Thursday, December 2, 2010

Another Round on the Deficit

Andrew Sullivan responds:
What I get frustrated by is the use of such political realism/cynicism to mitigate against action. When Jonathan does it, he is merely presenting the facts of political science. When Rove and Cheney did it, they were engaging in the kind of deep cynicism that has helped destroy America's fiscal standing and economic future.
Earlier discussion here and here.  

I guess I can make a couple of points in response.  One is that at least in my view, the federal employee pay freeze is awful close to the "political realism/cynicism to mitigate against action" that Sullivan finds distasteful.  I think that explains some of the liberal opposition to the freeze; liberal budget hawks want substantive action, not symbolism.

Of course, the other liberal frustration is with those held in what Jonathan Chait calls the ideology of deficit reduction, who not only act as if the deficit is self-evidently bad and extremely important (I think Sullivan basically qualifies on that) but refuse to accept that there are real differences between the parties on the deficit, and have been for thirty years -- including failing to give Obama credit for his deficit-reduction efforts (Sullivan is certainly not guilty of that one -- he's been very good at apportioning blame and credit).  I'd say [see Update below] that most mainstream liberal bloggers (Drum, Ezra Klein, Chait, Cohn) care quite a bit about deficits, but find the dynamics of deficit politics, in which liberals repeatedly clean up GOP deficit messes and get no credit from anyone for it, highly frustrating.  They aren't exactly deficit hawks, because they have other values as well, but they do seem to believe that long-term balanced budgets are important to achieving other liberal goals.

My own view on the deficit, as I've said, is basically with Brad DeLong (long-term deficits are in fact a big deal, but are almost entirely about health care), and with Matt Yglesias (the time to deal with deficits is when they become a short-term problem for the economy).

Apologies to anyone if I have their positions wrong.

I'd say that the first group would be very happy to have a truly bipartisan long-run balanced budget deal, but are (correctly, I think) pessimistic that it can happen.  And my guess would be that both the White House and the overwhelming majority of Congressional Democrats would be thrilled to have such a deal. 

Also taking issue with me on this one is Barry Pump, who I think makes one good point and one that I'd strongly contest.  The good point is that deficits may matter to electoral politics even if voters don't actually care about deficits because of how information flows work: if elite-level commentators believe that deficits are important, and evaluate politicians based on how they handle the federal budget, negative evaluations will eventually get picked up by mass publics.  It's also true, as he says, that if pols (mistakenly) believe that their constituents care about the deficit, that matters.  Fair enough.

However, his other point, I think, is just wrong:
How can one say that deficits do not matter politically? What is the Tea Party if not at least in some part a response to budget deficits? Are you going to argue that the Tea Party didn’t matter in the 2010 midterm elections? They may not have manifested themselves during George W. Bush’s reign of budgetary terror, but that’s not the same as saying there isn’t a sizable segment of the population concerned about budget deficits (his emphasis).
I would not at all say that Tea Party activity is a response to budget deficits.  I'd say that Tea Party activity is a response to (1) a Democrat in the White House -- see Kevin Drum's terrific article -- and (2) a massive recession.  Indeed, to the extent it had positions on public policy issues, it's hard to see Tea Partiers, who wanted to cut taxes and repeal the deficit-slashing ACA, as placing a balanced budget as any kind of real priority.

[Update: After a twitter back-and-forth with Nick Baumann, I'm convinced of two things: one is that I may have botched my categorization of specific liberal bloggers, and the other more important one is that trying to quickly categorize a bunch of bloggers was one of the stupider things I've tried to do around here.  I'll leave the original up, including the original apology-if-I-got-anyone-wrong line, but I wouldn't advise anyone to have a lot of confidence in that portion of the post].


  1. This is one of the issues where Sullivan's residual Thatcherite Toryism is still holding him back. (He's not going to like British Great Recession 2.0 or the 2015 Labour landslide, but he's currently cheering on the people determined to cause them.) Also, he blogs about a million different subjects -- that's a great thing about "The Daily Dish" but also a weakness, because it means he brushes past some subjects without fully understanding them.

    And yeah, this Pump guy is mistaking Tea Party rhetoric for actual Tea Party motives, which include the two you mention plus (3) moral panic over the gradual de-whitening of the United States.

  2. Jonathan, one thing I heard more than once while phoning voters this season was that government spending was "out of control." Most voters may not even know what a deficit is, but the Republican lie that Democrats have been spending like drunken sailors resonates, and lots of people blame continued economic woes on that perception.

  3. liberal budget hawks want substantive action, not symbolism.

    This is an outstanding point, IMHO, and perhaps captures some of the frustration with what, coming from Obama, seems like a gesture of staggeringly calculated cynicism that by reputation, anyway, seems beneath him.

    According to Ezra Klein, the pay freeze is worth about $60 B over 10 years. So, essentially: $6 B a year, with deficits floating along in the neighborhood of $1 T per year. In other words, the pay freeze is so insignificant toward cutting the deficit that it will - surely - be easily dwarfed by random noise from economic growth, etc, in balancing the budget. It is meaningless.

