Bank is to Own One, an associate professor of economics and law at the University of Missouri-Kansas City, and co-founder of Bank Whistleblowers United. Originally published at New Economic Perspectives

On December 5, 2019, Lawrence O’Donnell made an impassioned attack on Pete Buttigieg on his “The Last Word” program on MSNBC.  Buttigieg’s statements criticizing the Democratic Party as historically soft on deficits enraged O’Donnell.  The context was Buttigieg’s effort to signal to New Hampshire voters that he was the most conservative Democratic candidate for the presidential nomination.  Nothing signals ‘responsible’ so well to ‘New Democrats’ and the media as a candidate screaming ‘deficits’ in a crowded meeting room in a small New Hampshire town.

O’Donnell correctly pointed out that Buttigieg’s claims about Democrats and deficits are ‘Republican lies.’  The truth is that New Democrats have been the only group in America dedicated to inflicting austerity on our Nation.  Republicans only pretend to care about deficits when Democrats have power.  Buttigieg knows this, but his political interests in portraying himself as a stalwart emerging leader of the New Democrats caused him to position himself (falsely) as unique among New Democrats in his dedication to inflict austerity.

O’Donnell (largely) correctly pointed out that New Democrats had been fighting federal deficits for Buttigieg’s entire life.  O’Donnell stressed the New Democrats actions in 1993, when Buttigieg was eleven.  O’Donnell lauded the New Democrats for pushing austerity even when they knew doing so was likely to cause Democrats to lose elections.

O’Donnell’s dominant message, measured by both length and passion, was the crippling price the Democrats paid for the New Democrats’ pushing for austerity in 1993.  He made clear it was not a “one-off” – Democrats paid that price again when President Obama, a self-described New Democrat, pushed to inflict austerity on the Nation in 2010.

O’Donnell describes the New Democrats (Bill Clinton and Al Gore) as knowingly taking a “grave political risk” in 1993 in voting in favor of austerity.  The risk was that Democrats, not simply New Democrats, would lose scores of seats – and control of the House and Senate.  O’Donnell stressed that no Republicans voted for the New Democrat’s 1993 austerity program.  O’Donnell explained the initial political results of austerity.  “The Democrats lost the House because of that vote for the first time in 40 years.”  He then explained they also lost the Senate.

O’Donnell repeatedly explained that the New Democrats knew that their decision to inflict austerity on Americans would likely produce this political disaster – and “bravely” did so because of their belief that inflicting austerity on Americans was essential.  He noted that he “watched with pride” this exercise of political suicide.

O’Donnell then cited President Obama’s austerity efforts – during the weak recovery from the Great Financial Crisis (GFC).  At a time when the need to provide stimulus, not inflict austerity, was obvious, Obama embraced what again proved the politically suicidal option.

As fate would have it, the death of Paul Volcker days after O’Donnell’s takedown of Buttigieg extended O’Donnell’s argument further back in time – to before Buttigieg’s birth.  In 1979, President Carter (a Democrat) appointed Volcker to Chair the Federal Reserve.  Volcker soon unleashed powerful monetary austerity, raising interest rates to unprecedented levels for the United States.  Volcker’s obituary stressed the politically suicidal nature of inflicting austerity – and the Democrats’ pride in knowingly losing elections because of their embrace of it.

The harsh Fed policy no doubt contributed to Mr. Carter’s re-election defeat at the hands of Ronald Reagan; he had to campaign when interest rates were at their peak, and before the inflation fever had begun to break. Mr. Carter, in his memoirs, would offer a typically understated assessment: “Our trepidation about Volcker’s appointment was later justified.”


“Paul was as stubborn as he was tall,” Mr. Carter said in a statement on Monday morning, “and although some of his policies as Fed chairman were politically costly, they were the right thing to do.

O’Donnell’s denunciation of Buttigieg for adopting dishonest Republican talking points about Democrats and deficits did not discuss several essential points.  The first two points emerge from answering this question: what was the cost to the Nation – not the loss of Democratic seats – of the New Democrats’ intransigent insistence on inflicting austerity?  Shakespeare explained famously that “mercy” was “twice blest,” because it blesses both the giver and the receiver.  The quality of austerity, however, is typically at least thrice damned.  It is not a “gentle rain from heaven,” but a sandstorm from hell that batters the public and punishes the politicians who unleash the whirlwind.  It is at least thrice damned because it causes three grave forms of harm on the public.

