Are The Deficit Commission's Democrats Capitulating?

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JONATHAN CHAIT JULY 30, 2010

Are The Deficit Commission's Democrats Capitulating?

Unlike some other liberals, I have no problem with the deficit commission to reduce the unsustainably large long-term deficit. I do have a problem with the fact that the Democratic co-chairman of the commission, Erskine Bowles, proposes that the commission's plan hold federal spending at 21% of GDP. As Matt Miller notes, government spending averaged 22% of GDP during the Reagan administration. The aging population and explosion of health care costs that have followed mean a long-term level of 21% would mean slashing other functions of government.

A 21% goal means that the commission would not be producing a compromise between the Democratic and Republican preferences. It would be a wholesale adoption of the conservative plan, as CBPP points out:

The Committee on the Fiscal Future of the United States, a joint effort of the National Academy of Sciences and the National Academy of Public Administration, recently developed four budget paths or scenarios to illustrate the range of available policy choices for federal spending and revenues.One was a low-spending path that eschewed revenue increases and accomplished nearly all of its deficit reduction by cutting programs. At the other end of the spectrum was a path that accomplished most of its deficit reduction by raising taxes. Between these two paths, the committee outlined two intermediate scenarios. (See Figure 3.) Committee co-chair Rudolph Penner has described both the low-spending and high-spending paths as “extreme,” explaining that “At one extreme, the committee asked what spending cuts would be necessary to stabilize the debt-GDP target at 60 percent if the total tax burden was maintained at its historical level between 18 and 19 percent of GDP.” 

Under the committee’s extreme low path that secured almost all of its deficit reduction through budget cuts, federal spending would be about 21 percent of GDP.

Again, I'm very open to some middle-ground compromise to reduce the deficit. It's going to require liberals to accept some spending cuts we don't want, because liberals don't have the political clout to enact tax levels to pay for them. A deal tilted almost entirely toward the conservative vision is a total non-starter.

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posted in: jonathan chait, united states, erskine bowles, matt miller, rudolph penner

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