President Obama and congressional Republicans made it clear this week that there will be no clarity on the federal budget and long-term national debt. Such clarity would require an honest presentation of hard choices. No politician lives for the day of straight talk with the public.
The general outlines of the budget problem are not hard to agree on. The current high levels of deficit spending were brought on almost entirely by the Great Recession and will decline as (if?) the economy grows. The real budget crunch lies down the road a few years with exploding entitlement spending—mostly in Medicare and Medicaid. For a variety of reasons paying for Social Security is not as bleak a problem as the health care entitlements, and is easier to address in the long-term. Paying for Medicare and Medicaid through the aging of the baby boomers will require painful changes in taxation and benefits. These are hard truths, which elected Democrats and Republicans in Washington avoid in their own way.
The President delivered a dull State of the Union address chock full of empty platitudes. We need to educate our children—that’s bold. We will persevere through tough times because we are great—who doesn’t want to hear that? It seems as if the President was most intent on countering the criticisms of those tuned-up voices on the right who claim that he doesn’t believe in “American Exceptionalism” or some such nonsense. We are the best! How fantastic is that?
Of actual proposals there were few. A five year freeze on non-defense discretionary spending when Obama had previously proposed a three year freeze—this is not big news. A few dollars for research and development. Some talk about reforming corporate taxes and one sentence about eliminating the Bush tax cuts for the top two percent. That’s about it, and none of this will pass through the Republican Congress.
The Republicans will focus on cuts to discretionary government programs; easy to sell to conservatives, bad for short-term economic growth and entirely beside the point in addressing the major long-term budget concerns. They will not touch entitlements.
To maintain a pretense of acting boldly, 21 Senate Republicans are proposing a Balance Budget Amendment with a new twist. Balanced Budget Amendment proposals have circulated around conservative-ville for decades. This one has a new and entirely predictable feature, i.e. a super-majority requirement for any tax increase. California has this super-majority requirement for tax increases and it works just great. The new Republican proposal also caps the yearly budget at an arbitrary 20% of GDP.
Constraining the federal budget to such limitations would be disastrous—hogtying the ability of the federal government to act in the national interest when such action requires extra funds like during the recent financial collapse, or incurring deficits to boost spending and support the social safety net during recessions. It would tie federal budgeting and spending activity to artificial fiscal years rather than organic economic and fiscal trends and periods. A Balanced Budget Amendment would be a historic surrender of the fundamental budgeting power granted to Congress in the Constitution and an admission that hard choices are beyond the purview of our current crop of federal elected officials.
Plumping for a balanced budget amendment is also a way to avoid actually doing anything. Amending the Constitution is a process that takes years, and in this case is unlikely to succeed. In a larger sense this new proposal represents a continuing Conservative search for an automatic mechanism to compel adherence to what they offer up as fundamental principles—smaller government and fiscal discipline. Republicans know full well that whenever empowered over the last thirty years to actually put these fundamentals into effect they fail to do so. In effect these 21 Senators are saying tie our hands so we don’t sin. The proposed Balance Budget Amendment, and thirty plus years of conservative “Starve the Beast” theory, should be seen in this light, cold turkey straight jackets instead of a responsible twelve-step approach to fiscal sobriety.
Guest post by Jeffrey Goldberg