Posts Tagged ‘Deficit Politics’

America in the Red

Monday, May 3rd, 2010

Last week, I labeled this article a “Must-Read” — saying it provided “a coherent and reality-based conservative look at America’s structural deficit.”

As commentor John Rose points out, the piece has some glaring flaws. For one, there is only one mention either agricultural subsidies or the defense budget:

Every program should be on the table, including those as politically sensitive as agricultural subsidies, Social Security, and defense.

Throughout the rest of the piece, Marron focuses on total spending and specifically Social Security, Medicare, and Medicaid. No look at this topic can be complete without discussing the defense budget. But Marron makes the best contribution from the right to this national conversation dominated by Peter Orszag on the one side, the marginalized far left claiming any talk of the deficit is a cover to screw the working class for Obama’s corporate agenda on another, and the populist right not really participating as they seem to believe that this all can be fixed by cutting waste while leaving Social Security, Medicare, and the defense budget alone.

Of course, the most important thing to me personally, so that I can use it as a sledge against  is that Donald B. Marron — from a conservative (rather than populist right wing) perspective — confirms the essentials of the story I told in my series on “real fiscal responsibility” and each part. (Parts 1, 2, 3, and follow-up.)

Marron for example directly contradicts one of the avowed sources of hysteria on the right — Obama’s short term deficit — saying:

Running deficits can certainly be appropriate — and even beneficial — at times of particular stress, such as wars and recessions. But in the long run, persistent large deficits and growing debts undermine our nation’s prosperity.

Marron points out that the problems with Social Security can be fixed with some common-sense reasonable measures — but that Medicare and Medicaid — because of growing health care costs — are spiraling out of control:

While Social Security provides benefits in cash, Medicare and Medicaid pay for a service — the cost of which is not wholly within the government’s control and is also growing at an explosive rate. Despite some rhetoric about solving the problem once and for all, the reality is that no one really knows what to do to rein in federal health spending. There are lots of ideas — strengthening consumer incentives, changing provider incentives, investing in prevention, squeezing doctors and hospitals, or moving to a single-payer system — but no one can be sure how much any of these measures would actually “bend the cost curve” over the long run. Policymakers should therefore approach health spending as a research-and-development challenge, not as a one-time matter of setting specific policy dials. Experimentation, learning, and reform will be essential as we pursue policies to reduce the growth of health-care costs. Budget-setters can take some immediate steps to reduce the growth of health spending (e.g., by limiting Medicare payment rates), but this is a dilemma that will require ongoing attention.

The populist right lives in a world in which “Other Spending” is what is out of control.

Marron makes the best conservative case against the Obama administration’s relative fiscal responsibility that can be made:

Finally, our leaders should obey the first law of holes: When you are in one, stop digging. Unfortunately, the current climate in Washington encourages the exact opposite: Dig as fast as you can while there’s still time.

That impulse is evident in many recent policy initiatives. Lobbyists are already arguing that various temporary provisions in the 2009 stimulus bill should be made permanent. While the congressional committees with oversight of education spending have found a way to eliminate $80 billion from the federal student-loan program, they plan to use most of it to expand other spending, rather than to reduce the deficit. The committees in charge of energy and environmental policy are considering proposals that would create almost $1 trillion worth of carbon allowances over the next ten years — only to give away or spend 99% of that money. And then there is the Democrats’ health-care initiative, which would make a series of cuts to the budget only to use the savings to expand the federal government’s role in financing health care.

Marron gives no credit to the actual worth of the policies being pursued — cap-and-trade addressing the issue of global warming for example. Marron instead looks at each policy solely based on how it affects the budget.

And on health care, he is curiously silent. He makes it clear that this is the crux of the problem — but doesn’t evaluate or discuss the deficit reduction matters within the health care law recently passed — the many pilot projects meant to test different ways to bring down costs. You get the impression that he would oppose all non-stimulus spending the Obama administration has proposed — even if it reduced the deficit.

Ezra Klein though had a good rejoinder:

[T]he Center for Budget and Policy Priority’s Bob Greenstein made a nice point on this: The choice, he said, isn’t between solving the problem before the crisis hits and waiting for a crisis. Solving the problem requires doing more than the political system is able to do outside a crisis atmosphere. But making a start on the problem isn’t. And if you can make enough of a start, you can delay the crisis and/or mitigate its eventual severity. The problem is that people tend to dismiss doing a bit because it means we won’t do enough. But if we attempt to do too much, Greenstein said, we run a large risk of doing nothing at all, and that will be much worse.

