Jonathan Chait

The Establishment's Strange Debt Fetish

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Despite my enthusiasm for the latest debt commission plan, I should say that I continue to be puzzled by the Washington establishment's belief that the deficit constitutes the gravest crisis to the Republic. Check out Fareed Zakaria's latest column:

The fate of the U.S. is going to be decided over the next year. O.K., I know that's overly dramatic, but here's why I say it. The deficit-reduction commission co-chaired by Erskine Bowles and Alan Simpson has put the long-term fiscal health of the country front and center on the national stage. If we're lucky, we'll have a serious debate about it. We could decide that we are willing to undertake real reforms and fix the problem. Or we could once again kick the can down the road. If we do the latter, things get worse, the political deadlock hardens, and costs rise. Historians may well look back and say this was the point at which the U.S. began its long and seemingly irreversible decline.

The problem we need to fix is simple. Americans have an appetite for government benefits that greatly exceeds their appetite for taxes. For more than a generation, we have squared this dishonest circle by borrowing vast amounts of money. As more people age, this gap between what we want the government to provide and what we are willing to pay for is going to widen to an unsustainable level. Over the next 75 years, benefits under entitlement programs will exceed government revenue by $40 trillion. The federal budget deficit, if unattended, will reach 24% of GDP in 2040.

In the first paragraph, Zakaria asserts that the fate of the U.S. will be decided within a year. In the next paragraph, he warns that without proper action, we will experience catastrophe in ... 2040. Dos that sound like the kind of problem we really have to tackle in the next year or never?

I do think the long-term deficit is a serious issue that I'd like to see addressed. I don't understand the idea that this is an especially good political time to solve it. While many Democrats oppose any revisions to entitlement programs, the entire Republican party is in the grips of anti-tax dogma so powerful that not a single Republican in Congress has defied it for twenty years. Now, a moment of high Republican hubris, seems like a very unlikely moment to force the party to compromise its core policy commitment.

What's truly bizarre is this idea that it's the most urgent issue to address. Climate change seems clearly more urgent--and, what's more, it's probably irreversible. The economic crisis is also more urgent. But Washington elites are fairly removed from the cataclysmic effects of the economic crisis--they're not losing their homes or living in economic terror. And climate change is a "partisan" issue, unworthy of the urgings of a non-partisan wise man. And so, by dint of the peculiar isolation and sociological demands of the members of the political and media establishments, the deficit must become the top priority.

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