Inflicting austerity on the United States government has three likely consequences for the public.  It is likely to cause or extend a recession.  It forces Democrats into an unending series of “Sophie’s choice[s]s.”  We cannot adopt any new program of consequence without budget ‘scoring’ – requiring new taxes or cutting other vital federal programs.  Under austerity, Democrats must shrink existing overall federal spending.  By extending existing recessions or leading to new ones, austerity causes economic harms that increase social and political breakdowns that can lead to the election of fanatics and corrupt fake-populists.  The political parties that refuse to inflict austerity (at least when they are in power) will be the political winners.

Republican fiscal policies combine “wedge” offerings to fire up the worst of their base and massive tax breaks for the elites that fund their campaigns – leading to a recurrent cycle in which the New Democrats champion policies that cause the public to identify Democrats as the party most likely to raise taxes and cut vital federal programs.  Republican political power and ‘wedge’ legislation and policies cause enormous harm, particularly to the poor and minorities.  The larger the Republican deficits, the greater the New Democrats’ urgency to inflict austerity – and embrace political suicide.  It is a self-reinforcing cycle producing recurrent political disaster for Democrats.

O’Donnell does not address two other critical points.  First, MSNBC’s top commentators endlessly warn Democrats that they must nominate the presidential candidate most likely to defeat President Trump.  MSNBC’s commentators implore us not to focus on policy differences among the candidates.  Their message is relentless realpolitik, particularly, you should never vote for the candidate whose policies you believe are far superior to the candidate the MSNBC commentators think is most electable.  MSNBC and the New Democrats claim they share the same prime directive – Democratic Party electoral victories are the only imperative.

O’Donnell’s anti-Buttigieg rant reveals the truth about MSNBC and the New Democrats’ real prime directive – inflicting austerity even when doing so is economically irrational and politically suicidal is their sole imperative.  The obvious questions, which O’Donnell never asked or attempted to answer, are why he and his MSNBC colleagues push the false prime directive (winning must be the sole paramount goal) as gospel while praising the New Democrats for repeatedly causing the Democratic Party to commit political suicide through inflicting austerity on our Nation.  Logically, the only possible answer to that question is that O’Donnell and the New Democrats must view inflicting austerity as being of transcendent importance.  It outweighs everything.  Inflicting austerity is the New Democrats and MSNBC’s sole prime directive.  They are not simply willing to lose so many contests that they lose control of the presidency, the House, and the Senate – they are “proud” to do so when the reason for those losses is ‘we committed political suicide to fight to inflict austerity.’  The related questions are whether MSNBC and the New Democrats are actually blind to the contradiction between the real and phony prime directives and why they think viewers and voters will be too dumb to spot the obvious contradiction.  Why do New Democrats and MSNBC insist on hiding their real prime directive?

A related question arises from this bizarre prime directive to inflict austerity even when it is politically suicidal.  Why did New Democrats and MSNBC choose inflicting austerity as their holy grail?  What is it about inflicting austerity that makes New Democrats so “proud” to cause the Democratic Party to commit political suicide and deliver control of the House, Senate, and Presidency to the likes of Ronald Reagan, Newt Gingrich, Mitch McConnell, and Donald Trump?  Preventing Bush’s invasion of Iraq, global climate disruption, and Trump’s election would all make sense as overriding priorities.  Those are things worthy of losing a House seat or even the entire House.

Inflicting austerity typically harms America and our people.  A federal budget deficit is not bad.  A federal budget surplus is not good.  Clinton and Gore’s budget surpluses were not good for America.  They were likely harmful, as recessions soon followed our prior budget surpluses throughout our history.  In each of the cases O’Donnell lauded, the New Democrats’ insistence on inflicting austerity did not simply prove politically suicidal for the Democratic Party – austerity was a terrible economic policy that caused harm.  How did inflicting austerity become the overriding priority of New Democrats, swamping all other policies?  In 1993, when Clinton and Gore made O’Donnell “proud” by inflicting austerity, the inflation rate was three percent.  That rate of inflation was trivially higher than what the Fed would adopt as its inflation target (2%) – the preferred rate of inflation.  Even under neoclassical economic nostrums, there was no need, much less a compelling need, to inflict austerity.