But by providing a reality-based description of the structural deficit from a conservative perspective, Marron has made an important contribution to our political conversation and where it needs to go.

Senator Lindsey Graham: Fiscal Chickenhawk

Tuesday, March 30th, 2010

[digg-reddit-me]

As I wrote earlier, Republicans are clearly rooting for a fiscal catastrophe. How else would a plan like Rep. Paul Ryan’s which increases taxes on 90% of Americans, cuts services for most Americans (while excluding the elderly and military, who happen to be 2 of the main Republican interests groups and beneficiaries of the status quo), and cuts taxes on the richest (who happen to be the 3rd main Republican interest group) have a chance of getting through?

It’s not clear the Graham himself – or any particular Republican – buys into this plan. But it is the clear result of the Republican strategy.

What is clear is that Graham – for all his talk of fiscal responsibility – proposes amending Obama’s health care plan to take out every revenue-generator, leaving a massive hole in the deficit.

Real Fiscal Responsibility & Deficit Politics: Republicans

Wednesday, December 9th, 2009

[digg-reddit-me]See Part 1: An Introduction here. Parts 3 and 4 discussing the Democratic approach and then lessons from this moment of “welfare scleroris/imperial overstretch” coming tomorrow and Friday.

Republicans have called themselves, and are once again trying to position themselves, as the party of fiscal responsibility. This is the pendulum swing of deficit politics in its second repetition – as Republicans run up massive deficits during their time in power and then attempt to pass off the blame for raising taxes or cutting programs onto the Democrats who succeed them in office.

The political challenge the Republicans face is intriguing. Their ideology holds the solution to the deficit is to shrink the size of the government. Yet the Republican base consists of corporate America, the military, and the elderly – the largest beneficiaries of current government spending. Given this, it’s not surprising that while in power Republicans have expanded rather than shrinking government. Bush expanded Medicare further than anyone since LBJ created it all while cutting taxes and engaging in two wars and allowing Congress to engorge itself with discretionary spending increases never before allowed. Bush was not an isolated example. Like his apparent role model, Ronald Reagan, he saw deficit spending as a way to win politically in the short term as you gave everyone what they wanted – and protected those interest groups who supported you – while in the long term the incredible irresponsibility would force government to shrink, and perhaps even discredit the idea of a competent or sustainable government program. In other words, deficits were the way to “starve the beast.”

Republicans did not jettison this approach along with Bush when they began to repudiate his legacy. John McCain – for all his talk of fiscal rectitude – offered more of the same in his campaign agenda. He proposed dramatic tax cuts without commensurate spending cuts (while masking this by proposing the elimination of pork barrel spending which represents a minuscule portion of the federal budget.) As an alternative to the stimulus, McCain and the Republicans attempted the same trick – attacking the plan for adding to the deficit with spending while proposing a plan that would add even more to the deficit through tax cuts (which the Congressional Budget Office determined was a less effective way to stimulate the economy.) For Republicans, increasing the deficit by cutting taxes is “fiscally responsible” – while increasing the deficit with spending is “generational theft.”

What’s tricky is how Republicans position themselves with regards to the looming fiscal crisis. The business conservatives who make up an influential portion of the Republican base tend to propose pragmatic but politically impossible solutions like cutting spending to the other core Republican constituencies – the elderly and the military, and sometimes, even the tax and other subsidies to big corporations. The other groups seem primarily concerned with ensuring that their own government dollars continuing to grow. The past two times a liberal has taken office following several terms of extreme fiscal irresponsibility by a Republican though, a semi-independent movement has sprung up, thus changing the political dynamics in the Republican party. This movement of citizens concerned about the size of government, of government debt, and especially of liberals being in charge of this government (which suddenly seems more intrusive now that it is in the control of those they don’t sympathize with) was incarnated in Ross Perot’s two presidential campaigns, the 1994 Republican Revolution, and today, the Tea Parties. In each instance, this movement has coalesced around an inchoate frustration with the way things are coupled with the remarkably fixed position of opposing everything the Democrats do, opposing tax increases, and supporting the reduction of the deficit. Though this logically must lead to cutting government programs, which programs will be cut always remains vague which works well enough until a Republican gets in power.

