Bloomberg View columnist Josh Barro declares it "unfortunate" that most Reason staffers plan on voting for Libertarian Party presidential nominee Gary Johnson, as revealed in our quadrennial vote-disclosure exercise (an exercise, I might add, that Bloomberg View has declined to emulate). Why is the pro-GaJo sentiment unfortunate?
[B]ecause Johnson has nutty economic policy views and would do tremendous damage to the global economy were he to somehow become president.
Johnson advocates severe near-term fiscal and monetary policy austerity. When we talked at (or rather, outside of) the Republican National Convention, he told me he would cut Medicare spending by 43 percent in the short term. He repeatedly insists that "we are in the midst of a monetary collapse" and says he favors returning the United States to a (deflationary) metallic currency standard. He says he would have opposed TARP and allowed systemically important banks to fail.
In other words, if Johnson had been president in 2008, he would have allowed the U.S. financial system to collapse and the country to fall into depression. And if he became president now, he would do his best to strangle the tepid recovery we are enjoying and turn it into another severe recession.
As I said two years ago when Andrew Sullivan made a very similar argument about the madness of TARP-opposing libertarians (who "drive us nuts with their utter disengagement with…political reality"), just about every worst-case, no-TARP scenario floated by then-President George W. Bush when he first tried to frighten Americans into line has actually come to pass. Similarly (and as predicted by many cuckoo-bananas libertarians), just about every worst-case, no-stimulus scenario floated by the Obama administration has, too, come to pass. The economy (or in Barro's memorable phrasing, "the tepid recovery we are enjoying") has relentlessly underperformed the projections made by economic interventionists for four years running.
Against that backdrop of failure, the only way to get behind the bailouts is to assert that without them "the U.S. financial system" would "collapse" and the country would "fall into depression." Like all good unknowables, this is both eternally useful and heavily contested (see David Stockman for one of the more detailed cases against). What makes Barro's deployment of the "collapse" hypothesis particularly fun here is that it comes in the service of busting Gary Johnson for hyperbole in talking monetary collapse.
I for one am allergic to hyperbole in both directions, though it's always more irritating when wielded in the service of power. In any event, the underlying question going forward hinges on whether you think cutting federal spending by 43 percent in one year (balancing the budget, in other words) would lead to "another severe recession" and be worse than the fiscal cliff currently scheduled for Jan. 1.
I am in the camp that believes cutting government spending has a positive, not negative, impact on the economy, as was the case in post-war America, 1980s New Zealand, and 1990s Canada. And that if we don't change the trajectory of government expenditure, particularly with trillions in entitlement and pension promises coming due, there won't be much room left over for other federal services, let alone a robust private economy.
Is that "nutty"? Probably. But enough about me–Josh Barro, show us your vote!