Robert Samuelson on the myths of deficit reduction Robert Samuelson wants to "banish the budget fictions of left and right," he writes in The Washington Post. As the Super Committee determines how to reduce federal deficits, both liberals and conservatives are creating "fictions" to support their preferred policies. Conservatives argue, "We can reduce deficits and cut taxes by eliminating 'wasteful spending.'" Liberals say, "We can subdue deficits and raise social spending by taxing 'the rich' and shrinking the bloated Pentagon." Both make deficit reduction sound relatively painless. On the conservative end, there are, in fact, wasteful government programs which Samuelson thinks should be cut: he cites Amtrak, farm subsidies, and others. Entitlements, too, need trimming. "But plausible savings don't match conservative rhetoric. All the suspect 'discretionary' programs come to tens of billions, not hundreds of billions," and to match the trillions we need to cut, we'd have to look at unthinkable cuts to federal expenditures like the FBI, he writes. Trimming entitlements won't save money, it will just account for the growing pool of beneficiaries. On the liberal end, it is a myth to think that tax increases only on the rich will match our budget deficits. The rich already fund much of the government. Sen. Harry Reid's plan to raise taxes 5.6 percentage points on those making over $1 million would raise $453 billion over 10 years compared with a projected $8.5 trillion deficit. Liberals won't admit that unless social security and Medicare are significantly reduced or restructured, we'll face either huge deficits, huge tax increases, or cuts to discretionary programs. Neither side will do it, but both "need to identify the most justifiable spending cuts -- lots of them -- and the least damaging tax increases, which will still be sizable."
Albert Hunt on electing the non-politician "[O]ver the past century almost no one, save for Herbert Hoover, a disaster, and Dwight D. Eisenhower, ha[s] won the U.S. presidency before serving in another political office," writes Albert Hunt in Bloomberg View. So, he asks, is Herman Cain the next Eisenhower? The idea, he says, is "ludicrous." Cain is simply "the latest avatar of a recurring phenomenon in American politics: The usually short-term appeal of the nonpolitician, the outsider who vows to be different and not play the game by the rules." Yet politics is like a business, Hunt says. Experience should be a prerequisite. We've considered others, from Donald Trump to Wesley Clark and Ross Perot. Yet, "the bubble usually pops once voters try to imagine how this political novice would govern, or serve as commander in chief." Ross Perot had an impact by driving discussion toward reducing the federal deficit, but his difficult personality seemed unfit for the presidency. Cain has risen primarily on the attractive simplicity of his 9-9-9 tax plan and his personality. But on other issues, particularly on foreign policy, he remains too uninformed. He also released an ad with his campaign manager smoking a cigarette, confusing the message he sends about overcoming cancer. "These aren't matters of ideology or principles; they go to knowledge and judgment." People complained that neither George W. Bush nor Barack Obama had sufficient experience before taking office, but "the answer to such concerns, if they're genuine, isn't to elect someone with less political experience." Hunt takes a moment to acknowledge that Eisenhower had uniquely strong leadership experience commanding an army and dealing with politically difficult allies through WWII. "There may be another 'non-politician' Eisenhower on the horizon. He or she hasn't surfaced over the last 60 years."
James Surowiecki on deleveraging The report last month that the U.S. economy grew at an annualized rate of 2.5 per cent in the third quarter was good news in that we haven't fallen into another recession, and bad news in that our recovery remains slow, writes James Surowiecki in The New Yorker. Looking to explain this sluggishness, many analysts point to our debt. "Between 2001 and 2007, Americans went on an incredible borrowing binge, nearly doubling their household debt. Now, the argument goes, consumers are focused on paying off that debt instead of spending freely, and, as long as this process of 'deleveraging' continues, the economy is going to stay stuck in the doldrums." But evidence "is surprisingly sketchy" Surowiecki writes. Real consumer spending has been rising. Further, "several things that you'd expect to see if the deleveraging thesis were correct haven't happened. Personal consumption hasn't shrunk as a share of the economy ... And consumers aren't saving at an unusually high rate ... And although consumers did reduce their total amount of non-mortgage debt very slightly in 2009, in the two years since, that number has risen again." In fact, we shouldn't even be looking to return to an unsustainable time when the housing bubble fueled consumer spending and debt. Also, a more likely culprit than deleveraging is "the housing-wealth effect," in which people tend to greet a rise in their home value with increased spending. When the housing bubble burst, it was home values, not debt, that slowed consumer spending. "This doesn't mean that the piles of debt accumulated during the bubble aren't a serious problem," Surowiecki says. "But it does suggest that dealing with the debt problem, or the housing crisis, is not the panacea for the economy that many have made it out to be."
Juliette Kayyem on defense spending as a job creator When Juliette Kayyem was in counter-terrorism studies shortly after 9/11, people joked that as long as your research project had the word terrorism in it, the government would fund it. "We don't talk as much about terrorism today. It's all about job creation," she writes in The Boston Globe. The Pentagon and its spending recipients have thus changed their rhetoric to convince legislators to prioritize them as they look to cut budgets. "Noting that defense and homeland security are polling very low in terms of America's priorities, a lobbyist for Waltham [Mass.]-based military contractor Raytheon publicly admitted he needed a new hook to make military spending stick. 'So how do you make this issue resonate?' Michael H. Herson told the Globe. 'You talk about jobs.'" Kayyem writes, "There are many reasons to support military spending, but job creation is not one of them." She asks whether defense spending creates as many jobs with the same speed as other industries. She finds, "military would rank fourth after clean energy, health care, and education, in jobs per federal dollar." That's because military spending tends to go toward capital investments, not labor. Historically defense spending has sharply declined after a war, as much as 31 percent after both the Korean War and the Cold War. Contractors and the military want to blunt that historical trend by allying themselves with the job creation trend.
Andrew Ross on greening the city "The struggle to slow global warming will be won or lost in cities, which emit 80 percent of the world's greenhouse gases," writes NYU professor Andrew Ross in The New York Times. But if policy makers focus only on those who can afford low-carbon technologies, he says, we may only worsen the climate change problems. Take Phoenix as an example, which the mayor planned to make the greenest city in America. Yet, "[a]cross that valley lies 1,000 square miles of low-density tract housing, where few signs of greening are evident," which is unsurprising given the collapse of the housing industry there. "In the Arizona Legislature, talk of global warming is verboten and Republican lawmakers can be heard arguing for the positive qualities of greenhouse gases," Ross writes. More upscale areas have embraced hybrid cars, LEED-certified buildings, and solar energy. "By contrast, South Phoenix is home to 40 percent of the city's hazardous industrial emissions and America's dirtiest ZIP code." The lifestyle of the greenest, wealthiest 20 percent of America can't account for the other 80 percent. "Solar chargers and energy-efficient appliances are fine, but unless technological fixes take into account the needs of low-income residents, they will end up as lifestyle add-ons for the affluent." Phoenix should take steps like expanding its light rail system to diverse neighborhoods and eliminating surcharges on customers who install solar panels, lest its efforts be totally outstripped by those it ignores.
This article is from the archive of our partner The Wire.