Standing Athwart Your Accountant Yelling "Don't You Dare Stop, Whatever You Have to Charge Me Later"
Steven Pearlstein writes:
Let us begin with the budget scolds’ recent indictment of President Obama for his alleged scheme to turn the United States into a third-rate economic power by racking up more than $10 trillion in additional government debt. The evidence for this supposed fiscal treason is the 10-year budget projection that was included in his spending proposal for the next fiscal year.
Do you think, maybe, we could cut the guy a little slack? After all, he’s been in the job all of four months. He inherited two wars and the worst economic crisis in 75 years. And he came to office after an eight-year orgy of tax cutting and spending.
When your predecessor launches two costly wars, and presides over an orgy of tax cutting and spending, that is all the more reason to be fiscally restrained! It isn’t an excuse for spending even more of the country’s money. Liberals seem to understand that “I’m better than Bush” is an insufficient benchmark on torture. Imagine if President Obama said, “Cut me a break, my predecessor presided over Abu Ghraib, water boarding, and all the rest — whereas I just got here, and I really want to kick three or four detainees in the groin.”
Would that be acceptable just because Bush was worse?
Yet on fiscal matters, some Democrats treat deficit spending as a vice that the political parties get to indulge in equal measure—as though it’s a matter of short term political equity, rather than America’s long term health. “It’s our turn to spend now, it’s only fair!” Well, apply that logic and no one ever stops spending. That way lies ruin! The Democrats claim that they are the grownups who can govern responsibly, whereas the Republicans were the spendthrifts who mortgaged our future. Okay, prove it. Please!
Later in the same piece, Mr. Pearlstein writes:
The biggest threat from this budgetary obsession is likely to come up in the debate over health-care reform. Under pressure from budget scolds, Congress and the administration have agreed that any plan to extend health care to 47 million uninsured Americans and reform a $2.6 trillion industry will be “budget neutral” within the first five years after enactment.
There is, for example, general agreement that it will cost $100 billion to $150 billion a year to provide the subsidies necessary to allow all Americans to afford a basic health plan. But the Congressional Budget Office, the official scorekeeper on these matters, has been reluctant to certify the major cost savings that might come from various proposals to restructure the health delivery system, or reform the health insurance market to make it more competitive, or change the way doctors and hospitals are compensated so they have the incentive to use only the most cost-effective treatments.
It is, of course, the CBO’s job to be skeptical, particularly after a number of past experiments in this area have yielded disappointing results. But it is also true that because nothing of this scale and complexity has been tried before, projecting the fiscal impact is next to impossible. This budgetary standoff will leave Congress with no choice but to try to finance its health-reform efforts by raising taxes or limiting payments to doctors and hospitals, possibly jeopardizing the entire project.
We can certainly applaud policymakers for their reluctance to enact another expensive and popular entitlement program without finding the money to pay for it. But it is folly for them to put themselves in a political and procedural straitjacket. In all of history, no revolution was ever made by budget analysts.
Yeah, viva la revolucion! After all, when has a revolution ever gone wrong? No need to worry about catastrophic unintended consequences. In seriousness, this is almost a caricature of the attitude that makes me mistrust liberals on domestic policy initiatives. The author’s premise is that we cannot predict how much this policy is going to cost, because it has never been tried before. His recommendation is that we should therefore go full speed ahead, whatever the unknowable fiscal consequences. Yikes.
And Yglesias agrees.
Well, Clinton did leave the country with a budget surplus, so we’ve got some adult history here. Also, I think the worst economic crisis in 75 years really do the majority of the heavy lifting in that sentence.
The revolution quote is certainly overblown. That said, most revolutions fail to deliver the goods. On the other hand, we’re the only major developed country without a universal health care system. I actually suspect that some technological and bureaucratic revolutions have probably had budget analysts in leading roles.
There are going to need to be some tax hikes at some point. However, it’s difficult to tell how much without first seeing which of the innovations have worked. We’ve tried doing the budget stabilization first and the policy reforms second and we’ve been badly burned for our efforts.
— Greg Sanders · May 22, 12:15 PM · #
I hope you understand what you’re really saying here, Conor, because this is a genuine problem for mature governance: as long as Republicans are allowed to do pretty much whatever they want, with no regard to fiscal responsibility at all, but Democrats are expected to operate under a different set of rules, you’re privileging irresponsible governance. Why should a party practice fiscal responsibility if its up to the other party to clean up the mess afterwards? And there’s little question that the conservative line of constant tax cuts in the face of any situation, ever, is going to be an irresponsible and immature position much of the time. But when you can then pawn off responsibility for fixing the country on liberals, what’s the harm?
