Caution: Obama Speech Parsing In Progress - UPDATED

I hope you have your shovels close by and in good condition, because Obama gave a speech today, in which he promised to "put[] every kind of spending on the table." His thumbnail history of the Eighties and Nineties is not too bad:

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But as far back as the 1980s, America started amassing debt at more alarming levels, and our leaders began to realize that a larger challenge was on the horizon. They knew that eventually, the Baby Boom generation would retire, which meant a much bigger portion of our citizens would be relying on programs like Medicare, Social Security, and possibly Medicaid. Like parents with young children who know they have to start saving for the college years, America had to start borrowing less and saving more to prepare for the retirement of an entire generation.

To meet this challenge, our leaders came together three times during the 1990s to reduce our nation's deficit. They forged historic agreements that required tough decisions made by the first President Bush and President Clinton; by Democratic Congresses and a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice, but they largely protected the middle class, our commitments to seniors, and key investments in our future.

As a result of these bipartisan efforts, America's finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt-free, and we were prepared for the retirement of the Baby Boomers.

But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program - but we didn't pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts - tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

To give you an idea of how much damage this caused to our national checkbook, consider this: in the last decade, if we had simply found a way to pay for the tax cuts and the prescription drug benefit, our deficit would currently be at low historical levels in the coming years.

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Or, if we had simply omitted the Bush tax cuts for the very wealthy... or even if we allowed them to expire now... there wouldn't be even the appearance of a problem. Probably it would have helped not to allow Big Pharma to extend patent rights on drugs to obscenely long time periods, but our government belongs to them, not to us, so that's probably too much to expect.

The problem is of course the metaphor, "our national checkbook." The bank balance behind that checkbook is unlike any bank account an individual has ever experienced: the government can adjust its contents according to economic circumstances. The metaphor is simply wrong for the national budget: it doesn't work that way. But with Obama and every Republan talking about "our national checkbook," the concept has settled into everyone's brain. It's dishonest as hell, but there it is: people believe our government has a fixed amount of money.

There's more bullshit in the pile: Republans have consistently not only not helped bring our national budget into balance, they have done everything possible to give their wealthy "clients" obscene amounts of federal money (often in the form of "temporary" tax breaks that aren't temporary), and then claim the government is too broke to meet its obligations to mere ordinary citizens. Many of America's problems are bipartisan in origin: this one isn't. Republans alone are to blame. Obama is wrong to suggest any kind of "compromise" with (i.e., giveaway to) Republans.

So that's how our fiscal challenge was created. This is how we got here. And now that our economic recovery is gaining strength, Democrats and Republicans must come together and restore the fiscal responsibility that served us so well in the 1990s. We have to live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt. And we have to do it in a way that protects the recovery, and protects the investments we need to grow, create jobs, and win the future.

 Ah, now we begin in earnest. Excuse me a moment...

BULLSHIT! BULLSHIT! BULLSHIT!

Sorry, but somebody has to say it, and if it isn't shouted, it won't be heard over the chatter. In an economy that is, at best, fragile (and arguably is not headed for recovery at all yet), the last thing our government needs to do is to "live within our means, reduce our deficit, and get back on a path that will allow us to pay down our debt." That way lies catastrophe of the sort Herbert Hoover pursued, until the nation replaced him with FDR. Indeed, even FDR didn't "get it" for a while. This turns out to be as simple as one can imagine: the government must be the employer and customer of last resort. When no one else is hiring, and no one else is buying, the government must hire and buy. When no citizen can afford medical care, the government must provide it.

Once the economy is up and running again, then private enterprise can pick up the thread, but let's face it: the major employers of the Noughties and Tennies just aren't doing the job right now. It is a fundamental flaw in capitalism ("what! that filthy commie! he said capitalism has a flaw!") that it has intrinsic feedback mechanisms that drive the economy in the wrong direction when things are at their worst, when people are out of work, losing their homes, living on the streets, losing resources such as public education for their kids, etc. etc. There is simply no choice: in these circumstances... and I mean right now, in case you haven't figured that out... government simply must step in. Old right-wing slogans notwithstanding, your government really should be there, and they really are there to help.

UPDATE: Krugman basically likes what he hears... but as an endpoint, not a starting point.