Allan Sloan and Geoff Colvin Think The Federal Budget Debate Is Just A Mathematical Problem
This article by Allan Sloan and Geoff Colvin from the business section of Sunday's The Washington Post makes it sound like getting a plan that eliminates the federal budget deficit is easy. All you have to do is come up with a list of spending and revenue changes that when added together reduce outlays and increase taxes.
I'm tempted to say, "Why didn't I think of that?" or "Hallelujah, I was blind but now I see" or any one of about a dozen other incredibly snarky things.
But I won't.
It's not that Sloan and Colvin have come up with a list that's bad or that their math is incorrect. To the contrary, they're proposing a version of what most objective budget analysts will tell you will need to be done if the deficit is to be reduced substantially.
But Sloan and Colvin fail to do the same thing that most economists, objective analysts and others not running for election or reelection fail to do: Explain why anyone who benefits directly from the spending and revenue provisions that will be changed will agree to give them up in exchange for a vague promise from someone with no credibility that they'll get good things in return.
In other words, they never describe how the world for the average person in the U.S. after the deficit is reduced will be better than the one that exists for them now.
I have to ask: Are they really that naive?
Yes, Sloan and Colvin talk about an unnamed CEO who says that he is not doing something because of the uncertainties of the fiscal cliff, and they indicate in the vaguest of terms that what this CEO says he isn't doing is costing the U.S. economic growth. They imply that this same calculation is being made at hundreds of other companies and, therefore, that GDP growth is stymied because of it.
Several points need to be made in response:
First, the fiscal cliff uncertainties the CEO is concerned about all have to do with the possibilities that federal taxes will rise and spending with be cut, that is, that policies will be put in place that will decrease the deficit as Sloan and Colvin say needs to be done. Therefore, using that CEO's words to justify the deficit reductions in their plan doesn't make any sense at all and the whole premise for the article is wrong.
Second, it's not at all clear that an individual who benefits directly from getting one of the big tax breaks Sloan and Colvin want to eliminate or scale back -- like the deduction for mortgage interest -- will be willing to give that up for a vague promise that they will benefit from the increased economic growth they say will occur. Not only is the higher growth anything but certain to materialize, but the average person is far more likely to think they will lose rather than gain by the trade. Why would anyone think that the policy changes included in the plan will be popular and, therefore, that any member of Congress will go along with them?
Third, the exact same calculation exists on the spending side. Why in the world do Sloan and Colvin believe that the typical person who thinks about Social Security ad Medicare will be willing to pay higher taxes and/or get smaller benefits if they can't be assured of getting something direct, tangible, guaranteed and of equal value in return.
This is what I call "The Promised Land" of the federal budget debate and it's what is and has been completely missing. It's not a mathematical problem; in fact, the math will be quite easy once there's an understanding of what someone will get in exchange for giving up what they already have.
But unless and until that dynamic is understood by the "grown-ups" Sloan and Colvin say are needed, the budget debate isn't going to change just because someone comes up with yet another list of how to get there from here.