JONATHAN COHN JANUARY 21, 2011
I think I'm finally beginning to understand GOP thinking about fiscal policy. It's not that they're at war, as Krugman thought, with logic. Or, as Jonathan Chait writes, with arithmetic. Or even with CBO, as Ezra Klein concludes. It's the concept of budgeting that they don't like.
That's my takeaway from Greg Mankiw's seemingly bizarre post yesterday, in which he mocked Democrats on health care:
I have a plan to reduce the budget deficit. The essence of the plan is the federal government writing me a check for $1 billion. The plan will be financed by $3 billion of tax increases. According to my back-of-the envelope calculations, giving me that $1 billion will reduce the budget deficit by $2 billion.
For Mankiw, and for Charles Krauthammer, who has a very similar column today, this is self-evidently foolish as a deficit reduction plan. Put aside casual misdirection (both of them imply that ACA raises spending and taxes, but in fact there's also quite a bit of spending cuts in ACA—something that Republican politicians have made a chief talking point against reform). Put aside too outright lies and myths; Krauthammer embraces 10/6, which Chait once again destroys. Put aside, too, that Mankiw's "plan" of giving $1B to him personally isn't actually conceptually different from real-life plans to give very wealthy people very large tax cuts, without the corresponding new revenues or spending cuts to balance them, that Mankiw has supported in the past.
No, just take them at face value. What's going on? What is Mankiw telling us?
It's the idea of a budget they don't like. Here's NRO's Reihan Salam, applauding Mankiw's post:
In my view, it is conceptually useful to think of the spending component and the revenue-raising component of PPACA separately. Why? Because there are much better ways to raise the same amount of revenue, e.g., by eliminating or paring back the mortgage interest deduction and the state and local tax deduction, among other thing. My sense is that thinking of revenue-raising mechanisms separately leads us to better public policy conclusions.
I don't want to stretch what Salam said too far, but let's just say it pointed me to a way through the confusion that I've had, and that I think others have had, about conservative budget thinking, and makes sense of Mankiw—and of GOP opposition to PAYGO, support for unfunded tax cuts, and the rest of the Republican fiscal stew.
To understand what they're saying, just throw out the entire concept of a budget.
So: to characterize conservative talk about revenues and spending, I think what I'd say is that conservatives believe that each program, and every tax, should be judged on its own merits. If a spending program is necessary, like missile defense, then it should be fully funded. If not, it should not be funded. On revenues, the justification for any sort of taxation is that citizens should have "skin in the game," and therefore everyone should pay the same, small amount. Any more taxes, and any more spending, are by this way of thinking fiscally irresponsible.
Now, you may note at this point that there's nothing in that formula to make government revenues equal government spending. As far as I can tell, that's correct; conservatives aren't interested in that question. Oh, there's plenty of lip service about "budget deficits," but the point is that they've never made sense if you read "budget deficit" as "government revenues minus government spending." It does, however, suddenly make sense if you translate "budget deficit" to mean "unwarranted spending or taxes." Regardless, that is, of how changes in that would add up.
That's why the whole concept of a fiscally sound bill that involves new spending on health care is nonsensical to conservatives who believe that individual health care just isn't the job of the federal government, a conclusion that liberals find baffling. Yes, in the trenches, some Republicans have made specific arguments about why the CBO score is wrong. But you can tell, I think, that their hearts aren't really into it—or at least, that would explain the poor quality of some of their arguments, such as the idea that the cost of "doc fix" somehow or another is both a cost of passing and of repealing ACA. Whatever, they seem to be saying; why are we even debating this, when it's self-evident that increasing the scope of government responsibilities to include some form of universal health care, even if it's structured by creating markets, is a mistake.
That still doesn't excuse shenanigans like 10/6, which is just factually wrong. And, of course, it doesn't mean that Republicans are correct. And it certainly doesn't excuse actual deficit hawks, people who really do want government receipts to equal government expenditures, from mistakenly believing that folks like Paul Ryan are their allies. All it means is that, when listening to liberals and conservatives debate the budget, remember that they're often talking past each other—because, I strongly suspect, they're just using the same words to talk about two different things.