The Disappointing Liberal Reaction to the Deficit Commission

Let's be clear about what the National Commission on Fiscal Responsibility and Reform is. Created by presidential order, it is an effort to take the necessary, but ugly, work of deficit reduction out of politics, put it in a safe room where electeds can talk like wonks instead of politicians, and create a plan that spreads the pain.* This way, if Congress voted to turn it into law, both parties would lose a little. And in the zero-sum world of partisan politics, that means nobody would lose at all.

Well, that was the strategy at least. But then yesterday, we saw the plan -- not the actual deficit commission report, but a working draft prepared by commission chairmen Alan Simpson and Erskine Bowles. Predictably, everybody found something to hate.

The liberal and conservative media universally panned the proposal as too regressive and too progressive; destroying Social Security but also turning it into a welfare program; raising taxes too little and raising them over their historical average ... and you get the point.

For months, we have said the Tea Party doesn't understand the deficit, and the Republican Party has no plan to fix it. Well, here's a plan to fix it. Why can't we understand that?

Three-hundred sixty degree criticism is the intended consequence of "spreading the pain." But in today's media environment, where the loudest voices are 180-degree polar opposites, a strategy to spread the pain seems to have merely convinced both sides that the proposal is DOA.

Since I lean left on budget issues, I'm most stung by the liberal reaction to the bill. The most disappointing criticisms have come from economist Brad DeLong on the plan's approach to tax reform.

In order to demonstrate the cost of tax expenditures (such as the mortgage interest deduction and the child tax credit), the plan includes a slide that eliminates all tax expenditures and lowers tax rates to 8, 14, and 23 percent. Then it forces Congress to raise rates for each tax subsidy it restores. Clever! DeLong, rather than see this as a smart strategy to line up tax expenditures and tax rates, pretends the plan is to actually lower the top tax rate to 23 percent. I've spoken to a senior commission official to confirm this: the plan is not a Trojan Horse. It's just a frame for lawmakers to see tax expenditures and tax rates as part of the same system. Professor DeLong should know a sly teaching tactic when he sees one.

The second most disappointing criticism comes from writers like Felix Salmon on the discretionary cuts discretionary spending (ie, not health spending, not Social Security). Discretionary cuts are difficult to recommend, because unlike Social Security, you can't make one big tweak and suddenly save a $100 billion dollars. Instead, you have to make a million little tweaks: reform agricultural subsidies, make congresspeople fly coach, hire fewer clerks, that kind of thing. So the commission provides a menu of $400 billion of cuts from which Congress would choose only half. Felix has some fun with this, writing

Some of the small savings have to be seen to be believed. The deficit commission, charged with coming up with a bold plan to bring the nation's finances into order, really does propose:

  • Increasing the amount of time spent on instant messenger, to reduce travel costs;
  • "Reduce copying use by putting the default option on copiers to double-sided";
  • Merging the Commerce Department with the Small Business Administration;
  • Charging a fee to Smithsonian visitors.
  • Etc.

Faulting these admittedly small ideas for their smallness is like saying you can't win a land war with a single pair of shoes. It's true, but shoes don't hurt, do they? Surely, we should all prefer the federal government use IM rather than spend Felix' hard-earned tax dollars on flights to Singapore. Printing double-sided is easy to snark, but the chairmen aren't pretending we can collate our way to fiscal responsibility. They're just saying, "Here's some waste."

The third most frustrating criticism comes from folks like Kevin Drum, who claims that any effort to reduce the deficit that isn't 98% health care reform isn't serious. The fact is, there are no feasible ways to definitively curb health care inflation starting today (if Kevin has some in mind we need to hear them!). We can shoot a thousand arrows at the medical inflation monster -- health care reform, to its great credit, does. We can nudge providers and customers away from pay-for-service, which rewards over-treatment. We can increase cost-sharing to help patients react to prices, increase transparency and quality through exchanges, and so on. But these are efforts, not answers. If we waited for the messianic Answer to health care inflation, we might never act on the budget. I can't imagine that's what Kevin would prefer. Instead, we should make the changes we can make today, slowly.

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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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