The Conservative Keynes? - Benzinga's Exclusive Interview with Bruce Bartlett

Bruce Bartlett is a widely read columnist for The Fiscal Times. He spent years in economic policy circles working under conservative politicians, including in the United States Treasury Department. Over the past few years, he has authored several books on “the failure of Reaganomics,” the betrayal of the Reagan legacy by former President George W. Bush and more. Before writing for The Fiscal Times, he wrote for a variety of publications, including Forbes.

Bruce spent some time talking with Benzinga’s Alex Schiff about the “conservative Keynes,” the Tea Party and Donovan McNabb. Below is an abridged transcript of their conversation.

This interview is also available as an episode of the Benzinga Podcast.

Hello and welcome to the Benzinga Podcast. Today we have on Bruce Bartlett, a noted author, columnist and economic policy advisor under a number of congressmen and presidents. How ya doing today Bruce?

Just fine.

Great, glad to hear it. Let’s get right into the questions. You started your adult life as a historian, but then made the jump to economics. Could you tell our listeners how and why you made the switch?

Well it was really very simple, I was sitting in class one day at Georgetown in the mid 70’s and is suddenly had the revelation that there was no future in academia. I just decided that the chances of my getting a tenured track position at a university were just about non existent. I was actually half way through a class and just walked out and took refunds on all my courses. At the time I was working on Capitol Hill for Congressman Ron Paul and I decided to make my career working in that field. How did you get started working for Congressman Paul. Well, I was looking for a job and one day I saw a small story in the Washington Post saying that there had been a special election down in Texas and how his opponent had accused him of being to the right of Barry Goldwater. I sent him in a letter and a few things I had written. A few weeks later he called me in for an interview and I went to work for him in 1976.

Despite conservative, supply-sider roots, you’ve become well-known for your outspoken criticism of this school of thought, going as far to publish a book on “The Failure of Reaganomics.” Could you tell us what that means and what catalyzed your shift in thought?

I still think that everything we did back in the 70’s and 80’s were the right choices given the economic problems of that time. I just think that we have different problems today and I don’t really understand the mentality of people that think we should just keep doing the same identical things regardless of the circumstances. I think you have to study the circumstances and come up with policies that are appropriate for those circumstances. In the 70’s and 80’s our problems were largely due to inflation, and today our problems are largely due to deflation. It’s really just a matter of analysis.

You once wrote that, “Keynes was really a conservative.” Could you explain that to our listeners?

What I was trying to say that in contrast to the view of Keynes which many silly people have of him being some sort of Socialist, he was very much opposed to socialism and his policies were developed for the purpose of saving Capitalism from Socialism. We forget that in the 1930’s the threat was from the left, you had the Communists in control of Russia and National Socialists in control of Germany and elsewhere. Keynes was very much afraid of those movements and felt that as long as capitalist countries had very high unemployment that voters would be sympathetic to those far left Socialist movements. He felt that it was essential to get out of those problems, and he devised a system of polices to deal with them that were compatible with the Capitalist system. I believe that he was very much a friend of Capitalism and he did in fact save it.

Some of the most interesting articles of yours that I’ve read have been about tax policy, including the oft-maligned value-added tax and more recently the use of tax expenditures. Given the state of the national debt, how can we reform our tax system to ensure both growth and fiscal sustainability?

There are lots of ways to reform the tax system to improve growth, but that’s really a secondary problem. The primary problem is raising enough revenue to pay for the costs of government. I’d be perfectly happy to cut spending, but the question is, how do you get the votes? You’ve got to find a package of policies that you can get a majority of votes in the House and at least sixty votes in the Senate. I just don’t think that it's realistic that we can have a package that slashes government spending while not raising a single penny. That’s grossly unrealistic. And so I believe that eventually the markets are going to force congress to act on the deficit problem and when that day comes, higher taxes will inevitability be a part of that package as they have been in every budget deal that we have ever had in this country.  

How do you think the rise of anti-tax groups like the Tea Party and the dogmatic no-tax position of the Republican Party affects our ability to implement tax reform?

It makes it very, very hard. I’m afraid that what we have at the moment is political paralysis. That means that our fiscal problems are simply going to the point that they have meaningful economic effects on the country. And we will probably get back to a stagflation situation such as we had in the 1970’s where we have high inflation and high interest rates at which point people will become desperate to cut deficit and political support will finally be there to do thing that I think are politically impossible today.  

Has the modern Republican Party reached ideological bankruptcy?

I would agree that they are intellectually bankrupt. I’m not so sure how ideological they really are. I think they are simply pandering to any group in society that has disagreement with the government or the administration about anything. And what they have carefully done is stoke those disagreements without offering any alternatives because they know that if they put any kind of alternative on the table then people could evaluate the two options and they might very well decide that the republican option is stupid. So, they just say nothing other than Obama is wrong, Obama is a socialist, and he’s destroying the country so elect us. That’s the sum total of their program, and the Tea Party people are in the same mindset.  

What does that mean for our two-party system?

Historically the two parties have been divided in that one is the evil party and one is the stupid party and it changes back and forth from time to time. The real problem is that we need some political reform in the Senate. I just think it’s irresponsible for the Republicans to just filibuster every single thing no matter how trivial because it’s just going to come back and bite them on the ass unless they think that there is never going to be another Republican president and when that day comes they will have more than sixty votes in the Senate. They are eventually going to suffer from the exact same policies they are perusing themselves and I think that that’s a very pennywise tom foolish attitude. I have no problem with filibustering things from time to time but this idea that everything needs sixty votes in the senate is ridiculous. That’s the problem that we have today that is unique in our history. Filibuster has never, ever been used so trivially. It has always been reserved for issues of special importance.  

Now that we’ve got all the hard questions out of the way, we’ve got some fun ones. What was your first, and what was your worst job?

My first real job was the one I mentioned earlier working for Ron Paul. My first paying job was working as a clerk in a supermarket back in the 1960’s. I remember I got a pay raise the day they raised the minimum wage and I was paid $1.60 an hour. My best job was being staff director for the joint economic committee. It was a great job because my boss was a really nice guy. He trusted me and would pretty much do whatever I asked him to do. If I thought it was a good idea to have a hearing on some subject he would say tell me what room it is and when to show up. I could pretty much do what I wanted to. It was fun and would have done that job for the rest of my life but unfortunately my boss was defeated.  

What do you enjoy doing outside of economics?

I don’t really have that much of a life. I just sit in front of my computer all day trolling for information. I do live out in a nice area just outside of the City of Washington and I’ve got some interesting neighbors. Donovan McNabb just moved in a couple of doors down from me. I don’t know, I enjoy my big screen TV.  

What is your favorite restaurant you’ve ever been to?

Well, I can’t really say. I do like a good steak. Morton’s is a place I go to fairly often. I usually end up there if I’m going out for some reason.

And now for our final trademark question: If you could offer Benzinga one piece of advice to help grow its business and be successful, what would it be?

Well clearly the internet is the future and I think that more and more of our lives and the research and analysis and commentary is going to be exclusively web based and I just think that you need to get rid of as much of the old media mentality you have as possible. This is one of the things we talk about in the publication I write for, the Fiscal Times, trying to position ourselves for the future in terms of providing faster, better quality, more up to date information for the people who read us.

Thanks Bruce.