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Fareed Zakaria To Obama: Think Big.

ABC's "This Week" just had a terrific roundtable about Obama's legislative ambition.

For the last few weeks, most of the A-list pundits have been arguing that Obama needs to jettison some of his grandiose plans, given the high budget deficits he will inherit and dangers of overreaching politically. Fareed Zakaria argued against this, strongly, and made two crucial points.

One was about the analogy to 1993, when high deficits compelled Bill Clinton to ditch his spending plans. But, as Zakaria noted, Clinton did that in part to bring down interest rates, which were bound to get in the way of a recovery. (This was Robert Rubin's essential argument: Bring down the deficit and the Fed will cooperate with lower interest rates, thereby boosting the economy.) Today interest rates are already low. The same rationale simply doesn't exist. Besides, when interest rates are low, borrowing is cheap. In that sense, this is an ideal time to run deficits, assuming they are temporary. 

Zakaria's other argument was about the international economy. One reason you worry about deficits is the loss of confidence it might generate abroad. If foreigners lose faith in the federal government's ability to pay its bills, they could dump their dollars and switch to other currencies. But, as Zakaria pointed out, the rest of the world facing the same economic plight we are; they're all going to be running high deficits in the short- to medium-term. A run on the dollar seems extremely unlikely.

Smart economists have been making this argument for a while now, but it's taken a while for non-economists to pick it up. Maybe Zakaria can help change that. He has a lot of intellectual credibility--and rightly so. If he thinks Obama should push ahead with his legislative ambitions, deficits be damned, maybe the idea will stop seeming so controversial.

--Jonathan Cohn