What if all of the familiar sides in the current debate about the economy -- left, right and center -- fail to provide convincing plans? Sadly, it is easy to make the case that they do.
Four major positions are represented in the debate: supply-side conservatives, fiscal conservatives, neoliberals and progressives. The last three -- fiscal conservatives, neoliberals and progressives -- make valid and important points. But none has a persuasive vision of how to promote long-term American growth and equity.
During the cold war, conspiracy theorists would sometimes suggest that the American and Soviet militaries were secretly in cahoots. Each needed its civilian overlords to keep the money flowing, and to make that happen, each needed the other to appear menacing. "Hey Vasily, we've got a difficult budget vote coming up. Would you mind sending a sub into the Persian Gulf?" "No worries, Rick, and we're super-pumped about your big war game next spring." Or something like that.
They did it! They kept the government open! Tourists can still see the pandas. Hooray!
The White House is trying to spin this as another in a growing list of across-the-aisle joint successes. Like the budget busting tax deal in December, where policymakers of both stripes came together in agreeing to borrow close to $1 trillion from their kids to cut taxes for every taxpayer they could find.
Please. Heralding this as a success is like cheering me on at the office for handing in my taxi receipts. Late.
I have been thinking a lot about the many lawmakers who have sworn to never -- never ever -- raise taxes.
First, how on earth did Grover become a single-name celebrity? Cher, Madonna, Fabio ... Grover?
I'm not talking about the little blue furry puppet. I'm talking about Grover Norquist. He's the leading anti-tax advocate in Washington. And his "Taxpayer Protection Pledge," to which many members of Congress have signed on, is playing an outsize role in the fiscal debate.
In general, I think it's totally fine to oppose tax increases.
I wish government were smaller and more efficient. But I'm not a spending limit kind of guy. I'm old-fashioned and prefer to be governed by human beings. Spending limits are formulas, and I can't call up a spending limit, ask a spending limit a question, write a letter to a spending limit, or give money to a spending limit's opponents.
America is at a crossroad. We know that a daunting series of fiscal challenges lie ahead. We know roughly what they are and when they will occur. And we have the chance to address them before they get out of hand. We also know that the economy cannot fully recover or remain strong without addressing these fiscal challenges. If they are left unchecked, we will eventually face a greater crisis, although we cannot say with certainty when it will occur or what the tipping point will be. Yet, policymakers may fail to agree on a plan to right our fiscal course over the next few years.
I think we a can find a way to get a large-scale budget agreement that tackles our insane multi-trillion dollar debt in time to avert a fiscal crisis. I am not saying we will definitely get it done. But I do think, even in the current hostile partisan environment, that it's becoming increasingly possible.
And as a long-time pessimist and deficit worrier, this new feeling -- this glimmer-of-hope-feeling -- is a whole new sensation. I kind of like it.
It's rare that those of us concerned about the nation's fiscal course come bearing good news. The federal debt, after all, is as high as it has ever been in the post-1945 period and is growing uncontrollably. Under our best projections, the debt will grow from nearly 65% of gross domestic product today to over 90% by the end of the decade — a level that experts have warned could have dangerous economic consequences.
If Washington, D.C., were a sovereign country, much of its GDP would consist of exports of paper, in the form of plans for the future of Social Security. Whether offered by liberals or conservatives, almost all of the proposals for Social Security are doomed by political realities that the authors of these plans refuse to acknowledge.
The winners were announced yesterday during their “The Human Side of the Fiscal Crisis” event, which featured a very elevated and constructive discussion. I listened to most of the event while at my desk (which you can too). For me, the presentations collectively reinforced the importance of shifting the current focus away from spending cuts toward identifying ways to increase revenue. It seems clear that will need a bigger pie in order to meet our responsibilities to each other as a society. This includes being able to provide a reliable safety net to assist those who need help but it’s also a precondition for the types of investments in education, infrastructure, and research that will determine our future prosperity.
Now, I’m a firm believer in responsibility. If we can find waste, fraud, and abuse in federal spending, let’s start by cutting that out of the budget. I’d like us to get a handle on long-term health care spending and bend the cost curve. I think the Pentagon's budget should assessed and probably reduced. But I also believe there is an imperative to increase the revenue side of the ledger. Almost all of the fiscal commission plans that approach this topic credibly recognize that some new source of funding will be part of the solution. I welcome the discussion as to whether this should be a value-added tax, a financial transaction tax, a carbon tax, or the simple gas tax. We should be focusing on these options and ways to ensure they can be implemented progressively so the burden is fairly distributed.
Here’s one of the runner ups, Anna Flaherty, that I missed out on the cash prize but I thought should have won. She makes some excellent points in a compelling presentational style. I’ve always been partial to the singer-songwriters who put themselves out there with just their guitar. But this is the first song I’ve ever heard featuring the gas tax. Well done, Anna. I'm not sure Dylan could have done much better.