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Monday, November 29, 2010

Deficit Assumptions

by digby

We've known that the chances of getting a unanimous report from the Catfood Commission was highly unlikely and we knew that they knew that going in. It's been out there for some time that the most they hoped for was a new "bipartisan" baseline which would, in all likelihood exclude only the liberals from the consensus. Earlier in the month we had reports of just that and today we see more evidence that this is their plan:

If the panel wins close to a dozen votes for its proposal, some of the ideas could be incorporated into the White House's 2011 budget proposal, or tax and spending plans from either Democrats or Republicans next year. If the proposal receives only a handful of votes, it will likely send a signal that the parties remain at odds over how best to rework the country's tax and spending priorities, suggesting that it will take much longer for any changes to be made.

A key threshold for the co-chairmen will be whether they can get the support of the 10 lawmakers on the panel who are returning in January as part of the new Congress.

Failure to win support from any of these members—who include likely chairman of the House Ways and Means Committee Rep. Dave Camp (R., Mich.) and the second-ranking Democrat in the Senate, Sen. Richard Durbin of Illinois—would show how difficult it might be for any proposal to win support from the politicians who would ultimately be charged with setting any plan in motion on Capitol Hill.

If those lawmakers vote for the plan, and withstand the political blowback from constituencies poised to defend their cherished programs, others on Capitol Hill could feel under pressure to act. Aides familiar with the matter said panel member Sen. Tom Coburn (R., Okla.) had expressed the most interest in forging a bipartisan deal.

The NY Times puts it this way:

Inside the commission, expectations remain low that a supermajority can agree on a plan, given most Republicans’ opposition to raising taxes and most Democrats’ resistance to deep spending cuts and reducing future retirees’ Social Security benefits.

Yet the panel’s proponents hope that agreement among even a bipartisan minority can be the basis for future action to arrest the unsustainable growth of government debt in coming years.

Now it only takes 10 votes out of 18 to be sufficiently "bipartisan." Presumably that could mean all 8 Republicans and 2 Democrats, although considering the make-up of the President's commission it seems likely that quite a few Dems will do the dirty work for zealots like Paul Ryan so that he can stake out the far right wing goalpost. (After all "consensus" really means never having to compromise with a liberal.)

The good news is that liberals have actually done something important, at least for the record, in that they released a deficit reduction plan today that actually doesn't require heaps of suffering for the old and infirm.. Brad DeLong writes:

The Left Opposition Has a Budget-Balancing plan and it is a very good one--a much better one than the amateurish, unthought-through and far-right Simpson-Bowles or the professional but inequality-increasing and right-wing Domenici-Rivlin.

Here's what it looks like:

In a world in which anyone (including the president) gave a damn about liberal solutions to problems, this exercise would have been required from the Commission itself so that people could see clearly what the trade-offs are and how the two ideologies differ in their approach to governance. Matt Yglesias analyzes the plan from a similar perspective:

Liberals didn’t like the Simpson-Bowles deficit plan largely because neither Simpson nor Bowles is a liberal so their proposal doesn’t encapsulate liberal thinking. Today the Our Fiscal Security coalition, comprised of Demos, the Economic Policy Institute, and the Century Foundation have released their fiscal blueprint which shows you would that liberal take would look like.

First and foremost that means explicitly situating the “budget” problem in a broader economic context. You see this two ways. One is the heavy (and appropriate) emphasis in the short term on mobilizing excess capacity to increase growth and decrease unemployment rather than austerity budgeting that will only increase resource-idling. The other is the principle they call No Cost Shifting, namely “Policies that simply shift costs from the federal government to individuals and families may improve the government’s balance sheet but may worsen the condition of many Americans, leaving the overall economy no better off.” ...

At any rate, they show that medium term balance can be achieved basically entirely on the tax and defense sides.For the longer-term, like all long-term budget plans they need to rely heavily on fairly speculative assertions about health care costs. But I think that if you dig into it, you’ll find that OFS offers the least hand-waving on this point of any plan I’ve yet seen, though that’s not to say there’s no hand-waving.

Liberals look at the way the economy as a whole affects a citizen's life and tries to fashion a set of policies that provide a little ballast in a necessarily risky capitalist system. Conservatives see that sort of thing as bailing out parasites who should have planned better and think everyone would be better off with a little "tough love." (Simpson's "greedy geezers" trope is designed to create means testing so they can finally get around to hectoring the elderly for failing to be responsible enough to save for their entire retirement on their own.)

Tomorrow the Citizens Commission will be releasing its report as well. You can see it here today and there will be more about it in the press tomorrow. Combined with the Schakowsky plan released a while back, these three blueprints prove that there are more ways to balance the budget than slashing all spending on social welfare.

It's important to see this difference in approach spelled out in detailed plans like these. If there is any justice in our political system, it will force the non-FOX media to re-assess its assumptions and start framing this debate in a more balanced way. In fact, if President Obama wanted to be a Party leader and a president with a real vision, he could be the one to do it. There's no economic reason not to -- they all achieve long term deficit reduction. And unless he agrees with the conservative view of the government's responsibility to its citizens (or the ruling class view that the wealthy must not be required to pay a fair share to support the society from which they benefit so grandly) there no political reason not to.

Social Security Works has something for you to do to help in this debate. Tomorrow is National Call Congress Day and you can sign up here to participate. They've made it very easy.

If you think this won't make a difference, think again. Right wing radio managed to derail a very carefully negotiated Immigration reform bill with a tidal wave of calls to the congress. The good guys can play that game too.

Sign up here.

Update: Oh Jeez. Here comes Third Way, advertising itself as "progressive", with it's own plan proposing to help Alan Simpson turn the elderly into welfare recipients and pave the way to privatization. Can't somebody sue them for misappropriation of labels?

Update II: What would really help at this point in the debate would be for someone to come up with a radical leftist plant to cure the deficit through the nationalization of corporations, total demilitarization and a 90% tax rate on the top .5% as a balance to the Ryan wrecking crew. That would successfully push all the other proposals to the center so that even Andrea Mitchell could talk about it in respectful terms.