With the government living on a two-week financial reprieve that will expire on March 18, this is Rumpelstiltskin time in politics as everyone seems to be stamping his feet in rage over the $14-trillion national debt.
Republican Paul Ryan, chairman of the House Budget Committee, is making the rounds with charts
entitled "Reckless Spending Spree" and "Tidal Wave of Debt." In a clarion-call address
to the Conservative Political Action Conference (CPAC), Indiana GOP Gov. Mitch Daniels warned of "the new Red Menace, this time consisting of ink." Talking to a convention of religious broadcasters recently, House Speaker John Boehner sounded like a Biblical prophet as he warned, "We're broke. Broke going on bankrupt." And Barack Obama, speaking Friday at a Democratic fund-raiser in Florida, hailed the coming national debate over the deficit "because we can't sustain the spending path that we're on."
Erskine Bowles and Alan Simpson, who chaired the president's bipartisan debt commission, are launching Tuesday in Washington what they dub "The Moment of Truth Project
" to restore fiscal discipline to the federal government. To deficit hawks like Bowles and Simpson, every tick of the debt clock sounds like a tocsin. In their view, there is not a second to be lost in the race to enact fundamental changes such as the Bowles-Simpson commission recommendation
that the retirement age for Social Security be gradually raised to 69 by the year 2075.
After ignoring the deficit for almost a decade, the new orthodoxy is that Medicare and Social Security must be revamped immediately because 2075 is getting closer every day. With a series of artificial deadlines coming up (March 18 for funding the government
and sometime later this spring for raising the statutory debt ceiling
), congressional Republicans and the Obama White House are giving lip service to fantasies about long-term fixes.
Even if it would not jeopardize the fragile recovery, this is the wrong medicine at the wrong time. For all the apocalyptic rhetoric from Boehner and Company, America is neither broke nor broken. America is not Greece – we lack leaders like Pericles and there is scant danger that the global bankers will stop lending us money. Interest rates on two-year federal bonds – a key barometer of perceived risk – are a microscopic 0.7 percent. Put in piggy-bank terms, investors get 7 cents back on every $10 they invest in Uncle Sam.
Since the markets are giving us the luxury of years to get our fiscal house in order, there is a potent political reason for taking a deep breath and stepping away from the abyss.
A significant portion of the deficit crisis has been caused not by 85-year-olds living the lush life courtesy of Social Security and Medicare, but by the worst economic downturn since cars came equipped with rumble seats. Newt Gingrich recognizes this reality, even though this admission is not often featured in Republican rhetoric. Making the case for the GOP elixir of another round of Miracle-Gro tax cuts last week, Gingrich stressed that getting the unemployment rate down to 4 percent is "the first and biggest step to get back to a balanced budget."
For all the haste gripping the political community in Washington, there is no national consensus whatsoever on how to tame the deficit. House Republican freshmen may believe that they came to Washington with a mandate to slash domestic spending, but this slash-and-burn agenda is not reflected in the national polls.
A recent NBC News/Wall Street Journal survey
found that, if pushed, 35 percent of all Americans would cut essential programs to eliminate the deficit and another 33 percent would raise taxes. The swing group: the 26 percent who say that they would prefer to postpone doing anything about the deficit if confronted with those unpalatable choices. In similar ostrich-like fashion, an early February poll by the Pew Research Center
found that the only program that many Americans (45 percent) are eager to cut is global poverty assistance, a microscopic fraction of the federal budget.
For all the glib Washington talk of cutting back major government benefit programs, the NBC/WSJ poll underscored how difficult it is to trim Social Security (22 percent favor this remedy) or Medicare (18 percent) to staunch the deficit. In contrast, it is fascinating that polls show significant support for an agenda item rarely discussed in Washington – downsizing the Pentagon budget. In the NBC/WSJ poll, 46 percent of Americans would find it "acceptable" to slash military spending. Using different question wording, the Pew survey asked whether Americans would prefer to increase (31 percent) or decrease (30 percent) the Defense budget.
These poll numbers are suggestive rather than definitive because there has never been a sustained national debate over how to bring down the national debt. That is what a presidential campaign is for – to create a national consensus on important policy issues. What passed for a debate on the deficit in 2008 was comically unsophisticated, with John McCain all but implying that eliminating earmarks was the route to a balanced budget. Even during the 2010 congressional elections (with a much smaller electorate than in presidential years), issues like health-care reform and the unpopularity of Nancy Pelosi loomed larger than red-ink budgeting in most races.
Putting off the moment-of-truth reckoning on dealing with the nation's structural budget deficit would not be a ploy to aid the Democrats or Republicans. While predictions this far in advance of an election are fraught with risk of embarrassment, it is certainly plausible that Obama will be reelected but Republicans will gain control of the Senate and hold the House. The point is that there might be even more political balance between the two parties after 2012 than there is now.
The difference is that voters will have two years to hear the arguments from both Obama and his GOP rivals about the decisions necessary to bring federal spending in line with governmental revenues. In an ideal universe, voters will learn that eliminating foreign aid or canceling bridges to nowhere are budgetary gimmicks rather than fiscal remedies. If ultimately there is going to be a grand political bargain on the deficit in Washington in 2013, Americans deserve to understand what the stakes are for Social Security, Medicare, domestic spending, tax rates and, yes, the Pentagon budget.
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