To balance and rally these constituencies while out of power – the anti-tax fiscal hawks, the elderly relying on government programs, the military reliant on government spending, and the corporations who profit from government favors – Republicans have adopted a framework whereby they condemn any new spending as “generational theft” while protecting the status quo. Within this framework, Republicans claim their protection of the status quo which is screwing over my generation is actually about protecting my generation. This language also comforts the elderly who don’t wish to see any reduction in their benefits. Under the Republican approach, the only elderly who will see a reduction in benefits under the Republican plan are the eventual elderly of the younger generations – as the government programs they are now paying for cease.

The challenge Obama has given to the Republicans though is to propose a solution to the looming fiscal crisis through health care reform. Republicans have responded by claiming that the plans will add to the deficit (contrary to the Congressional Budget Office) while at the same time they have been attacking any measures in the plan which might actually cut costs. For example, Senator Coburn has said, “If you’re a senior and you’re on Medicare, you better be afraid of this bill” – which is a difficult position to maintain while at the same time holding that any deficit spending today is “generational theft.” But it is of course, the only political answer they have.

The Republicans – for short term political expediency – are creating an interesting political dynamic (and an impossible situation for the country.) They are telling the elderly that any spending that adds to the deficit is stealing from their grandchildren and children – while telling them to be afraid of any cuts to the programs they like. Meanwhile, as they filibuster any attempts to alleviate the situation, they inculcate the belief among the younger generation that the government cannot do anything right – pointing to the approaching fiscal disaster as proof. The hope must be that if they are correct that this disaster cannot be averted, their obstruction of any attempt to avoid it will be forgiven, especially if the disaster itself discredits the government, thus bringing the younger generation ideologically closer to the Republican position.

Thus is the logic of deficit politics and starve-the-beast governance.

Funding Health Care Through A Millionaires’ Tax or One on “Cadillac Plans” – Why Not Both?

Monday, September 21st, 2009

The Politico has a piece about how the Democrats are “squabbling” over how to pay for health care reform. The article by Patrick O’Connor and Carrie Budoff Brown considers the two main revenue increases that have been proposed: the Baucus plan attempts to get funding from within the system by taxing “Cadillac” plans; and the House plans levy a “millionaire’s tax” on those making over a million dollars a year.

But given our fiscal situation – and the extent to which it is being driven by Medicare’s rising costs – and given the political landmine that is looming in our coming deficit crisis – why not include both? Take whichever measure is less popular, and use that to shore up the very popular Medicare program. And use the more popular measure to do the essential but less politically rewarding task of helping the uninsured.

What’s the downside of that? Let the Republicans oppose a revenue raising measure as busting the deficit!

The downside of course is that by increasing revenue and making our current level of government more sustainable, the Republicans and other right wingers will switch their criticism to focus on the fact that by running government well and responsibly, we are making more government possible. It’s rather incredible how the “starve the beast” strategy has become so essential to the Republican party’s political success since Ronald Reagan.

[Image not subject to copyright.]

These Protests Aren’t Against Big Government, But About Liberals Running the Government

Monday, September 14th, 2009

[digg-reddit-me]Andrew Sullivan postulates that there is a “silver lining” to the “right’s apoplexy” in that it has moved the Republican Party away from its christianist social policies to a focus on economic libertarianism.

I’m far from convinced by this argument however – as my impression is that the real impetus behind the opposition to Obama isn’t economic as much as cultural. Concern about the size of government and the deficits don’t seem to be strongly related to either the size of government or deficits, but about who is in power. Ronald Reagan ballooned the size of the deficit and enlarged the size of government, yet is beloved by those who now (and in 1992) claimed to be very concerned about the role of government and deficits. George W. Bush had strong support from the right during his term, and I don’t recall any Tea Party Protests during his watch – yet he presided over ridiculous deficits and an expansion of the government in every direction, from national security matters to health care (Medicare Part D) to the financial and automotive sectors to the tens of thousands of small pork projects.

Yet suddenly, a liberal becomes president – a moderate, pragmatic liberal who seems genuinely focused on reducing the mid- and long-term deficits – and Tea Parties erupt to protest all the programs he’s running (which he inherited). It seems outright naive to attribute these protests to a rejuvenation of economic conservatism – especially given the “hot button” issues that arise: government-sponsored (and maybe forced!) abortion and euthanasia and illegal immigrants getting health care. I know that Sullivan isn’t this naive – he’s just looking for the silver lining. But I don’t think one is there.

