In democracies, there is almost always a political incentive to ignore excess spending. Thus the imperative to seize rare opportunities for reform.
Paul Krugman says that the debt ceiling deal, or at least the form it took on Sunday, portends economic disaster. "We currently have a deeply depressed economy. We will almost certainly continue to have a depressed economy all through next year. And we will probably have a depressed economy through 2013 as well, if not beyond," he wrote. "The worst thing you can do in these circumstances is slash government spending, since that will depress the economy even further."
Matt Miller concurs.
"Washington will do nothing more to boost jobs and growth. The best that can be said is that the spending cuts will be tiny in the next two years, so the feds won't be contracting demand, save for the end of the stimulus. Our epic jobs crisis remains ignored," he wrote. "The only sane agenda -- more tax cuts and spending stimulus in the near term, coupled with much more deficit reduction in the long term, triggered once unemployment is back below 6 or 7 percent -- is not even on the table."
I am surprised by this surprise that our elected representatives haven't pursued "the only sane agenda." Every day, I learn about policy that seems insane. Were we governed by diligent, uncorrupted technocrats, sent to Washington, D.C., by citizens with a keen understanding of economic theory and informed preferences about the fiscal choices before them, perhaps doing what Krugman and Miller recommend -- stimulus now, deficit reduction when the time is right -- would be just the thing.
But we live in a democracy.
American politics is shaped by a citizenry that wants to receive lots of government benefits and pay low taxes. Democrats succeed insofar as they can convince us that we can have more benefits, and that only really rich people will have to pay more taxes. In contrast, Republicans succeed insofar as they can convince Americans that we can pay ever lower taxes, and the only cost will be to some shiftless poor people who'll just have to pull themselves up by the bootstraps.
I've never seen any evidence that either party is willing to prioritize deficit reduction when it has a lot of power. As far as I can tell, it is most likely to occur when there's a particular kind of divided government: a Democratic White House, plus Republicans in Congress who, having run up big deficits, are suddenly eager to cut cut cut while the other party holds the executive branch.
Otherwise, the political incentive is always to kick deficits down the road.
If I thought, like Krugman and Miller apparently do, that more Obama administered stimulus would help the economy, and that deficit reduction would get done after the inevitable recovery, I'd sign on. Given reality as I see it, however, there's a fair chance that additional stimulus funds would be spent inefficiently, and I see no reason to think that deficit reduction efforts would actually happen at the optimal moment if Congress waited until then to try legislating them.
Perhaps Republicans will be gearing up for an invasion of Iran at that moment. Or refuse to raise taxes under any circumstances. Or a newly elected Democratic president will be fulfilling his campaign promise to make pre-school a universal entitlement, even as he delivers on a campaign promise to cut taxes. Or another terrorist attack will occur, and dominate politics for a decade.