Small Ball

[Valin]

The Weekly Standard:

Why our fiscal debates amount to nothing

YUVAL LEVIN

Jan 14, 2013

 

For fiscal hawks of all political stripes, the last two years have been awfully frustrating. Budget politics has been front and center almost constantly, yet we have made almost no progress toward reducing our deficits and debt.

 

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The divided Congress, and especially the willfully negligent Senate (which has not passed a budget since 2009), has meant that the resulting fiscal debate has not occurred through the normal legislative process but rather through a series of dramatic showdowns forced by a variety of predetermined deadlines. The failure to enact regular budgets has created the need for temporary continuing resolutions, forcing some spending conversations under the threat of a government shutdown. The near-breaching of the statutory debt ceiling in 2011 required congressional action to enable further borrowing, which Republicans turned into an occasion for budget negotiations. The congressional “supercommittee” created in those negotiations to reduce the deficit kept the fiscal debate alive through 2011 but then failed to reach agreement and raised the specter of automatic cuts in domestic and defense spending. And that specter, combined with the simultaneous expiration of the Bush tax rates, then made for the most dramatic showdown yet—the “fiscal cliff” that threatened to raise everyone’s taxes, and which Congress averted with a New Year’s deal to raise income tax rates only on the wealthy (and payroll tax rates on all workers) and to put off the automatic spending cuts until March, when they would coincide with yet another debt-ceiling debate.

 

Each of these showdowns has involved frenzied last-minute negotiations to avert some supposed catastrophe, each has seemed to be on the verge of failure until just before the deadline, and each has then concluded with an agreement to somehow reduce the deficit. But each of those agreements has been disappointing in roughly the same way: After beginning with talk of a “grand bargain” to simultaneously and substantially reduce spending and increase revenue in ways that would significantly improve the long-term budget picture, it has ended with some very small agreement to move the needle very slightly in the short term.

 

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Our fiscal dilemma is, to oversimplify a little, an entitlement-spending problem. The network of programs and benefits created by the Great Society, but above all (by far) the Medicare and Medicaid programs, are growing much more quickly than the economy and federal revenue, and so are becoming unsustainable. They have already sent our debt up to levels seen only in the immediate wake of World War II, and in the coming years will send it far higher than it has ever reached in our history—limiting the potential prosperity of the next generation and running the risk of a sudden and disastrous crisis.

 

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