In the Tea Party Free Zone: A Serious Debate on the Budget Deficit

America’s long-term fiscal challenge will drive the nation’s domestic policy for years to come. But in an age of partisan noise and name-calling, it is not easy to find reasoned commentary over the tough fiscal choices we will inevitably confront.   


Fortunately, in recent days, I’ve come across two valuable discussions of both the deficit and ways to address it. Both, interestingly, come in the form of debates. In one, the Tax Policy Center's Gene Steuerle and Brookings Institution’s Henry Aaron face off  here.  The other pits Brookings scholar Belle Sawhill against Century Foundation vice president Greg Anrig here.


The debaters come from quite different perspectives. Henry, Gene, and Belle all agree that addressing the long-term deficit is critical to the nation’s future. Greg is less convinced. Belle and Gene favor broad changes in Social Security and Medicare. Greg would leave benefits in these social programs untouched. Henry comes in somewhere in the middle. He supports some changes in these programs, but far more modest ones than Belle and Gene.


The biggest differences, however, are not in their policy prescriptions. Instead, as Henry notes in his rebuttal to Gene, they are in tone and overall perspective. To Gene and Belle, budget deficits are far more significant than a mere matter of government spending more than it collects. They are symptoms of a larger disease that Gene defines as nothing less than a risk to fiscal democracy.


Their concern: Because so much of the federal budget is mandated—not only Social Security, Medicare, and Medicaid, but the interest on the money we borrow to pay for these programs—that today’s legislators have little to say about government priorities. Unless lawmakers are willing to address social insurance programs, all they can do is tinker around the edges of domestic policy.


Belle, a top budget official in the Clinton Administration, and Gene, a top tax official in the Reagan Administration, share an additional fear: that spending on programs for the elderly will inevitably short-change others, especially children.


But where Gene and Belle define big government spending on Medicare and Social Security as both excessive and a sign of profound fiscal failure, Henry proudly embraces these programs.  “What Steuerle sees as problems,” Henry writes, “I see as achievements.”


For instance, Henry agrees that Medicare will require ongoing changes, but finding new efficiencies in health care delivery, he argues, will take many years. Beyond the reforms already enacted as part of health reform, don’t count on medical spending cuts as a source of deficit reduction any time soon, he argues. 


All four do agree that Washington must take a hard look at tax policy in the context of long-term fiscal imbalances. All favor long-term reform, and all would scale back tax expenditures, those targeted tax subsidies that feel much like government spending. And Henry, Gene, and Greg like a value-added tax.


But, here again, they differ on scale. Henry and Greg would place much more of the deficit reduction burden on new revenues, while Gene and Belle feel there are limits to how much of the deficit problem can—or should– be addressed through higher taxes.


These two debates are provocative and may challenge some of your preconceived notions about liberals and conservatives. Read them.