Fox News host Stuart Varney has lashed out at University of Texas economist James Galbraith for teaching his students "naked Keynesianism" -- to Galbraith's great delight.
Galbraith earned Varney's ire by giving an interview to Ezra Klein of the Washington Post in which he said that the danger posed by the long-term deficit "is zero."
Like other devotees of early 20th-century British economist John Maynard Keynes -- whose warning that capital markets can be unstable has recently burnished his already sterling reputation -- Galbraith recognizes the value of accelerated government spending in stimulating an economy in a downturn.
And at a moment when worrying about the deficit is the obsession of many Washington movers and shakers, Galbraith has been one of the most outspoken advocates of worrying about jobs and infrastructure and climate change instead. He even makes the argument that deficit reduction right now would destroy the economy -- and that the government should intentionally run a long-term deficit because that puts money in people's pockets and promotes growth.
But saying deficits don't matter (ironically, a phrase most identified with former vice president Dick Cheney) was enough to send the folks on "Fox and Friends" through the roof on Friday. They also -- surprise -- misrepresented Galbraith's position as applying to all debts, public or private. Here's Varney:
This is Mr. Galbraith, the son of JK Galbraith, a great economist. This is the man who holds the Lloyd M. Bentsen chair in government and business relations at the University of Texas in Austin and he says, debt has no consequences. Debt doesn't matter. Think of the morality of this. Forget the economics for a second. What about the morality? You're teaching youngsters that debt doesn't matter? That the government can just print money and pay off our debt that way?....
Mr. Galbraith goes on to say, to fix the unemployment problem, don't have any Social Security tax for the poor. No taxes of any kind for the poor. just encourage the rich to recycle their wealth through the government.
Government, government, government, government. That's when you're teaching the kids. Forget about the prosperity of America that comes from private enterprise.....
He's teaching them naked Keynsianism, that's what he's teaching them.
Galbraith is amused by the whole thing. "I loved being called a naked Keynesian -- particularly in that delicious leering tone," he told the Huffington Post in an email. "And I think the Fox segment may have burnished my image, a bit, with my undergraduates."
If Varney was hoping to cow Galbraith, it's not working. "Mr. Varney's expose managed to provoke a grand total of four outraged emails from around the state," Galbraith wrote. "Of those, two became quite cordial exchanges after a short bit. So the Republic of Texas doesn't seem about to rise up and throw me out."
For a somewhat more subtle attack on Galbraith, read Len Burman of the Tax Policy Institute -- and Galbraith's response.
WATCH THE VARNEY VIDEO (courtesy of Media Matters):