Do We Need an Election to Fix the Deficit?

By :: May 17th, 2011

I spent this morning at one of those Washington institutions: the budget roundtable. Today’s (at the Aspen Institute) gave me a chance to pose a question in exchange for my muffin:  Should Washington await the results of the 2012 election before reaching a cosmic budget agreement?

It will, of course. The odds that President Obama and Congress will reach across the gaping fiscal divide anytime soon are vanishingly small. But does it even make sense for lawmakers to agree to what would be a profound change in the relationship between government and the people without first having an election?

Here is why they should wait…and why they should not.

Why we need an election:

Education: The public desperately needs to learn about the real consequences of big deficits and what it would take to reduce them. Polls show that people overestimate the cost savings of cutting foreign aid and “waste, fraud, and abuse.” They also overestimate the financial problems of Social Security and grossly misunderstand the nature of Medicare. And they are completely mystified about the workings of the tax law. What better forum to highlight all of these issues than a political campaign?  

Consensus building: Today, the public is not prepared to either sacrifice benefits or pay higher taxes to reduce the deficit. A December 2010 Pew poll reported that only two deficit reduction ideas—freezing salaries for federal workers and raising Social Security taxes for high-earners-- enjoyed majority support.  Do Americans really want to cut the deficit, and how? That’s what elections should be about.  

The 1994 presidential race is an interesting case study. Before that campaign, there was little public support for budget cutting. But key swing voters were moved by Ross Perot’s ceaseless focus on the deficit, according to political scientist James Shoch. Exit polls that year showed that more than half of all voters—and two-thirds of Perot voters--saw deficit reduction as the single most important issue. While Bill Clinton didn’t campaign on deficits (in fact, he ran on new public investment) he quickly flipped after the election—in part because of that change in public mood generated by Perot.     

Here is why we should not wait for the election to address deficit reduction:

Promises. Promises. Candidates have an unfortunate tendency to make promises in political campaigns. And those vows make it harder, not easier, to reach the kind of political compromise necessary to reduce the deficit. A GOP candidate inevitably will be forced to take “the pledge” to never, ever raise taxes. President Obama will be pushed by the left to “protect” Social Security and Medicare. And reversing those promises can be fatal. The story of President George H.W. Bush’s “read my lips” vow to not raise taxes and his subsequent abandonment of that pledge and election defeat is built into the DNA of all pols. Thus, there is no worse forum to highlight tough issues than a political campaign.  

The Noise. In theory, it sounds great: Obama lays out his vision of gvernment in an era of fiscal constraint. The GOP challenger does the same. An informed electorate chooses. Flags waive. Birds sing. We all hum America the Beautiful.

But what idiot thinks there will be a serious discussion of fiscal policy—or anything else—in 2012? Modern elections are decided on personality and unpredictable and ultimately irrelevant issues (Did Hillary cry? What about Rev. Wright?) Serious policy debates, such as they are, usually focus on topics that have little to do with the reality of governing.  For example, Obama’s promise to close the prison at Guantanamo was far more important to many Democrats than his (rather modest) health reform plan. A real debate about tax expenditures? Please.

Serious deficit reduction will await the 2012 election results. I hope the campaign will clarify matters, but I'm not counting on it.

16Comments

  1. Michael Bindner  ::  2:27 pm on May 17th, 2011:

    I think you mean the 1992 election

  2. Michael Bindner  ::  2:49 pm on May 17th, 2011:

    The election will be about whether to keep Obama on – and judging by the lack of viable candidates against him at this point – the answer is a no-brainer. He will stay on unless the latest incarnation of the Reform Party – the Independence Party of America, runs a strong candidate while the economy crashes around Obama. If gas goes down and home values go up by even $50,000 for most people by election day, Obama should win.

    This speculation also ignores the fact that there will either be compromise or ruin on the debt ceiling before 2012, as well as automatic tax increases in 2013 if no compromise is reached on the tax issue.

  3. Sid F  ::  5:00 pm on May 17th, 2011:

    Two points

    1. Serious deficit reduction may occur this year if Obama caves to the Republican hostage taking on the debt ceiling. It is certainly not clear at this point how that issue will resolve itself. Given the historical record a surrender by the President is probably an even bet.