The protests aren’t about the size of government or its role; they are a viceral response to the fact that a liberal now runs the government. That frustration is rooted in cultural and social issues, rather than economic ones. Which is why deficit politics only becomes powerful when Democrats are in control of the White House.

[Image by Steve Rhodes licensed under Creative Commons.]

Governor Rick Perry Lies to Voters As He Prepares for a National Race

Monday, August 24th, 2009

Emily Asfahini Smith interviewed Governor Rick Perry of Texas for the Wall Street Journal editorial board over the weekend. Governor Perry made very clear in the interview – by his positioning – that he’s planning on making a jump to the national stage. He’s probably the candidate most motivated to bring libertarians back into the Republican fold – referencing Hayek here and blaming the Republicans’ problems on not remaining true to their values – of which he says fiscal conservatism is the core:

They spent too much money. They acted like Democrats.

It’s a funny thing to say, if typical. The freest spending presidencies in recent memory have been George W. Bush and Ronald Reagan. The most fiscally responsible have been Bill Clinton, George H. W. Bush (who lost the Republican base for responsibly raising taxes), and Jimmy Carter. It’s not so much fiscal conservatism that is the heart of the Republican party as deficit politics – the game the Baby Boomers have played regarding spending and taxing.

There’s a great moment in the interview though that is so typical of the absolute asininity of the Republican positioning on health care. He “explains” the bill’s position on end of life issues as this:

You’re a little too old to be spending money on, so we’re just going to put you over here in the ‘gonna die’ category. ‘Bye.’ That’s pretty gruesome and scary to people that are my mom and dad’s age.

But his next line is about how:

To talk about health-care reform and not talk about tort reform is like whistling past the cemetery…

So, his message is: Obama’s going to put my mom and dad in the “gonna die” category – and on top of that, there’s no tort reform in the bill! Imagine the insane mental leap required for a man to go directly from one of these subjects to another. Clearly, the charges of forced euthanasia aren’t meant to be taken seriously – even by those promoting them like Governor Perry. Of course, this isn’t news. But it’s worth calling out by name each lie I come across, so when it is time for voters to evaluate them again, they remember the many lies they were told.

[Image by Bonzo McGrue licensed under Creative Commons.]

Ezra Klein’s Mood Swings

Wednesday, August 12th, 2009

[digg-reddit-me]Ezra Klein has been far and away the most insightful blogger so far during this health care battle – snagging interviews with key Senators, from Lindsey Graham to Johnny Isakson, and even more importantly wrestling with the issues and politics in the frank manner that, of all mediums, only blogging allows (and perhaps talk radio.)

Through this August, Klein seems to be oscillating between two conflicting positions. This Monday, for example, Klein wrote that:

We have an unfortunate tendency to think of policy reform as episodic rather than continual. The process of reform is sold as a legislative Big Bang rather than an ongoing effort with lots of different policies all building on one another.

As reform is continual, he concludes that:

[T]he relevant question is not just whether they are an improvement on the status quo – they unquestionably are – but how they contribute to the next set of reforms. Health-care reform doesn’t end if we pass a bill in 2009. It begins.

I consider this a fairly optimistic take. We may not get everything we want done, but reform is a continual process and the bills under consideration “unquestionably are” an “improvement on the status quo.”

By Tuesday, he had a different take, saying, “It Is Democracy, Not Health-Care Reform, That Is Sick.”

Members of Congress are terrified of voter backlash and industry opposition. They are leaving virtually the entire health-care system untouched. They will scuttle the bill if a rural hospital in their district doesn’t receive sufficient reimbursement or if a local device manufacturer is harmed. Yet there is a certain portion of the country that believes that Max Baucus and Mike Ross are willing to vote for death panels and defend them before their constituents in the following election…

In a healthy relationship, such madness is simply unthinkable… Similarly, the relationship between the protesters and the government is not healthy. The protesters believe the government capable of madness.1

But Klein’s swings aren’t without cause. Anyone following this issue closely can see each modest attempt at progress is quickly submerged by an inundation of non-coherent nonsense. Klein is right when he says that whether or not our democracy can act quickly to deal with the long-term and long-put-off issues of health care reform and climate change is a test of whether our political system is still relevant. But he should remember that our system has had some successes relatively recently – with Ronald Reagan and Tip O’Neil coming together to shore up Social Security and with Bill Clinton and the Contract With America crowd coming together on welfare reform. These attempts were successful because they steered clear of the Charybdis of deficit politics.

