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Tuesday, April 09, 2013  

The Budget's Via Dolorosa

With the president's policy people having semi-officially endorsed the idea of cutting Social Security benefits to a resounding cry of "dead on arrival" from Republicans, I can't resist pointing out that this is a rare area in which I've managed to call the politics pretty presciently. Here we are, back in the dreadful summer of 2011, asking why Republicans are insisting on free falafel. And here we are looking at the politics of this from the Democrats' side of the aisle.

Certain stable facts of American life have been neglected by the Washington media in understanding what is going on with these never-ending budget battles.

1) Republican voters don't want cuts to retirement programs, at least not for themselves.
2) Neither do Democratic voters.
3) But Democratic Party leaders are in many cases interested in fiscal consolidation for its own sake and are eager to cut retirement programs.
4) Republican Party leaders are absolutely unwilling to get more revenue from upper-income people.

I just don't see any way a deal gets done under these circumstances.

The somewhat more interesting, and perhaps tractable, question is why can't American politics be sorted any differently than this? Why do progressivity on the revenue side and ambition on the spending side have to go together, and vice versa? Yglesias got at this recently by wondering why Republicans, instead of promising to slash spending in order to cut taxes on rich people, don't promise to slash spending in order to cut taxes on middle-class people. For the overwhelming majority of Americans there is no actual trade-off between public services like police, schools, and retirement insurance and income lost to the top tax rate. On the other hand, if stingier public services could fund tax cuts aimed at the median and below, voters who aren't ideologically or demographically aligned with the conservative coalition would have a choice to make. You like well-funded schools, but do you like them more than spending more money in a manner of your own choosing?

On the other hand, Democrats have made the question of who pays for new or growing public needs inseparable from whether those needs are genuine. A new cost that is not borne by wealthy people is not, apparently, a cost worth paying. Politically this is smarter than the Republicans' gambit--who doesn't want stuff paid for by other people?--but it comes at a serious cost. For one thing, it feeds an anti-government, anti-public sector ideology among wealthy people, who are in actual fact every bit as likely to benefit from a strong public sector as middle-class people. For another, it suggests to voters at the median that public spending is only worthwhile if they're not paying for it, which is not true even from the standpoint of progressive distributional concerns. Good schools, good roads, and secure retirements have a strongly progressive impact even if they are funded in a flatter manner than the present tax code.

I have attempted to sum up this state of affairs with this crude chart. And my question is, why isn't anyone trying to occupy those empty quadrants?

posted by Benjamin Dueholm | 4:53 PM
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