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Glass Sealing

July 8, 2011

The debt-limit debate has reared its ugly head and, much in the same vein as the budget battle, given wedge politicians a fallen-tree-in-the-road opportunity to ambush their opponents and advance more narrow political stances that probably deserve separate scrutiny.  It has become clear that America has an inability to make tough political choices without having a gun to its head  (not an inapt metaphor if you consider the ramifications of letting the United States default).  Of course, it becomes pretty difficult to make decisions with clear and sober analysis while a gun is held to one’s temple.

None of that is to say that these kinds of discussions shouldn’t happen.  Maybe this is the only way to start curbing the entitlement spending that takes up such a significant portion of our budget.  Maybe we should seize this opportunity for entitlement reform since America seems willing to acknowledge that it’s finally become necessary.  But the fact that we face choices and tradeoffs doesn’t mean that the right proposals are under consideration (especially when all tax increases, such as the repeal of the Bush tax cuts that got us into this deficit, are off the table).

The deadly political cocktail of systematic ignorance and assiduous selfishness is what got us into this mess, so of course it continues to impede our ability to make choices at this juncture?  People still don’t like paying taxes, so of course the fact that such an option isn’t on the table isn’t making too many people mad at Republicans.  But that doesn’t make the resulting debate any more incisive.  That’s why it’s appropriate to have a regular reminder of the costs that go unchecked and the opportunity costs we’re ignoring.

For one thing, when air conditioning in Iraq and Afghanistan costs upwards of $20 billion per year, one wonders whether or not that money might be better spent.

That’s more than NASA’s budget. It’s more than BP has paid so far for damage during the Gulf oil spill. It’s what the G-8 has pledged to help foster new democracies in Egypt and Tunisia.

Of course, military spending is a perennial target for folks like me who observe that military spending is the single biggest item of spending (discretionary or otherwise) at 25% of the federal budget, followed closely by Health Care (i.e., Medicare and Medicaid) at 23% and Social Security at 22%.

The fact that almost 75% of our budget is basically outside the realm of reasoned debate speaks volumes. That’s why it’s intriguingly palatable that a debt ceiling debate include some systematic curbs to entitlement spending (which is not to say that Republicans are choosing apt methods; if the Democrats refuse to cut anything at all, then the middle ground may be another Frankensteinian compromise).

But legislators insist that they are finding plenty of fat to trim! After all, the Senate voted to eliminate the $6 billion/year ethanol subsidy in a vote of 73-27. Sure, it’s just a tourniquet to stop the previous bleeding.  Sure, it still pales in comparison to the real systematic imbalances. Sure, the tax credit is likely to survive because its elimination is attached to a stalled economic development bill. And sure, the House may not follow suit in the repeal. But still! America’s waning attention may be a good thing in that it can create some breathing space or cover for legislators prudently interested in cutting needless waste or bloated entitlements.  Then again, the White House can always stymie things with half-assed half-measures (“The White House has said the president supports reducing the ethanol tax credit but not eliminating it.”).

So, Americans seem to be faced with a Hobson’s choice.  If America, writ broadly, pays little to no attention, legislators can have frank and open discussions with all options on the table, but then will end up choosing the policies favored by the most power to affect the result. On the other hand, if America carefully scrutinizes things, the incentives to disinform and mislead the public increase, but the public gets its putative choice.  Any development that brings us closer to the point where anything and everything is on the table is a good thing; the problem is that the ideas that are best for the masses don’t necessarily win out in a world of systematic and deliberate misperception.  Then again, that seems to be the willing bargain accepted by a people content to be ignorant of how they are ruled.  And isn’t America founded on the notion of consent of the governed?

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2 Comments leave one →
  1. John Aho permalink
    July 12, 2011 12:53 pm

    Where are the bloated entitlements? As far as i can tell, most of the growth in entitlement spending is linked to runaway health care spending. The cost control issue was halfheartedly addressed in Health Care Reform, but our politicians are too afraid to tell any of the industry players that they might make less money because those interest groups have become so entrenched in our political system (see: http://voices.washingtonpost.com/ezra-klein/2009/07/cost_control_in_france.html).

    Social Security’s funding problems could be dealt with by raising the cap on payroll taxes. But of course, that would involve raising taxes which is verboden, despite the fact that our tax rates are low compared to the rest of the industrialized world (see http://krugman.blogs.nytimes.com/2011/04/22/our-low-low-taxes/).

    Cutting things like the ethanol tax credit are good policy steps, but as you point out it’s really a drop in the bucket when you look at the overall federal budget.

    If both our political parties were both responsible and within the political mainstream negotiating a “grand bargain” over the debt ceiling wouldn’t be such a bad thing. I’m sure Obama is looking to the the O’Neill/Reagan Social Security deal of the 80’s and the Bush/Congressional Dems deal of 1990 as models. As policy, both of these are reasonable compromises. The problem is the radicalization of the GOP. When Eric Cantor thinks that not driving the US into default is a compromise in itself, the only “grand bargain” that seems likely is a deal that halfway demolishes Social Security/Medicare without bringing in substantial new revenues. Therefore, I doubt even having the “gun” of default to our heads will produce a rational political discussion.

    All of which says nothing about the real short to medium term problem of high unemployment, which Washington doesn’t care a bit about.

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