    2. The 2012 election may well result in the re-election of the President, but it may also result in the Republicans gaining seats in the House and taking control of the Senate. In that case the Republicans will call those wins a mandate, and we are right back where we are today.

    Serious deficit reduction will come

    1. If Obama concedes the issue in debt ceiling negotiations.
    2. If a Republican is elected in 2012.
    3. If Obama concedes the issue in the late 2012-13 with the expiring Bush tax cuts on the table.
    4. In 2013 if Obama is re-elected and the Republicans hold the country hostage and Obama concedes the issue.
    5. In 2015 if Republicans win a veto proof Congressional majority.
    6. In 2017 if Republicans win the Presidency.
    7. A fiscal crisis where inflation takes off and anti-inflationary monetary policy raises interest rates to unsustainable levels and foreign investors refuse to buy U. S. debt.

    Take your pick. Note that all of these scenarios result in continuation of the Bush tax cuts and massive decreases in non-defense discrtionary spending.

    Now it may be that if re-elected Obama will take a position of vetoing any extension of the Bush tax cuts for high income tax payers even if it means letting the tax cuts for middle and low income tax payers expire, but I wouldn’t bet the farm on that one.

  4. Michael Bindner  ::  5:47 pm on May 17th, 2011:

    After the Ryan budget proposal, the GOP will be lucky if they can elect the dog catcher in Montgomery, Alabama. Anyone running in a swing district will use that vote against the incumbent. When you look at races on a district and state level, the GOP has picked up its theoretical maximum in the last election due to the down economy. The 62 swing district are all held by the GOP. Without a viable candidate at the top (and if you know of one, name him), many of those seats will go back into Democratic hands. Romney is a no go, as the party activists as well as the insurgents don’t like him. As Lawrence O’Donnell pointed out last night, when Pawlenty and Gingrich were suspended by FoxNews for running for office, Palin was not – a major indication she is at least smart enough to know she is not presidential material.

    Obama may be beaten, but not by a member of the GOP. Note that in the House, the budget passed requiring Democratic votes and non-Tea Party Republicans. That same coalition will pass debt limit legislation. The only real question is how to make it look good enough to keep McConnell from being primaried by the Tea Party (which would all but gaurantee that it goes Democratic) and have Boehner avoid a palace coup when he blinks on the issue. I would need to see the inside math to determine if a Boehner-Hoyer alliance could control the House – but I don’t think either can bring enough to the party to get to 218. If they could, it would be better for the nation if they did.

  5. Sid F  ::  8:23 pm on May 17th, 2011:

    If NY26th goes Democratic in a way that cannot be attributed to a third party Tea Party candidate splitting the Republican vote then Mr. Bindner may be onto something.

    If it is held for the Republican Party even with the Republican campaigning in support of the Ryan plan and a third party splitting the vote, well, hold the Democratic celebration.

  6. Rob in CT  ::  3:31 pm on May 18th, 2011:

    Serious deficit reduction will come


    2. If a Republican is elected in 2012.

    5. In 2015 if Republicans win a veto proof Congressional majority.
    6. In 2017 if Republicans win the Presidency.

    You can’t possibly actually believe those things, can you?

  7. Sid F  ::  7:09 pm on May 18th, 2011:

    “You can’t possibly actually believe those things, can you?”

    Incredibly enough I can and I do.

    To understand this you need to understand that for Conservatives the deficit is not the end but a means to the end. The end is a substantial reduction in the role of the federal government, and ultimately reducing government spending to 14-15% of GDP in the long term, 18% in the near term.(see Norquist, Grover, Heritage Foundation Fiscal Plan etc).

    If Republicans take control of the government they will start to implement policy to reach this goal. There will be substantial reductions in non-defense government spending.

    Note I did not say the deficit would be eliminated, just that there would be signficant deficit reduction (which was the point of the original post). Those who do not believe this radical decrease in spending would take place should disbelieve it at their peril.

