"Reconciliation" is getting a lot of attention in Washington lately. Most understand a reconciliation bill can pass the Senate by majority vote after 20 hours of debate, but that's often where the understanding stops. Reconciliation originated in the Congressional Budget and Impoundment Control Act of 1974 as an optional means of changing (mostly) entitlement spending, but not Social Security, and taxes to achieve the deficit target set forth in the budget resolution. Because a reconciliation bill has a high likelihood of becoming law, it quickly became a magnet for extraneous amendments, which Senator Robert C. Byrd (D-WV) deterred in 1985 with the Byrd Rule, now Section 313 of the Budget Act, which lays out six criteria for determining what is extraneous. Implementing these rules in the Senate has become so complicated that no one can be entirely sure of what will emerge until the Senate Parliamentarian has ruled.

Congressional Budget Office Director Doug Elmendorf addressed the National Economists Club luncheon today in D.C. He started with the good news: "In the near term (FY10-FY12), we expect the economy to recover." However, his job outlook was grim: "More pain of unemployment lies ahead of us than behind us." That's because this recession has had much more permanent job loss than past recessions and because our recovery is likely to be weak, with subpar job growth. We've lost 8.5 million jobs so far, and it would take 11 million new jobs to reach the level we would have had if the recession hadn't occurred. He expects the unemployment rate to drop to 5% by FY13, but, "That's a long ways away."

In a word, yes, but Stan's thoughtful post prompted me to think again about what it means to be a deficit hawk.  With some further reflection, I think there are two incentive problems that dominate all others on domestic policy.

One of these problems is that the federal deficit serves as a mechanism to facilitate the use of future taxpayers' income to buy votes for elected officials today.*  To be a deficit hawk is to be vigilant against all possible instances where that may occur.  Our political system creates many opportunities for it.  I think my best statement on the problem was How to Advise on Fiscal Policy, posted in July 2007. Here is the key excerpt, pertaining to what the President's advisers should be doing about it: 

Note to myself (and everyone else): Don't let a few days go by without looking at economistmom.com.  If you do, you might miss this gem about the curret budget debate.

I've always thought that reporters should be very mindful of the way they use adjectives in their articles.  Charles Babington's piece on the Obama budget is a case in point.  Here's a list of modifiers used outside of direct quotes that I think are excessive (as opposed to merely unnecessary, of which there are several more): breathtaking, sprawling, stunning*, jaw-dropping, whopping.  Are these words the hallmark of an objective reporter or a story-teller?

What we know is that the Obama budget is unprecedented in the postwar period in its size and in the size of the gap between spending and revenues.  How is this being described?  Here's a quote from the article:

"We're struck with how bold and courageous a budget it is," said James Horney of the liberal Center on Budget and Policy Priorities, which supports the president. "There are a whole lot of things that are going to be extremely difficult because there are very powerful vested interests out there that will fight them."

I have been very careful to stay away from making a link between the current explosion in the deficit and the reform of entitlement programs like Social Security and Medicare.  It's not that I don't think that a link exists -- it's that I don't think that the case for entitlement reform depends on what part of the business cycle we are in.  The case makes sense to me based on the long-term cost projections for those programs.

In today's Washington Post, Robert Kuttner laments that so-called* deficit hawks in Congress are trying to make the link.  He opens with:

With the enactment of a large economic stimulus package, fiscal conservatives are using the temporary deficit increase to attack a perennial target -- Social Security and Medicare.

It may be that the recent increase to the deficit is temporary.  But even a temporary increase in the deficit is a permanent increase in the debt unless there is enacted some way to specifically repay that debt in the near future. 

It is a rare bird around Washington these days, but Stan's is actually the second sighting of fiscal responsibility in the campaign.  It looked the same, but its appearance was more fleeting.  I blogged about it here.  Rhetorically, it went something like this:

If there's something we've got to pay for ...

As they say, admitting the problem is the first step to curing it.  It wasn't quite speaking truth to power -- more like truth to poser -- but it was definitely a sighting. Maybe these birds are breeding ...

This should make Bruce Bartlett very happy.

From the Associated Press, courtesy of TPM:

Obama: Bailout likely to delay spending programs
Obama says massive financial bailout probably would delay his spending initiatives

DOUGLASS K. DANIEL
AP News

Sep 23, 2008 08:52 EST

Democratic presidential candidate Barack Obama says he probably would have to delay the spending programs he has called for during his campaign in light of the massive government bailout being proposed for the nation's financial industry.

****

Let me be the first to welcome Stan back from his trip out West.  In the interest of financial market stability, Stan is hereby forbidden from ever getting back to nature again.  Or, at least, getting back to nature without letting me short the entire financial sector first.

I will welcome him back as a co-blogger should--I'll take issue with his most recent column linked above.  Not the whole column, which is unsurprisingly excellent, but the middle of the following three paragraphs:

From a federal budget perspective, what makes the national parks remarkable is that we use current taxes to maintain them. We’re not doing that just so those who are living and paying taxes today can enjoy the parks. We’re also doing it so that, unless nature decides something different, the parks will still be around for the great-grandchildren of our great-grandchildren and beyond. Taxpayers in 2008 are paying to preserve and maintain the parks that others will enjoy for a long time into the future.