    And yet, as Jonathan points out, it means a lot to those Federal workers, who probably feel like a giant lump of coal has been dumped in their collective Christmas stocking. But what can they do? Their alternative is to vote for Republican tea party poseurs, who will probably give government workers an even bigger (though nevertheless symbolic) shiv than Obama did.

    It appears, then, that Obama has put the gears to one of his safest constituencies in order to play the game of appearing to be anti-deficit, even as Bowles/Simpson fades into the sunset and no one does anything of substance to mollify deficit hawks.

    The problem with declaring pols like Cheney outsized assholes is that they wear the title like a crown, while a fellow like Obama is lovable by virtue of smiling here, there and everywhere. We all know that difference doesn't amount to squat, but seeing what's in front of one's nose, and a constant struggle, and all that.

  4. ASP,

    Sure. But cutting spending, even if it's sincerely supported (and we both know that once you go by category that commitment to cutting spending gets awful dicey), isn't the same as reducing the deficit. The people who are buying GOP talking points are also complaining (inaccurately) that Obama raised their taxes. Oh, government/hands/Medicare.

    Anyway, I do agree that there are people who sincerely want lower levels of government spending.

  5. Jonathan, I don't know about "sincere wants." I was thinking more of an inchoate sense, sucked up from Foxville, that Democrats have been indiscriminately spending the country into bankruptcy.
    It will be interesting to see what people think of Chris Christie a year or two out. At least he's really doing what Republicans say they want to do and rarely do: swinging the meat ax. And I wish Obama knew how to use a veto threat like he does.

  6. I never hear anyone pointing out that "cutting spending" is another way of saying "putting more people out of work" (either directly by laying off government workers, or indirectly by reducing government's purchases of private sector goods and services).

    So my question to anyone who wants to cut spending: who exactly is it you want to put out of work in this time of already high unemployment?

  7. I think the policy is bad on the merits. The recovery is still vulnerable, so an anti-stimulative measure in the short term doesn't make sense.

    But I also agree that this demonstrates not that Obama is concerned with the deficit. Rather, it demostrates that he is concerned about the concern about the deficit. This is beneath Obama.

  8. I think you are wrong about what the Tea Party is about. In my view, the impetus for the Tea Party was the bailouts. I'm a liberal myself, and when the $900 billion no-strings-attached bailout of the banking sector was announced, I was livid (and am still simmering to this day). Many in the Tea Party believe that when government gets involved in something, someone benefits disproportionately and unfairly, and it is never them. I agree with that. There are too many people feeding at the trough and that is not what government should be about. The Tea Parties culturally identify with the Republicans not the Democrats, so they hold their tongues when the Republicans are in power, but fundamentally the movement was sparked not by who was in power but who is benefiting from that power. That seems to remain the same no matter which party is in power--both seem equally good at feeding the corporate beasts.

  9. The point about the Dems continually having to clean up the mess and not getting credit for it far understates the problem for them. Instead, the GOP insures that they will take the blame for any tax increase, no matter how well intentioned.

    Then, when the Dems' policy does relieve the GOP-policy-induced budget problems, they simply buy back the electorate's favor with more tax cuts, claiming that now the government brings in too much money.

    Try to get a reasonable answer to this question from any Republican: When is the right time to raise taxes? They will always answer: NEVER!!

    That always sells and the Dems are just outflanked by that position. They couldn't get a tax increase for war. They couldn't get a tax increase during a boom. The GOP cuts credit for tax cut after tax cut. If the Dems to it, as Obama did, the GOP charges him with raising taxes!!

    The Dems have to take away the tax argument from the GOP and the only way to do that is by exploding the deficit. Even faced with massive interest payments, a sagging dollar and copious debt, the GOP's answer to the question above will continue to be: NEVER!!

    Yet, there is no choice. If the Dems do raise taxes, and it actually helps the economy, the GOP will ride the fact of a tax increase and false claims of harm to electoral victory and just start the cycle over again.

    Debt is the new tax we all pay -- as it has been from the beginning of modern finance. Until the public realizes that the debt we accumulate now costs us NOW, and also costs us later, the GOP can ram tax cut after tax cut through to curry favor of the voters and lay the blame for the cost of the debt on the Dems.

  10. Tea Partiers, who wanted to . . . repeal the deficit-slashing ACA . . .

    Do you have any evidence that Tea Partiers believe that ACA will cut the deficit?

    I haven't seen polling on this point. As a Tea Partier myself, I suspect finding a Tea Partier who believes this would be about as easy as finding one who believes in AGW.

  11. David,

    OK, that's a fair point -- except that if Tea Partiers really cared about the deficit, they might actually pay attention to neutral budget projections. Or at least have a coherent explanation for why the neutral projections are wrong. Or support a real budget balancing plan.

    (I know some Tea Partiers do, in fact, support significant budget cuts, including defense. But I hear a lot more complaints about taxes, not to mention complaints about ACA Medicare cuts. And of course Tea Partiers just voted in heavy numbers for the party that supports big deficits).


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