From Ezra Klein, the Wash Post’s outstanding policy wonk:
“If you’re a deficit hawk, today’s Wonkbook won’t be easy reading for you. We lead with the tax vote, of course. The $858 billion package does more damage to the deficit than anything other piece of legislation passed during the Obama presidency. It’s also expected to receive the largest bipartisan majority of any major piece of legislation the Senate has considered in the last two years.”
You’re right, Ezra. Us deficit hawks got rolled on this one. But when don’t we?
I’m certainly familiar with, even have sympathy for, the argument that in a bad economy deficit reduction has to take a back seat to stimulus. And it’s true, too, that an improving economy is the best possible weapon against the deficit. But over time, the stimuli never quite get the deficit (let alone the debt) heading down. It’s easy to say that now is not the time for the sour medicine — spending cuts and tax increases — that are necessary to get the U.S. fiscal picture out of the “unsustainable” category. But a review of recent history suggests that the time for candy is always. The time for the tough medicine is never.
Next year, or the year after, or the year after that, please prove me wrong.
Nothing will prove you wrong, Eric.
It’s going to be all candy (mostly for the rich) in terms of outrageously low taxes and unprecedented levels of income, with the middle class continuing to slide into the economic abyss and the poor barely surviving (if at all) right up until China “calls the note” by which the US is now mostly financing itself.
So we can’t just raise taxes on the rich and the economy is too bad to raise taxes on the middle class. How will we know when the time (economy) is right to raise taxes? GDP up 3%? 4%? 5&? Never?
We’re loath to cut spending on popular social programs, wars and the military and unwilling to pay for them with taxes. We need a new method of raising money. A national lottery with a mandatory buy in dependent on income. So you and I will have to buy say $3000 worth of tickets and your millionaires will be required to buy $150,000 worth. Sounds unfair until you see the prize for a mid class ticket is only say $1,000,000 and the millionaire winner gets $1,000,000,000. Everyone is happy except perhaps people like me that think the government shouldn’t be in the gambling business.
To bring in another metaphor, there is no carrot associated with deficit reduction, and the giant stick associated with it is far off and generalized enough that no individual legislator, or even political party, has any motivation to take responsibility for it.
The only way that lawmakers will take the tough votes necessary is if BOTH parties frame deficit reduction (see yesterday’s “Don’t Think of an Elephant” post) as a great win for the public, making sacrifice feel worthwhile and patriotic, as it was during WW II.
It would be nice (wishful?) to think that part of the Obama/McConnell negotiation on the tax package included some agreement to work together forcefully in the future on the deficit message.
It wasn’t that long ago that we actually able to take the medicine. Bill Clinton raised taxes on the wealthy. George H.W. Bush raised taxes. Even Ronald Reagan raised taxes after his earlier tax cuts left too big of a hole in the budget. Since then, Republicans have let ideology completely replace common sense, and the Democrats have become even more spineless.
Who cares about a deficit. The Vikings are playing Sunday.
New sports stadium? $700 million? No problem, the Vikings are playing Sunday.
Pro sports has replaced religion as the opiate of the masses.
Well, Eric, I wish I had a lot of faith in a workable, albeit painful, solution, but at the moment I don’t. It’s going to be an interesting next couple of years as Tea Party types find they have to govern – or perhaps decide they don’t have to, or don’t want to – and the rest of us have to deal with the consequences.
Anyone who’s even mildly interested in public policy – and regardless of political persuasion – knows that the bulk of the federal budget is eaten up by entitlements, and the military consumes most of what’s left. Rhetoric about “waste and fraud,” the perennial culprits, is largely sophistry, and the usual right wing targets, social programs and foreign aid, are already very small potatoes in the deficit sense. They may not represent “bone,” but they’re definitely in the “muscle” category when cuts are proposed, and one of the interesting things is that those who propose cuts to what little is left of the “safety net” virtually never have any sort of alternative. When the homeless start camping out in the lobby of the swanky New York apartment buildings of Goldman Sachs executives, it’s going to make for ugly television, just as it does now – or would if it were shown – when the homeless camp out over sidewalk vents and similar structures in the Twin Cities.
Moreover, it will be difficult to get reelected on a platform of reducing Social Security benefits, cutting Medicare and Medicaid by percentages never dreamed of at the turn of the 21st century, and cutting the military budget in half. The people most likely to vote – that is, people my age and older – will be particularly outraged, and no amount of flag-waving on the part of legislators, be they Democrats or Republicans, will mollify the discontented.
If medical costs continue to rise at rates far exceeding inflation, or even believability, I won’t be surprised to see a sudden and perhaps unexpected increase in interest in a single-payer or even a nationalized health-care system. Hysteria on the right notwithstanding, a dozen or more rather prosperous industrial nations located elsewhere on the planet provide health care to every citizen (and often to visitors, as well) without any out-of-pocket costs at the time of care. One of them is no more than a day’s drive to the north. Most have been providing health care to their citizens for many years. The sky hasn’t fallen. They’re not communist dictatorships. People still want to be doctors and nurses in them. They have hospitals. Not coincidentally, they also have better health outcomes at lower cost than we do.
Employer-based health insurance is already breaking down, and having lived without health insurance at all for a dozen years, I can vouch for the fact that individual families are not going to be able to pay their medical bills for anything that constitutes a serious illness. After more thousands of families go into bankruptcy due to medical bills, we could easily have a lot of people carrying signs and marching in the streets of Washington (or Rochester) to protest, and it might not make much difference who, or what party, is in the White House, Congress, the Governor’s mansion or under the legislative dome in St. Paul at the time.
Something similar could be said about the military budget. Others have said, and often, that we spend more than the rest of the world combined on our military, with no plausible threat of invasion and no coherent mission to justify the enormous expense. Terrorists – at least the kind we’re pursuing with some futility in the Middle East – aren’t usually state-based. They’re just thugs – street gangs with better weapons – and we’ve already seen that standard military operations have very limited success against them.
But I grew up in a city where the largest employer, by far, relied on military contracts, and cutting the military budget significantly will eliminate many, many thousands of well-paid jobs in the military-industrial complex that President Eisenhower warned us about more than half a century ago. They won’t go quietly, and might not go at all, even though there’s no sensible rationale for continuing to build gigantic aircraft carriers or $22 million-dollar fighter planes that have no enemy against which to be deployed.
Taxes are the price we pay for a civil society. If we’re not willing to pay them – and at the moment, that seems to be the public mood – then a civil society may simply go away. Plenty of science-fiction and “regular” fiction describes what comes afterward…
Seems to me that the Bush tax cuts should be allowed to expire for everyone. We need to pay out bills. The red ink is too deep to keep pretending that we don’t need to raise taxes, and the GOP won’e go along with only raising taxes on the upper 2%.
We all need to bite the bullet, some harder that others, obviously. We have two unfunded wars to pay for (what a waste!!) and our infrastructure is crumbling. It’s time that the president and the Congress started acting like grownups and working for the good of the country.