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Some Thoughts on Deficit Mania

Deficit hysteria has really been years in the making, but it only really ever comes to the fore when there’s a Democrat in the White House, as a corrective to the slightest thought of progressive governance. Therefore, it feels like the national conversation has skipped over the WHY of deficit reduction and moved forward right to the WHAT.

If people wanted to be honest about the situation, they would answer the question the way this guy answered it, which is that we need to keep running deficits until the recession truly ends (i.e. until people have jobs), and then address the decade-long structural revenue gap to bring the primary budget into balance. But not right now. Keynesianism did not fail as policy because it was cancelled out by the enormous budget shortfall in the states. It did not fail as politics because it’s hard to fail to defend something that you never bothered to defend in the first place. That’s why we got from the why to the what so quickly. I would agree that automatic stabilizers make this whole thing easier – and countries with stronger automatic stabilizers did better in the crisis – but that’s not a reason to shy away from the actual solution to the problem.

Because here’s the thing. You could eliminate the entire primary deficit simply by letting the Bush tax cuts expire and ending the two unnecessary wars in which we’re currently tangled. That would close the gap by much more than even the cat food commission did. And think of all the money you’ll save on future deficit commissions. If you want to get cute, you can transform the tax code into something that offers more progressive taxation, but that’s essentially what Obama tried to do last year and as a result he got nothing. The path of least resistance here is just letting them expire. Hunting for the perfect balance of tax rates in the short term is a snipe hunt.

Getting that nonsense out of the way will allow those intrepid budgeteers to focus on the actual wasteful items in the budget. You could go slow, attack a couple a year and root them out. That succeeded on the $450 million second engine for the F-35 Joint Strike Fighter, which was eliminated today in the continuing resolution thanks to votes from Democrats and Republicans. It allows the conversation to focus on the actual cost drivers in the budget, namely the rising costs of health care in America relative to the rest of the industrialized world, and that brings us back to negotiating down drug prices and public options and even system-wide overhauls. There are other solutions too, which are for some reason not seen as “serious” by the serious people yet.

This also becomes good politics, because if you move from the general to the specific, nobody actually wants to cut the budget. And they certainly don’t want to cut the social insurance programs that constitute the bulk of the federal budget.

This has turned into a morality play, with bravely bold deficit warriors invoking their children and grandchildren to demand reduced services for them in the future. But if you want to actually be moral, you can invoke fairness. As in, we fairly pay for the society we want, we respond to the needs of the people fairly, and we can do that without shutting off somebody’s heat or revoking the food program they need to eat.

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David Dayen

David Dayen

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