Friday, July 29, 2011

Apocalypticism and the Budget

The really weird thing about the budget debate raging in Washington is how little separates the two sides. Obama was willing to cut a deal that would raise taxes by only a few hundred billion over five years, far less than they are going to go up if some kind of deal isn't made before the Bush tax cuts expire in 2012. On the spending side, the Times notes that Speaker Boehner's plan would result in very small spending cuts over the first few years:
The Congressional Budget Office found that the bill would save $22 billion next year and $42 billion in 2013 — at a time when the government is spending $3.7 trillion a year.
All the plans defer any real cuts to the future, when future Congresses can simply change their minds about them. I think a balanced budget amendment would be a big deal, and a disaster, which is why nobody thinks one will pass and why, I suppose, Tea Party congressmen are so fixated on passing one -- the amendment is the only really big proposal in play.

Meanwhile, though, pundits and some Congressmen continue to speak about the debate as if fundamental issues of our civilization were at stake. Krauthammer:
We’re in the midst of a great four-year national debate on the size and reach of government, the future of the welfare state, indeed, the nature of the social contract between citizen and state.
Are we? We had undivided Republican government for four years, 2002 to 2006, and the result was a huge increase in government spending, especially on Medicare and "homeland security." My biggest complaint about the Republicans now is not that they want to do radical things but that they are so dishonest about their agenda. All they really care about is keeping taxes on the rich low, and in that cause they are willing to run gigantic deficits forever, while pretending that they lie awake at night worrying about the debt.

In the long run, we can't balance the budget without either big tax increases or major cuts to Social Security and Medicare, and since Republicans are completely dependent on the votes of old people, they can't make those cuts. Paul Ryan's plan is a sham, because it requires future Congresses to cut off funding for old people's health care, and future Congresses aren't going to do that. So the only real options are tax increases and deficits.

It bugs me that our political class is risking government default to posture over these phony budget wars, because the stakes are really so small.

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