Friday, July 30, 2010

Left/Right and The Deficit

Ezra Klein has a nice comment on an Benjamin Sarlin's helpful interview of Pete Peterson, the rich-guy deficit hawk.  The politics of deficit reduction have become only more confusing in the last year, and Sarlin and Klein both point to liberal paranoia about Peterson, who liberals tend to see as mainly interested in killing Social Security and Medicare.

Here's the thing: once upon a time, there was such a thing as fiscal conservatives.  "Fiscal" was understood to be about the size of the deficit.  In the 1950s and 1960s, Keynesian liberals believed in varying the size of the deficit -- increasing it during recessions, and then running surpluses during good times (I said they believed in it, not that they actually did it).  Fiscal conservatives, on the other hand, believed that government revenues and spending should always be balanced.  Fiscal conservative beliefs did, in fact, tend to correlate with belief in small government, but nevertheless fiscal conservatives really did put balanced budgets first, and therefore supported tax increases as well as spending cuts (and, perhaps most famously, opposed JFK's tax cuts). 

The thing is that this kind of fiscal conservative is so rare within the two major parties that no one recognizes it when they see it, and therefore ascribes all sorts of nefarious motives to actual fiscal conservatives (or, as they're more often called now, budget hawks).  Indeed, as far as I can tell conservatives aren't even aware of the long tradition of fiscal conservativism in the Republican Party, and don't know that "fiscal conservative" was actually the name for those who supported balanced budgets as a top priority.  So liberals see fiscal conservatives as plotting to gut Social Security, and conservatives see them as plotting to raise taxes.   What do I think?  I take them at face value: they actually think that budget deficits are more important than the size of government, or any particular program, or the level of taxation. 

The one question I wish Sarlin had asked is whether Peterson has much of a preference between size of government as long as revenues match spending.  My guess is that whatever his personal preferences, as an activist he's basically neutral about that (although he almost certainly believes that it is impossible in a practical sense for revenues to keep up with the more pessimistic long-term projections for Medicare spending). 

Personally, I think that making long-term deficit projections a higher priority than avoiding short-term pain is generally a bad idea.  But I also think that honest deficit hawks -- real fiscal conservatives -- aren't the worst thing to have around most of the time; democracies are, one would think, biased in favor of short-term results, and so it's not a disaster to have at least one interest group looking out for the long-term.  That's only true, however, if deficit reduction pressure is actually neutral about the size of government; otherwise, putative deficit hawks are really just liberals or conservatives in disguise.  As far as I can see, however, Peterson is the real deal.


  1. Ah, but Pete Peterson has never been "actually neutral about the size of government." Nor is he neutral about what to cut or whether/how to raise revenues. At least historically, somehow the defense budget (just to pick one example arbitrarily out of the air) hasn't been showcased. Whereas he's been consistently and loudly pushing the "Social Security is broke" canard ever since the last time we "fixed" Social Security.

    Like you, I think true deficit hawks have an extremely valuable role to play in the economic policy ecosystem. And if he were an equal-opportunity deficit hawk on the spending side - and on the revenue side pushed things like another 1986 tax reform to get rid of 25 years of accumulated loopholes to rebroaden the tax base or to dismantle incentives for socially-destructive policies like the ethanol boondoggle - I'd be a whole lot more enthusiastic.

    As it is, take a look at the "frame" of his Fiscal Times site. The adorable little illustrations and captions that are in the sidebars contain, frex, on the "Taxes" page, a guillotine re the French enthusiastically executing tax collectors, late-night comics with "cute" quotes equating all-things-dreadful with taxes, and so forth. On their entitlements page, they used to have a hackneyed illustration asserting Social Security's insolvency, but they must have figured out that would just provide ammunition to their opponents, so that disappeared awhile ago.

    But overall, their site's frame sends a not so subliminal message about what the Peterson folks think the real deficit crisis is about, and how it should be "fixed".

    Furthermore, the Peterson Institute's recent "listening tour" to "educate ordinary Americans and find common solutions to our fiscal crisis" was a real propagada job if you look at the assumptions underlying their "education" and how "problems we must solve" were framed.

    Fortunately, Fiscal Times has hired some decent journalists and economists whose articles don't match the site's framing very well. In particular, Bruce Bartlett, a conservative economist who was long ago declared a movement apostate, has been on a righteous roll recently and has been producing lots of cognitive dissonance with the Peterson agenda.

  2. I should add, I do think that Peterson is legitimately concerned about fiscal responsibility, unlike the current GOP. But after following him for better than 3 decades, what I dispute is that he is (or at least historically has been) "neutral about the size of government." He's been obsessed about entitlements (especially Social Secuirity, even after the Social Security fix) relative to everything else on both the spending and revenue side.

    But give him his due, he's never been a "drown government in a bathtub" sort and has been vocally against the "starve the beast" theory of tax cuts. IIRC, he called out voodoo economics for what it was at the start and hasn't changed his mind.

    What I find interesting about the interview you quoted is that Peterson looks to be trying to market deficit control to more liberal Dems (not just the Bayh-style deficit peacocks) and seems to be adjusting his messaging accordingly. Perhaps he's finally given up on the GOP and fiscal responsibility and is searching for ways to do deals with more Dems than just the right-wing of the old DLC.


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

Who links to my website?