In 2010, when Obama first sought to inflict austerity on us, the rate of inflation was 2.3 percent and the unemployment rate was 9.6 percent.  The economic illiteracy of his austerity horrified even neoclassical economists.  Fortunately, the Tea Party Republicans pushed so aggressively in the “Grand Bargain” negotiations with Obama that the tentative deal he reached with congressional Republicans collapsed.  Otherwise, Obama’s infliction of austerity would have ended the already weak recovery, plunged the Nation back into a Great Recession, and caused him and scores of congressional Democrats to lose their elections in 2012.

O’Donnell’s presentation, implicitly, makes it clear that he thinks austerity is so obviously desirable, and the budget deficits of a fully sovereign nation so obviously the gravest conceivable threat that he need provide neither logic nor evidence to support the New Democrat’s politically suicidal and economically illiterate austerity prime directive.  O’Donnell’s cheerleading for the austerity prime directive was never supported, but it has become facially indefensible over the last quarter-century.  Trump’s tax reduction scheme for the wealthiest was outrageous on multiple grounds, but O’Donnell can observe the present unemployment and inflation rates.  Unemployment is at 3.5% and the inflation rate for 2018 was 1.9% — less than the Fed’s target rate.  Inflation is the only logical bugaboo about federal budget deficits, so O’Donnell and Buttigieg’s feverish fear that federal deficits are about to cause a catastrophe is beyond bizarre.  The bond markets confirm that there is no expectation of material inflation.

The New Democrats remain transfixed by their ‘virtue’ and ‘bravery’ in losing control of all three branches of government by insisting on inflicting economically illiterate and politically suicidal austerity assaults on the voters – raising taxes and cutting vital services.  They refuse to act on the real emergencies we face such as global climate disruption based on the economically illiterate fantasy that ‘we cannot afford’ to prevent the worsening catastrophe.  The ‘New Democrats’ and their media enablers demand that we nominate candidates dedicated to enacting politically suicidal deficit hysteria policies and adopting tepid anti-environment policies that are suicidal towards the lives of our children and grandchildren.  The most remarkable aspect of this insanity, however, is that the hucksters pitch their embrace of their prime directive as defining the concept of “responsible.”  Indeed, it is so obviously ‘responsible’ that O’Donnell and Buttigieg feel neither logic nor facts are necessary to prove the virtues of austerity.  They omit the fact that austerity proponents’ warnings and promises have repeatedly proved false and outright harmful as well as politically suicidal.

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  1. timotheus

    Could it be that the New Democrats are not stupid or irrational at all but know what they are doing and happily play their role in the permanent professional wrestling spectacle as the hapless patsies who keep losing to the real tough guy? After all, they get paid handsomely in any case.

  2. Adam1

    Not only did President Carter appoint Volcker, but he also vetoed a bill to raise the national debt ceiling. Thankfully Congress, run by a very different set of Democrats at the time, over-rode his veto.

  3. Steve Ruis

    This is why I have stopped watching MSNBC, which I used to watch five nights a week. They have fallen into the NY Times trap of believing that they create the news instead of report on it.

    1. RMO

      “We’re and empire now. We create our own reality”

      At the time it seemed like the hare-brained ravings of a right wing lackwit… but, whether deliberately or not those words seems to have been taken as holy writ by most of the American political and media establishment in the years since.

  4. NotTimothyGeithner

    “Austerity” is basically the only policy Team Blue has undertaken without outside pressure. As bad as it is, it’s the one thing they can point to over the last 25 years as something they did without mass mobilization or court cases embarrassing them into not being totally heinous.

    Then little Mayo Pete is trying to deny Team Blue their only accomplishment.

  5. shinola

    “New Democrat” = Neoliberal.

    If Buttgag et al were really concerned about deficits, how about reverting to Eisenhower era tax rates & cutting back on “defense” spending?

    Oh, wait – that would upset their real constituents – the 1% & the MIC.

