Nov. 12, 2011 – 1:44 p.m.
Political Economy: Willful Disbelief
By John Cranford, CQ Columnist
There’s a tendency in Washington to cheerlead for Congress to put aside its differences and act in the best interests of the country (however that might be defined) rather than engage in gridlock and finger-pointing.
Such calls for action are clear, for example, in the demand for passage of bills that promise — probably without much justification — to increase jobs. But this cheerleading is most evident right now in the expressed hope that lawmakers on the joint deficit reduction committee will reach a deal to save $1.2 trillion over the next decade to avoid automatic spending cuts of the same magnitude.
Why? What makes a deal — a compromise between two competing ideologies — better than a stalemate? Maybe it’s a deep-down belief, one that actually runs counter to much of the history of this country, that, in the end, reality will trump political will. That does not happen often.
The most common articulation of this cheerleading takes the form of an assertion that if Congress “fails” to get a budget deal, the sky will fall under the automatic cuts.
There are two flaws in that argument. The first is with the word “fails.” Yes, Congress told itself in August to find a way to reduce the deficit or this draconian “sequester” — the automatic cuts — would kick in. But the real purpose was to save a specific amount, not to devise any particular method to arrive at those savings. So, to call an inability to agree on precise ways to pare the deficit a failure is to choose sides. Maybe there are reasons to prefer the automatic cuts.
The second flaw is in the notion that automatic cuts themselves are somehow worse than targeted savings — either by way of specific spending cuts, tax increases or both. In a macroeconomic sense, they are all roughly the same. Sure, there are different micro-effects, depending on who gets whacked and how. But if the goal is deficit reduction, the specifics really don’t matter. (Now, the goal itself might be flawed, but that’s a different issue altogether.)
The fact is, Republicans and Democrats really don’t agree on very much when it comes to fiscal policy decisions, and that’s why compromise proves so difficult to achieve. If they had their druthers, many lawmakers, if not most, from both parties would spend more and cut taxes — and the deficit be damned. That’s actually why we are where we are.
But the world has decided for the moment that enough is enough with all the borrowing. The result is that a grudging consensus has evolved that something has to give. Spending has to be reduced. Revenue has to be increased. And, so, Washington is cheerleading for a compromise and predicting failure.
Where There’s a Will, There’s a Way
In parallel with all the talk that “failure is not an option” for the joint committee comes the assertion that the congressional budget process is dead. The House and Senate can’t agree on a budget resolution to guide policy. Appropriations get rolled up into scary sounding “omnibuses,” or only slightly less frightening “minibuses.” Artificial deadlines, threats of government shutdowns and sequesters are put in play to force decisions.
But whenever people say the budget process is dead, they miss the point that it was never intended to do what people accuse it of being unable to do. The current process was designed to give Congress a measure of control over fiscal policy that did not exist prior to enactment of the 1974 Budget Act. That law was not designed as a tool to reduce budget deficits, but merely to give Congress an overarching framework through which to make decisions.
More important, it was not designed to allow politicians to avoid making those decisions, meaning the tough ones. For the most part, the will to avoid compromise — to avoid upsetting the core voting blocs that undergird both parties — remains stronger than the will to change the course of policy.
The friction points that lead to political resistance are well known, of course. Should Congress vote to spend less on defense? Should it raise taxes on the rich, or cut them? What about the tax burden of the middle class, or those at the lower end of the income scale? And the safety net — particularly the Big Two of Social Security and Medicare — is it strong enough, or overly generous?
Political Economy: Willful Disbelief
The budget process is agnostic on all these issues, and it really doesn’t even have a position on how much debt is too much.
It may need tweaks, of course. There’s a growing sense that a two-year appropriations cycle might be preferable. But for the most part, the 1974 law gives lawmakers the tools they need to make decisions. Complaints about the process mostly arise because it doesn’t produce the outcome that critics prefer — whatever that may be.
For that reason, any agreement by the joint committee is sure to be rejected by partisans as a failure of the process and an unwillingness by one side or the other to stand for principles. That’s why compromises that anger all sides are often heralded as fair.
It’s not a surprise that politicians gravitate toward safe political ground and avoid difficult legislative choices. Nor is the inclination to cheer for compromise, even when it appears unattainable. Those watching from the outside might want to remember that.