The absurdity of the current moment in U.S. politics is truly astounding. Ezra Klein, as usual, gives a smart, concise account of the current state of play. But it’s important to step back and take a look at the big picture, as I tried to do the other day in this post–unfortunately, more than a few commentators, and one Time.com headline writer, were waylaid by the (limited) credit I gave Paul Ryan for courageously raising tough issues and ignored the fact that I found his solutions wanting.
To summarize: our deficit problems are not immediate; they are long term. I’m in favor of reforms that would make old-age entitlement programs more efficient, so long as they don’t adversely affect the middle class or the poor, but the best way to deal with the long-term problem is simple: pay for it. That is, restore taxes to the Clinton levels of the 1990s. This is an answer that Ryan and the Republicans flagrantly ignore. We had a budget surplus 10 years ago. We would have one now but for the following factors: the Bush tax cuts; the Bush wars; the Clinton-Bush housing bubble and refusal to regulate Wall Street, which created the crash of 2008–which removed $500 billion in tax revenues per year from the rolls and made two large stimulus packages necessary: the Democratic package of 2009 and the Republican package of 2010. We would still have a long-term deficit problem if all that hadn’t happened, but it would seem a lot more manageable.
There is a far more serious problem, however: The current deficit conversation is misleading and counterproductive. We are still clawing out of a recession; oil price inflation and economic dislocations caused by the Japan earthquake may hamper our ability to get back into the black. This is not a time to cut spending; indeed, it’s a time for prudent investment in government projects (especially big, green infrastructure) that will provide long-term economic benefits. Indeed, I agree with those who consider the deficit-fetishism of the fancy-classes (including some of my columnar colleagues) a form of useful idiocy in support of the immediate, dangerously myopic and decidedly cynical Republican program.
If the President accedes to the current demands–and I’m thrilled that he appears to be hanging tough–he’s walking into a trap: the Republican budget cuts will force layoffs and firings among the federal work force and subcontractors–which, in turn, will raise unemployment (it’ll interesting to see what effect the layoffs at state and local levels will have on unemployment rate), which the Republicans will then lay at the President’s doorstep. Worse, the Republican budget cuts will prevent us from important work like regulating Wall Street, as enacted in last year’s financial reform package, which will, over time, lead to another speculative orgy and crash. And worse still, the various restrictions visited on the upper, technologically-adept levels of the federal workforce–those who test new drugs and monitor Wall Street and try to regulate air pollution–could cause a brain drain that will also, over time, severely hamper our efforts to run an advanced, information age government able to monitor the latest technological advances.
Again, there are federal programs that should be reformed or removed. Ryan’s long-term budget opens the door to a productive conversation about farm subsidies and job training programs, for example–and even on Medicare (which should be reformed, but without the draconian assumptions Ryan builds into his plan). But that’s down the road and far removed from the immediate point: the current Republican budget-cutting proposals are dangerous and unnecessary. We don’t need to cut the budget anymore right now. We need to recover from this recession, and buffer the devastating economic effects on its victims–and then we need the private sector, with government encouragement via incentives for innovation, to find the path to growth once more.