How The Versailles-On-The-Potomac Establishment Got Everything Wrong About The Deficit
enlarge Do the lords and ladies of Versailles on the Potomac not have any trusted advisors? You know, the kind of people who can clue them in about the reality that Republicans really don’t care about the deficit, except as a handy tool with which to bludgeon Democratic presidents. (I suppose they also believe professional wrestling doesn’t use scripts.) Because really, their part in putting the stamp of approval on this debt ceiling fiasco is beyond absurd. The New Republic’s Jonathan Chait spells it out as he takes the Versailles establishment to task for pushing so long for President Obama to use the debt ceiling vote (granted, they didn’t have to push him very far, since he already supported the idea of a Grand Bargain) as an opportunity for Very Serious Deficit Reduction : The failure to understand the crisis we were entering was widely shared among centrist types. When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike. He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness . The Committee for a Responsible Federal Budget argued: [F]ailing to use this debt ceiling ‘hammer’ to force serious fiscal reforms would be a dangerous lost opportunity. This country needs a deal to achieve $4 to $5 trillion in deficit reduction, and we need to put such a deal in place as quickly as possible. The Concord Coalition chimed in: [T]he need to raise the debt limit does provide an opportunity to assess past fiscal decisions and, if necessary, make corrections. In the past, major increases in the debt limit have often been accompanied by the enactment of deficit reduction plans such as the November 1990 increase of $915 billion, the August 1993 increase of $530 billion, and the August 1997 increase of $450 billion. In the absence of such linkage, Congress has been reluctant to raise the debt limit by more than is necessary to get through a short period of time. Thus, while the debt limit is not, by itself, a fiscal firewall, in the absence of other more effective mechanisms, it is one of the few budgetary speed bumps left to provide a sense of fiscal discipline . And the Washington Post editorial page repeatedly endorsed using the debt ceiling to force a deficit reduction. The operating assumption was that both parties required encouragement to act on reducing the deficit: [W]e retain some shred of hope that the bipartisan group of senators known as the Gang of Six will come forward with a productive contribution. The group is working off a blueprint produced by the fiscal commission that the president convened and then abandoned. Perhaps the fact that the other main alternative on the table is the considerably less centrist plan put forward by House Budget Committee Chairman Paul Ryan (R-Wis.) will lure the White House into the fray. The political assumptions here turned out to be badly wrong. The main problem is that the Republican Party does not actually care very much about the deficit . It cares about, in order: Low taxes for high-income earners; reducing social spending, especially for the poor; protecting the defense budget; and low deficits . The Obama administration and many Democrats actually do care about the deficit and are willing to sacrifice their priorities in order to achieve it, a desire that was on full display during the health care reform debate. Republicans care about deficit reduction only to the extent that it can be undertaken without impeding upon other, higher priorities. Primarily “deficit reduction” is a framing device for their opposition to social spending , as opposed to a genuine belief that revenue and outlays ought to bear some relationship to each other.
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How The Versailles-On-The-Potomac Establishment Got Everything Wrong About The Deficit
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on July 30, 2011. Filed under