Nancy Pelosi vs the Deficit

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Outgoing House Speaker Nancy Pelosi has been a remarkable leading figure for the progressives, securing key votes for cap-and-trade and health care reform, despite the overshadowing drama in the other house of Congress. But her reaction to the recommendations from the chairmen of the president's deficit commission has been disappointing.

I think these words from Ross Douthat are harsh but mostly fair:

Their proposals certainly weren't flawless, but they did manage to include good ideas from right and left alike. And it's illuminating, and very depressing, that Democrats were so immediately outraged by a plan that reduces corporate welfare, makes Social Security more progressive, slashes the defense budget, raises the tax rate on millionaires' summer homes -- and does all of this while capping the government's share of gross domestic product, not at some Scrooge-like minimum but at the highest level in modern American history.

Needless to say, none of the liberal lawmakers attacking the Simpson-Bowles proposals offered alternative blueprints for restoring America's solvency. The Democratic Party has plans for many things, but a balanced budget isn't one of them.

But pondering what Nancy Pelosi and her compatriots are rejecting gives us a pretty good sense of what they're for. It's a world where the government perpetually warps the real estate and health care marketplaces, subsidizing McMansions and gold-plated insurance plans to the tune of billions every year. It's a world where federal jobs are sacrosanct, but the private sector has to labor under one of the higher corporate tax rates in the developed West. It's a world where the Social Security retirement age never budges, no matter how high average life expectancy climbs. And it's a world where federal spending rises inexorably to 25 percent of G.D.P. and beyond, and taxes rise with it.

Read on at the New York Times. I'm frustrated because this is a plan that raises Social Security benefits for the poor, lowers Social Security benefits for the rich, raises taxes on the rich, lowers taxes on the poor, protects welfare measures in the tax code, education, infrastructure and RandD, lowers tax rates on corporations while looking to collect more money, cuts defense more than the president has proposed ... and yet it's DOA among liberal politicians and writers. I think the discretionary spending cuts are too severe and the Social Security changes might cut too much from the median recipient, but these are grounds to engage with the plan rather than reject it.

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Derek Thompson is a senior editor at The Atlantic, where he writes about economics, labor markets, and the entertainment business.

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