Thursday, December 13, 2012

War on Budgeting Shows Up Again

Jonathan Chait has a nice one today in which he looks at GOP attempts to understand why Barack Obama is pushing tax increases on the rich. The gist of it is that it apparently doesn't occur to Republicans that Democrats might support higher taxes because it would reduce the deficit (or, to put it another way, because it would fund programs Democrats support).

This, of course, is recognizable as the GOP war on budgeting. Under war on budgeting thinking, each tax and each expenditure is evaluated in isolation as good or bad; there's no sense that one needs to compare one expenditure to the other, or to revenues, in order to get the whole thing to balance. At best, there's a sense of "is this worth the money?" kind of question...you'll hear conservatives say that some program would be nice, but isn't worth taxpayer's money. But there's no sense at all that one needs to consider any expenditure in the context of all expenditures. Of course, advocates in general try to talk that way about programs they like -- but war-on-budgeting conservatives do it in the context of deficits and budgets.

As far as how deeply Republicans "really" believe it...the best way to deal with that is just to realize that the war on budgeting frame helps explain what they say and do really well, and that's good enough.

As it is in this case: the idea that Democratic support for higher taxes as part of a solution to a deficit that's too large -- that Republicans loudly insist is too large -- is something difficult to explain is, really, pretty weird. It doesn't need a complicated political explanation! Of course, given a choice between raising taxes on rich people and, say, cutting Medicare, one would predict that Democrats would choose raising taxes on rich people. It only needs an explanation is it doesn't occur to you that choices of that kind are necessary when budgeting.

Of course, we could always conclude that Karl Rove and the others who Chait quotes are just making up a phony attack just because partisans do that. But the nature of it, I think, shows that the really do find this to be something rather puzzling on policy grounds and therefore in need of some other explanation.

12 comments:

  1. Jonathan - the flip side of this is the left's reach for higher taxes on the rich solution to any problem. They never ask what would happen if they won on that single question how then they would solve the next problem.

    Few bother to mention that for the highest earners, Obamacare already bumped marginal rates by more than 10% (or 3.8 points).

    Nevertheless, for me, I do think that most considered spending has value, but that value is not high enough to overcome the opportunity cost of leaving it in private hands or my general belief that our federal system ought to engage in limited services and benefits.

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  2. Jonathan, are you saying that without the tax increase, Democrats would feel compelled to cut Medicare? I find that hard to believe. Then there's Obama's proposed defense "cuts," based on savings from an already planned withdrawal from Afghanistan and getting kicked out of Iraq. Is it serious budgeting to pretend that this is some kind of nod to fiscal discipline?

    I don't see a serious attempt to balance the budget from either side.

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    1. Ah, but balancing the budget is a different question.

      Most liberals over the last few years have basically believed that the deficit should be large, or very large, or extremely large.

      But when they added a major new program in the ACA, they funded it. That really happened. When the took control of Congress in 2007, they brought back PAYGO. That really happened, too.

      It doesn't mean that there isn't both fudging and wishful thinking; Democrats have surely been guilty of both of those. But I don't think you'll find anything like unfunded Medicare Part D, or unfunded Iraq war, or unfunded Bush tax cuts.

      Would Dems feel compelled to cut Medicare? Dems *did* try to find Medicare savings in ACA. Maybe it'll work, maybe it won't, but you can't say they aren't trying. It's true that one of the big motivations among liberals for universal coverage is compassion/justice, but savings are another very real motivation, too.

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    2. You're making a big deal about window dressing here. Not only has PAYGO been violated multiple times, but much of its observance has only been accomplished by what you appropriately call "fudging and wishful thinking" (What happened to “lazy mendacity”?).

      And funding the ACA with Medicare cuts? There are no cuts, just a new bureaucracy that's supposed to find the money somewhere.

      And how do Democrats intend to pay for the Bush tax cuts and payroll tax cuts that they support reinstating? I don’t think there’s any intention to pay for them.

      You won't find me defending Bush-era fiscal policy, but it’s hard for me to see what’s really changed with Democratic policymaking.

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    3. There are no cuts, just a new bureaucracy that's supposed to find the money somewhere.