The challenge for progressives, for liberals, for those fighting to keep our political system relevant and to avoid the leeching of power by technocratic and not quite accountable institutions is to break this deficit politics that not only is preventing us from tackling these serious issues but that is also keeping us from reducing the deficit. On the positive side, there are reasons to hope that the tide is turning – at least regarding health care reform.

[Image adapted from this image by myglesias licensed under Creative Commons.  The same license applies to this adapted image.]

  1. He express regret about this specific formulation later on Tuesday. []

The Bankruptcy of Deficit Politics

Wednesday, August 12th, 2009

[digg-reddit-me]Ezra Klein had a revealing interview with Senator Lindsey Graham over the weekend. Read the whole thing. Graham gives Obama some clear advice on how to get health care reform done: Make Republicans and Democrats fear opposing you:

There’s two ways to fix a hard problem in Washington. You make people afraid of opposing you or you get them rewarded for helping you. There’s no fear for opposing Obama’s public option, and the reward is for opposing it. Right now, Republicans feel no political exposure from opposing the president’s health-care initiative.

That’s a pretty good analysis of what’s going on – though I’m surprised Graham is the one giving it. I think this would qualify as a gaffe if it were a bit punchier – if Graham had expressed this idea in one or two sentences instead of three.

But this wasn’t what I saw as the most interesting moment. That came when Klein asked Graham point-blank about “deficit politics”:

If the deficit politics are so powerful, where do you specifically see an opportunity for cost savings? Where can the curve be bent?

Graham dodged the question – as the astute politician he is rather than the honest truth-teller he holds himself out to be. And that’s exactly the problem with “deficit politics.” People may be angry about the deficit – but they don’t want any government services cut. They have been raised with the expectation that they can shift the burden to a future generation – namely, my generation. Republicans have been extremely astute at harnessing this anger at the deficit, though extraordinarily ineffective at actually doing anything about it.

“Deficit politics” is only about fear – and has no positive agenda. As conservative David Frum explains what the “success” of deficit politics will look like:

We’ll have entrenched and perpetuated some of the most irrational features of a hugely costly and under-performing system, at the expense of entrepreneurs and risk-takers, exactly the people the Republican party exists to champion.

It’s a mistake to see it as about “fiscal responsibility. What “deficit politics” is about a general suspicion of government, a sense the country is on the wrong track, and a sense that America’s position in the world is eroding due to government encroachment, especially on economic matters. What “deficit politics” is about is a kind of uniquely Baby Boomer sentiment – that we must cut the size of government, except for the military and those programs which “I” am using. It’s not a new sentiment – gaining serious credibility as a standalone dynamic motivating people at least as early as Ross Perot’s 1992 campaign. Before then, it had generally been incorporated into Republican politics – but as Ronald Reagan railed against big government while ballooning the size of government and deficits – and as George H. W. Bush tried to be fiscally responsible and raise taxes to reduce the deficit, and was pilloried for it – those motivated by “deficit politics” grew disappointed with the Republican party. As Bill Clinton reigned in deficit spending, he defused the explosive “deficit politics” but got little credit from those motivated by the issue. When George W. Bush exploded the deficit, he got little blame from this same crowd.

But now that Obama is running a short-term deficit to keep the macroeconomic demand high during this downturn, “deficit politics” is back with force. Obama has sought to defuse this issue by approaching his opponents as if they are acting on a good faith concern about fiscal responsibility by constantly talking about the importance of the long-term deficit, by taking strong measures to reign in the long-term deficit, and by making sure all of his new programs which seek to reign in the deficit in the long-term are deficit neutral over the mid-term. But the problem is – “deficit politics” isn’t about fiscal responsibility – but a far more nebulous and near-impossible combination of goals.

What is happening is that the right policy on the deficit is being distorted by deficit politics; it takes an odd, risk-averse sort of leadership style to realize how to play this game. Clinton was a master of it. But the selectiveness of the targets of this anger coupled with its explosiveness when it finally finds a target make any movement motivated by “deficit politics” impotent. Our political system rewards those movements that apply steady and generally predictable pressure, have clear goals, and that offer commensurate rewards for their supporters. The NRA, the NRLC, labor unions for example. Deficit politics though offers none of these.

Which is why it will fail to accomplish anything, except perhaps block any changes needed to deal with our festering, long-term problems – in which case these problems will get progressively worse.

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