Wednesday, February 17, 2010

Deficit Deficient

I just have to repeat what Matt Yglesias says:
The problem with Holtz-Eakin’s remarks, by contrast, is that like all mainstream American conservatives he’s not interested in reducing the deficit. Rather, he supports lower taxes and lower spending. This is why deficits exploded under George W Bush’s watch and also under Ronald Reagan’s watch. It’s not “irresponsibility” or some mistake; rather, conservative policymakers are not interested in the question of how large the deficit is, they’re interested in cutting taxes on the rich.
Conservatives don't care about the deficit.  Really.  Therefore, bipartisan deficit reduction schemes built on the assumption that both parties "really" want to cut the deficit but just don't have the political courage to do so are built on a fallacy, and are not going to work.

Now, granted, most liberals do not believe in deficit reduction per se; they believe as deficit reduction as a means to the end of a growing, stable economy.  There are exceptions -- just as there are some Republicans who actually do support deficit reduction -- but for the most part, liberals don't care at all about the size of the deficit except to the extent that it affects other goals liberals care about (and there are typically differences of opinion among liberals, including liberal economists, about the relationship between the deficit and other goals).

Conservatives, on the other hand, have a clear policy goal of low taxes, a goal that is inherently in competition with small deficits. 

Both parties are rhetorically in favor of low deficits, because the Washington consensus says that balanced budgets are a Good Thing.  But anyone who thinks that Republicans care about deficits is just ignoring thirty years of evidence to the contrary.  Before 1980, it was more or less true; since then, it just isn't.

1 comment:

  1. I'm not sure I would say that Dems or Reps "don't care" about the deficit, rather that it ranks below other goals.

    What I wonder about, though, is WHY they advocate the policies they do. An ideology is a vision about what the ideal society looks like. However, it's a big stretch to say that parties have ideologies. Rather, what they are closer to having is an agreement over policy goals, which are, of course, only instrumental goals. And, their "agreement" on these instrumental goals is, itself, instrumental, but we'll put that aside. (This is all idealized, too, as there are disagreements within the parties on both what the ideal world looks like and what the appropriate ways to get there are, but assume such an agreement for the ease of presentation, it doesn't really do violence to the argument to relax it).

    Republicans are in general agreement that lowering taxes is a good thing, but their reasons for thinking that are varied. Some of them simply want more money for them, their friends, people like them, or the people writ large to have. That is a goal in and of itself. Some think that lower taxes lead to more economic growth, and thus want tax cuts because they think that the rising tide will raise most boats. The extreme on this side might even believe the Laffer curve crap (the Laffer curve isn't crap, but thinking our position is to the RIGHT of the maximum IS crap). Some want to starve the beast, thinking that less government income means less to spend on programs they don't want. And some want lower taxes because people do and they simply want to get votes (for whatever reason, including getting in power to make OTHER changes they desire). These last three groups see tax cuts as instrumental only. Naturally, many people hold many of these beliefs simultaneously.

    I separate their reasons because it has implications for deficit ranking. The election winners will only rank it as high as public opinion does, and consistently, the public has demonstrated that deficit reduction is a great idea, but not as important as just about everything else. Eventually, it can crowd everything else off the agenda, but election winners tend to have short-term plans. Those who think lower taxes lead to growth are concerned about the deficit to the extent it harms growth; I'd say most in this camp are more scared of taxes than deficits, but both seriously concern them. The true believers in "its our money" don't care about the deficit; deficits just indicate us getting more than we're paying for, so great! Naturally, they may need to pay lip-service to the deficit, but they honestly don't care.

    However, those who want to starve the beast are the interesting group. Their plan only works IF we care about deficits. (Alan Brinkley wrote a column about "reagan's revenge" in 1994 on them; while Reagan wasn't one of them, a lot of them rode his coattails). What makes them even more interesting to me is that their argument works BETTER over time. That is, if we don't deal with the debt today, it is a better tool to use in the argument tomorrow. In a real sense, they WANT to lose debates on the deficit when it is relatively small, so they can win them when they are big. Naturally, to me, this is the most despicable of the groups, since they are being disingenuous in order to win a debate they can't ordinarily win.

    Naturally, there are some people who care as much or more about the deficit than taxes, for policy reasons themselves, but I tend to think their numbers are small.


Note: Only a member of this blog may post a comment.

Who links to my website?