      No, there are cuts:

      http://www.healthaffairs.org/healthpolicybriefs/brief.php?brief_id=17

      Also, the IPAB, if that's the "new bureaucracy" in question, is (as I understand it) required by law to propose actual cuts -- not just look for them -- if costs rise beyond a certain target, and its proposals automatically go into effect if Congress doesn't find some other savings instead. Hence the AMA's opposition; they evidently believe it will in fact cost them real money. See "What is IPAB" here:

      http://www.ama-assn.org/ama/pub/advocacy/topics/independent-payment-advisory-board.page

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    4. Jeff- Yes, my point is that the actual cuts are supposed to be made by the IPAB finding waste, fraud and abuse. Not a bad idea, but as you yourself say, the cuts haven't even been proposed yet.

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    5. That's one set of cuts; there's also the Medicare Advantage cuts. There's also other stuff that's supposed to produce savings.

      Anyway: what I really wanted to say is that there's a big difference, IMO, between what I describe as a war on budgeting and what I consider legitimate differences over the proper size, now and long-term, of the deficit.

      See this Krugman post for an example of a position about the deficit which real deficit hawks should oppose -- but which fully accepts basic budgeting and math.

      And I do think there are real policy outcome differences as a result.

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    6. Couves, the proposals for cuts are scheduled to start by a date certain (January 2014), they're required to happen by law if certain specifically stated targets haven't been met, and they'll be fast-tracked to implementation on the model of the military base-closing commissions. And as JB says, there have been other cuts and reductions in subsidies -- which is why Obama didn't defend himself against Romney's attacks over Medicare cuts by denying that there had been any. More importantly (I think), Obamacare institutionalizes cost control through various mechanisms and makes this one of the health-care system's priorities. We'll see how it all works in practice, but clearly it's an effort to be fiscally responsible in a way that GOP initiatives have not even tried to be.

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    7. Jeff, the IPAB has very limited discretion for making cuts:

      “The IPAB is prohibited from submitting proposals that would ration care, increase revenues, change benefits, modify eligibility, increase Medicare beneficiary cost sharing (including Parts A and B premiums), or change the beneficiary premium percentage or low-income subsidies under Part D. Hospitals and hospice will not be subject to cost reductions proposed by the IPAB from 2015 through 2019.”

      So if cost savings aren’t found within those constraints, the issue of what to cut will be thrown back to Congress. Don’t get me wrong, trying to find future savings is great, but this is no more a real cut than ending the surge in Afghanistan or getting kicked out of Iraq.

      Democrats have been more fiscally responsible than Republicans, but it has nothing to do with making promises or playing games with the numbers. Rather, it’s the fact that Democrats haven’t cut taxes by as much as Republicans (unless you consider reinstatement a tax cut, which seems to be the Democrats’ rhetorical position) and the fact that Obama hasn’t started a new ground war. Will the ACA ultimately be paid for (unlike Medicare Part D)? Hopefully so, but I remain unconvinced until I see the cuts actually materialize.

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    8. OK, I agree. I am more optimistic, but I too am waiting to see the cuts actually materialize.

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  3. If you are not willing to defend "Bush era" fiscal policy what are you defending? There is absolutely no evidence of Republican fiscal responsibility over the last 30+ years with the exception of Bush Senior -- who has been condemned in Republican eyes because of his fiscal responsibility. Yes, I know that when they have had the power to do so, Republicans have tried to limit what Democratic Presidents could do. But those are purely political calculations, abandoned the minute the party gets the presidency. If you want to understand why Republicans are losing support -- even from members of the business community like me -- take off your partisan blinders and look at the real history of "conservative" governance and budgeting mayhem. Some of us care about the well being of the country and could not care less about the success or failure of the GOP.

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    1. Anonymous -- Partisan blinders? You don't get it, I'm not defending either side. Your assumption that one must be an uncritical defender of either one side or the other tells me that YOU are the one who is wearing partisan blinders. It's a false dichotomy -- try thinking for yourself.

      Yes, Bush spent too much and Obama continues the trend. If we're not going to stop the spending, then we should raise taxes by a lot more than what the Democrats are proposing.

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