  8. Michael Bindner  ::  7:39 pm on May 18th, 2011:

    It won’t, because the Tea Party will drop the GOP like a hot potato if it puts any effort at all into cutting Medicare or the Defense industry(which many Tea Partiers rely on for their jobs and pensions).

  9. SteveinCH  ::  9:40 am on May 19th, 2011:

    There is this little thing called proof that you perhaps do not understand. I could equally say that Liberals desire to increase spending to infinity in the long term (see Obama, Barack, CBO analysis of the President’s budget, alternative fiscal scenario). Would that be any more legitimate an argument?

  10. Polly Rickert  ::  4:03 pm on May 19th, 2011:

    I find your generalization of the Tea Partiers interesting. Thus far, the only generalization I can make about them is that you cannot make generalizations. Most of the Tea Partiers I know in my area don’t fit into the category you suggest at all.
    I think the Tea Party will drop the GOP if they fail to deliver on the promise of less government spending. I don’t think you can assume much more than that.

  11. Sid F  ::  7:22 pm on May 19th, 2011:

    I think Ms. Rickert is correct in her assessment of the Tea Party. It is a diverse movement, held together by a single policy position which is the severe reduction in federal government spending.

    It is impossible to discuss and forecast economic policy without an understanding of the political landscape, because tax and spending is controlled by the Congress. For reasons too detailed to be discussed appropriately here, the following are what should be considered a description of the landscape.

    1. There are a huge number of “safe” Republican House and Senate seats. These are seats that will send Republicans to Washington regardless of their position on the issues.

    2. In these districts and states, the House Member or Senator will be selected in the Republican primary.

    3. In the primary, the extremist, single issue highly committed voters rule. For Republicans this is the Tea Party.

    4. As a result, extreme fiscal conservatives will win the primaries, be elected to Congress and be able to vote to cut popular spending programs with no fear of retribution from the voters.

    This is essentially what happened in 2010, will happen in 2012 and unless some event intervenes. will happen for the foreseeable future.

    Thus once these people are in a position to enact their agenda, they will enact their agenda. That agenda may not have the support of the majority of the populaton, but under our electoral system that is not necessarily necessary.

  12. Michael Bindner  ::  3:24 pm on May 20th, 2011:

    It is held together by not liking Obama and not much else.

  13. Michael Bindner  ::  3:32 pm on May 20th, 2011:

    The number of safe Republican seats is about 62 below the current membership. We know this because Obama won 62 Districts now in GOP hands. This leaves you with 181 solid GOP seats. That number will go down as anchor babies become voters, especially in the sun belt. If the GOP keeps up its current rhetoric on immigration and especially anchor babies, it will alienate all Latino voters. It now gets roughly a third of these. It is doing little to keep this third and everything possible to lose it, even as the Tea Party ages out of voting (a polite way to say dies off). Many of the socially conservative positions the Tea Party stands for across the board on such issues as immigration, gay marriage and abortion mean nothing to younger Republicans, which is why the TP has few adherents under 55 (except for GOP activists).

    Now is the time for compromise, not triumphalism.

  14. Michael Bindner  ::  3:33 pm on May 20th, 2011:

    People who saw Paul Ryan’s Medicare town hall might disagree with you on this.

  15. Michael Bindner  ::  3:51 pm on May 20th, 2011:

    On health care, they at least want to preserve current benefit levels, although they would try to make spending smarter as far as end of life. Cuts to Social Security are off the able too.

    I would rather they took private accounts more seriously and explored a version of them that would advance the power of workers vis-a-vis management – although going so would likely have the Tea Party’s financial backers pour cash into campaigns to leave Social Security alone.

    Democrats have no problem cutting defense rather sharply (except in California).

  16. SteveinCH  ::  9:54 am on May 21st, 2011:

    Excellent nonanswer Michael. Typical.

    Preserving current benefit levels will cost a whole lot of money over time. Again, I direct you to the CBO’s long-range forecast. There is no solution here that doesn’t involve rationing and/or price controls. We are only debating the form such rationing will take. Well actually, the Dems are still using the magical pony, there are no trade off argument which you do such a nice job of repeating.