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Wednesday, June 06, 2012  

Tough Votes

Ross Douthat's interpretation of the Wisconsin recall is not without merit, but at two points he makes big, unnecessary, and annoying mistakes. First:

To understand the broader trends at work, a useful place to turn is Jay Cost’s essay on “The Politics of Loss” in the latest issue of National Affairs. For most of the post-World War II era, Cost argues, our debates over taxing and spending have taken place in an atmosphere of surplus. The operative question has been how best to divide a growing pie, which has enabled politicians in both parties to practice a kind of ideologically flexible profligacy. Republicans from Dwight Eisenhower to George W. Bush have increased spending, Democrats from John F. Kennedy to Bill Clinton have found ways to cut taxes, and the great American growth machine has largely kept the toughest choices off the table.

But not anymore. Between our slowing growth and our unsustainable spending commitments, “the days when lawmakers could give to some Americans without shortchanging others are over; the politics of deciding who loses what, and when and how, is upon us.”

So the age of "surplus" is over and the age of "slowing growth" is upon us, with predictably baleful consequences for our politics. And this may be true in a certain narrow sense. But "surplus" and "slow growth" aren't weather patterns; they happen for policy reasons. We are not entering an age of "slowing growth" the way day turns to night. Rather, our institutions are choosing policies that do not promote growth, both at home and abroad. The Fed has policy tools--asset purchases and NGDP targeting specifically--that could increase growth and it has chosen not to use them. Holding Fed action constant, the federal government and states have policy tools--infrastructure spending, aid to states and cities, temporary tax cuts--that could increase growth and they have used them at best intermittently. We are experiencing "slowing growth" because we've chosen austerity, plain and simple, as often as not in accordance with Ross's own wishes. As a wise man once insisted, don't micturate on my hat and tell me it's raining.

The same thing is true, more or less, with "unsustainable spending commitments." As budget wonks have been pointing out for years, our budget problems come primarily from rising health care costs. If we could find a way to rein in those costs--and this, too, is a policy question and not a law of physics--most of our long-term fiscal gap would disappear.*

And then there's this:

The House Republicans have spent the past two years taking tough votes on entitlement reform, preparing themselves for an ambitious offensive should 2012 deliver the opportunity to cast those same votes and have them count. The Senate Democrats, on the other hand, have failed to even pass a budget: There is no Democratic equivalent of Paul Ryan’s fiscal blueprint, no Democratic plan to swallow hard and raise middle class taxes the way Republicans look poised to swallow hard and overhaul Medicare.

There is nothing true here. Once again, the "entitlement reform" consists of the following:

* Big, immediate tax cuts for rich people
* Big, immediate cuts to all spending on the poor, education, and public infrastructure, while exempting the Pentagon
* A promise to replace Medicare with insurance coupons for new enrollees in ten years
* A promise to close tax loopholes to be named later

That's the whole plan. There is nothing "tough" about punching poor people and children in the face while giving big tax cuts to the wealthy and exempting non-poor, non-disabled retirees or near-retirees from the pain, all while promising big hard choices later. That's the "blueprint," which is like saying a drawing on a cocktail napkin is a detailed schematic. 

On the other hand, "entitlement reform" has already begun thanks to none other than the current president and the 60 Senate Democrats who voted for the PPACA in 2010. That law caps overall Medicare spending growth at the same rate that Paul Ryan caps the growth of his insurance coupons. The big differences are that the PPACA keeps the Medicare purchasing power intact while Ryan breaks it up into smaller units of private insurance, and that the PPACA cost controls go into effect next year while Ryan's go into effect ten years after the law passes. Now in case you're inclined to think, "no big whoop, what's ten more years of uncontrolled health care inflation?" remember that Obama's plan was so controversial that every Republican and, if memory serves, a few Democrats voted to prevent it from being implemented. What are the odds of a serious, and perhaps successful attempt to delay or forever prevent the introduction of Paul Ryan's Amazing Shrinking Insurance Coupons getting off the ground in Congress between January 2013 and January 2023? I'd say they're pretty darned high.

A truly bold attempt at entitlement reform from the right would not exempt current beneficiaries and it would name names when it comes to eliminating tax loopholes. And as it happens, a fiscal commission basically proposed doing those things--the Simpson-Bowles commission. If you want to be a very serious person, you must scold the president for "failing" to "embrace" the results of the panel he proposed. But, it must be countered, Paul Ryan actually voted against the thing. Liberals weren't happy with it either, but they proposed their own plan, which closes the fiscal gap mostly through big tax increases on wealthy people. So let's make up a little fiscal seriousness scorecard, shall we?

The President plus Congressional Democrats: Limits on Medicare spending (enacted)
Simpson-Bowles: Pain for all (proposed)
House Progressives: Pain for the rich (proposed)
Paul Ryan, House Republicans: Pain for the poor and disabled now, Medicare coupons in ten years (proposed).

I get that Ross needs to play for the team at all times, but there's just no excuse for this kind of nattering on his part or that of anyone who plays a role in elite-level discourse. The discouraging thing about this very bad column is that its worst parts all reflect conventional wisdom. We're just doomed to be much poorer now. We can't afford to provide health insurance to anyone anymore. The only serious plan to deal with our increasing share of misery is Paul Ryan's. None of these things is true. These are actually pretty tedious technocratic issues that face us as a society, not age-defining moral battles. If that's what they prove to be, it will be a symptom of our political failures rather than our philosophical seriousness. It seems that Ross is, in step with many of his colleagues, rather enamored of human suffering and the virtues it supposedly returns us to. But if that's the ideological point being argued for, it should be more explicit.

* Now to be clear, I don't at all think that our politics will work as it should. At this point, it would count as a decent outcome for the rulers of the global economic system pull our institutions out of their drain-swirl of dysfunction in a few years and return us to something like normal economic conditions. In the mean time, however, it's pretty clear that massive concessions will have been wrung from the developed word's poor and middle classes, starting most obviously with retirement security. This is the global context in which everything from attacks on pensions to Social Security privatization to Ryancare old-age insurance coupons should be understood. When the dust settles on the current downturn--that is, if the global system isn't radically destabilized--there will almost certainly have been a major redistribution of the fiscal commons away from the middle class. The age of austerity will be weathered, if it is to be weathered, without any meaningful contribution from the wealthiest 5% or so. Their retirements will remain secure. They will remain independent of the public services they have degraded through austerity politics. They will continue to have access to first-rate medical care. If we take Ross Douthat's advice and all vote for Mitt Romney, they won't even have to bump their top marginal tax rate from 35% to 39.6%.

posted by Benjamin Dueholm | 11:21 PM
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