When you say that you distrust liberals on domestic policy, by the way, it made me laugh out loud, because this comes in a post where you acknowledge that it was conservatives who ran this country into the ground. And this comes back to something I encounter again and again, where conservatives are forcefully critical of liberals, and yet hold liberal politicians and liberal politics to higher standards than they hold their own ideological brethren to.
— Freddie · May 22, 12:28 PM · #
How about a deal? The various conservatives suddenly whining about fiscal responsibility tell us how they’ll pay for the $1.2 trillion deficit that Democrats inherited, and we’ll make sure that Democrats tell us how they’ll pay for anything new they propose. Okay, start …. now.
— Bo · May 22, 12:45 PM · #
No, Clinton didn’t leave us with a budget surplus; a Republican congress left us with a budget surplus.
— jd · May 22, 01:08 PM · #
a Republican congress left us with a budget surplus
Uh, no. The same Republican congress switched to running deficits when we elected a Republican president. Generally, when a result changes, logical-minded people don’t presume that something that didn’t change was the cause of it. And since the executive branch authors the initial budget, there’s a pretty clear explanation for the president’s important role in this process.
— Bo · May 22, 01:32 PM · #
And also, since there seems to be a lot of youngster in here, it should be noted the Bush campaigned on the idea that the budget surplus should be returned to the American people. It was hardly a coincidence that it evaporated.
— Bo · May 22, 01:35 PM · #
Conor, before you talk about how irresponsible the Democrats’ health care plans are, I’d urge you to check out Ezra Klein on what happens if we don’t have some sort of health care reform. Long story short: it ain’t pretty. We need to reduce health care costs NOW. If not the Democrats’ plan, then what? And please keep your answer in the realm of a) not counterproductive from a health policy standpoint and b) politically feasible.
— Dan Miller · May 22, 01:42 PM · #
Bo:
Actually, quite a few conservatives and libertarians have been complaining about fiscal irresponsibility for years. But in terms of how I’d balance the budget, it’s pretty simple – immediate, drastic cuts to the overbloated defense budget; when the economy stabilizes, I’d also be supportive of some tax increases, the fruits of which should be solely earmarked for paying down the debt.
— Mark Thompson · May 22, 01:49 PM · #
Thanks, Mark, that’s good to hear. Now, the entire DoD budget is $600 billion, so we just need to hear what the other half is, and I think we’ve got a deal. Openness to tax increases is a nice gesture, but I can’t really count them because: 1) they’re unspecified, and 2) you really have to balance the budget before you can pay off debt; it’s just the way finance works.
— Bo · May 22, 02:32 PM · #
Argh! This comment seems to have gotten eaten up, but I wanted to point out that it makes little sense to credit Clinton or the GOP Congress for the late 90’s surplus. It makes a lot more sense to credit divided government, which seems to have the only track record approaching fiscal sanity over the last 50 years or so. Both parties, when they get control of the Executive and Congress, have pretty extensive track records of racking up huge deficits. It would seem that Dem pols, for the most part, are only concerned about tax rates when they aren’t getting their preferred spending projects, and GOP pols, for the most part, are only concerned about spending when they aren’t getting their preferred tax cuts. Of course, at some point this is going to have to stop and someone is going to have to stand up and actually try to do something that will require some political courage. Eventually though we’re going to have to pay the piper one way or another.
— Mark Thompson · May 22, 02:50 PM · #
Well, we had divided government under Republican presidents from 1980-1992, 2001-2002 and 2006-2008 also, and what we got from those periods was every bit of both the increased spending and tax cuts supported by either party, with the deficits to match. And Democrats managed a united government from 1960-1968 without exploding the deficit. I’d rather put my faith in vaguely plausible hypotheses that are correct at least as often as random chance would predict.
— Bo · May 22, 04:17 PM · #
It’s not really fair to call the $1.2 trillion deficit a “Bush deficit.” It’s the deficit for 2009, and:
1) It’s a vast outlier out of the 8 or 9 years you might want to attribute to Bush, so the least you can do is average.
2) The major drivers to the 2009 deficit are the bailouts, which (a) Obama also voted for and supported and (b) are discretionary and occuring under Obama’s watch, so Obama could chose not to do them if he wanted. A secondary driver is the stimulus, which is all Obama and no Bush.