    1. workingclasshero

      Eisenhower era tax rates don’t make sense anymore since federal taxes don’t necessarily fund federal fact they’re politically suicidal in this era whether we like it or not.

      1. Heraclitus

        Eisenhower era tax rates only worked at the time because there were such enormous deductions for investing in favored industries, i.e..the auto, oil and gas, and real estate industries, so few people actually paid anything remotely close to the highest marginal rates. This is also how we ended up with twenty times the per capita retail space of France.

        One year in the fifties, only eight people in the United States payed at the top marginal rate.

        1. OpenThePodBayDoorsHAL

          Really useful data points, thanks.

          With Ike you could earn a living wage with a modest manufacturing job; pay off the house over time; take a vacation from time to time; have Mom at home watching the kids; get medical care when you needed it; and even retire.

          Of course to pay for endless war and make sure a few billionaire corporate shareholders got even richer we had to change all that

      2. shinola

        “…taxes don’t necessarily fund federal spending.”

        True, but we’re supposed to pretend they do (and most people really believe they do).

        1. Kevin McCormick

          False mainly. The federal deficits are nearly equal to the interest due on the federal debt. The bulk of federal spending is from tax revenue. Since austerity is intended to favor the 1%, we might as well increase the debt and interest payments while we are at it. We can upstream even more interest income than the huge transfer payments currently being made in the name of federal debt. The seemingly logical approach to being responsible is to raise taxes on the rich and cut military spending. I say “seemingly” because the irrationality of modern society brings all conventional wisdom into question.

  6. Darius

    Black makes the valuable point that the New Democrats think a dedication to austerity demonstrates virtue and bravery. It highlights a tendency, epitomized by Obama, to see politics as a matter of aesthetics, not outcomes.

    I would say Obama’s virtue signaling over austerity lost the Democrats 1,000 legislative seats and handed the White House to Trump. Carter and Clinton also showed a tendency to emphasize aesthetics over actual politics, but it wasn’t the obsession for them that it was with Obama and his groupies.

    Buttigieg’s full throated adoption of austerity and his pedaling of dishonest Republican talking points to promote it disqualifies him for any office. I will never vote for him under any circumstances.

    1. flora

      Black makes the valuable point that the New Democrats think a dedication to austerity demonstrates virtue and bravery.

      I never understood this claim of virtue essentially based on economically kicking their core voters and Main Street only in order to prop up the GOP and Wall St. I’ve come to the only conclusion remaining to me, the New Dems enjoy hurting the poor, the struggling, the unemployed, the middle classes, and Main Street. They enjoy causing pain. Pretty outrageous idea, I know. But after watching them for over 20 years, I’m left thinking they really really like hurting people, especially their own core voters (because where else can those voters go). Some virtue.

      1. flora

        adding: It doesn’t take much bravery to kick the economically powerless. The GOP has been doing that for years.

  7. Joe Well

    Reading between the lines: many people think that government spending only helps “those” people (the poor/the politically connected businesses/the bureaucrats/the old/the young/the non-innovative). You yourself are always a virtuous wealth creator, because of course you are.

    Even many former government employees now living on a government pension believe this.

    And when austerity comes for something important to you, it is a mistake, not something that makes you question austerity, since of course you are not one of “those” people.

    It’s prejudice/arrogance all the way down, and extremely hard to argue with since it goes against people’s self-image in many ways.

  8. Procopius

    MSNBC and the New Democrats claim they share the same prime directive – Democratic Party electoral victories are the only imperative.

    This is exactly the justification Al From gave for the program of the Democratic Leadership Council (see The NEW Democrats and the Return to Power). All those who joined shared the same goal. They took control of the party in 1992, and still control it. That’s why I think Trump is going to be re-elected.

    1. anon y'mouse

      they are quite OK with that.

      if you are going to play the White Hats, you need the bad guys to wear their outfits openly too.

      many of the events of these past years, Trump has been playing the villain they have desired him to play. with relish, in some cases but playing along to their lead.

      allowing for an endless distraction on style matters, while they avoid helpful legislation like M4ALL and help pass the latest inflated MIC budget, and wring their hands over the other political footballs that they always wring them over.

      point and cry, Dems. the Walrus and the Carpenter. your guess which is which.

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