3) To the extent that you argue that the events that drive the 2009 deficit are Bush’s fault, that’s a hard case to make. Most or all of the Bush era policies that arguably contributed to the unwind were present in the Clinton era as well and were supported by the Democrats.
Bottom line: Maybe some of the $1.2 trillion can be blamed on Bush, but some has to be blamed on Obama and congressional democrats, and some you might as well blame on the rain.
— J Mann · May 22, 05:36 PM · #
Never mind any blame at all, of course, on the costs of two mismanaged wars, at least one of which was an unnecessary war of adventure based on false and dishonest premises.
Who’s fault was that, again?
— Chet · May 22, 07:28 PM · #
No arguments that Bush had lots to do with huge deficits, but the notion that Clinton would have had a budget surplus with a Democrat Congress is laughable. He was dragged kicking and screaming into a balanced budget by the first Republican congress in 40 years.
And the notion that because Republicans were irresponsible with spending then we shouldn’t be outraged by the spending of the Anointed One is STUPID. I repeat STUPID.
Many conservatives were very unhappy with Bush’s entitlement spending. But it didn’t seem to make you liberals very happy either. You just hated that damn Bush so much you couldn’t see that his “compassionate conservatism” was simply more of what you guys like.
— jd · May 22, 08:45 PM · #
A liberal would blame both the bailouts and the stimulus (or at least the opportunity cost of the stimulus) on the GOP not because the GOP approved but because the GOP made them necessary. Obviously, the GOP will not see them the same way. But that’s the liberal’s general point—not “you started it”, but “you made this necessary”.
But this whole argument is from a flawed premise. It’s not how much we borrow that’s a significant difference between the ideologies—if the loans are cheap, it makes sense to borrow, and that’s the case under both Bush and, for now, Obama. Having ideological arguments about how much money we should borrow is foolish because it has more to do with exogenous factors (bond markets and stuff) than morality.
The key difference is what we spend the borrowed money on. In the Bush years, that money went to war and personal consumption, neither of which looks particularly wise now. Now it’s spent in attempts to fix the financial system, build infrastructure, deal with energy, reform health care, and, well, more war. Am I completely satisfied? No. But it’s an improvement. We’re spending our borrowed money on slightly less stupid stuff.
— Consumatopia · May 22, 10:00 PM · #
How the hell do YOU know it’s slightly less stupid stuff, Mr. wise man. You must be the only man in America who’s read the stimulus bill.
— jd · May 22, 10:35 PM · #
I’m not arguing to convince you, I’m arguing that some of you have the very terms of the argument wrong. I stated my beliefs not because I thought you would find them convincing, but because I hoped you would see where I was coming from.
But in answer to your question, I concede that there was waste in the stimulus. But I felt the things we went into debt for under Bush, war abroad and mortgages at home, were not merely wasteful but harmful.
— Consumatopia · May 23, 02:37 AM · #
You’re missing one huge point. According to your premise, the Bush years were stupid spending because of “personal consumption”.
That’s a mouthful.
First, it’s personal consumption, as opposed to the government spending somebody else’s money.
Second, WHO THE HELL ARE YOU TO SAY THE SPENDING WAS STUPID, if it was personal? MOST of us were responsible with our spending and are made to foot the bill for those who were irresponsible. And we are being forced to foot the bill (unfortunately started during the Bush administration) by the very people who had the largest share in encouraging irresponsible borrowing: Barney Frank, Chris Dodd, Fannie, Freddie….
And to top it all off, we are supposed to believe that the very people who encouraged profligate borrowing and lending, should be trusted to fix the problem by spending 4 times as much as Bush spent in eight years. Oh yeah, the country’s in the very best of hands.
— jd · May 23, 03:41 PM · #
Second, WHO THE HELL ARE YOU TO SAY THE SPENDING WAS STUPID, if it was personal?
I’m living with the externalities of the marketplace’s stupidity, just like everyone else.
Additionally, if the government is borrowing in order to make extra money available to the private sector in the middle of a war, I think that must be justified in terms of public benefit. The government had an assumption shared by Republicans and centrist Dems: if we made a lot of money available to the private sector, they would find something rational to do with it, expanding the economy in the long run. This assumption has been falsified.
The relevant distinction is not between spending and saving, but between consumption and investment.
— Consumatopia · May 23, 04:23 PM · #