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What we want is to pay for what we want

Your Humble Blogger gets really cranky about things, you know? Here’s one of them: when people talk about the two Parties and their positions on the budget, particularly when we are in the lead-up to yet another Deadline with a Bad Law booby-trap, they are likely to suggest that the Other Party wants spending cuts, and My Party wants revenue increases, and that therefore a compromise will have some spending cuts (for the Other Party) and some revenue increases (for My Party). This talk is typical even for Left Blogovia, as in Greg Sargent’s GOP approach to sequester jumps shark:

Meanwhile, Senate Democrats unveiled their own replacement plan for the sequester today. As expected, it contains roughly a 50-50 split of cuts and new revenues via the closing of various loopholes enjoyed by the rich and corporations.

So here are the politics of this in a nutshell. Democrats want the sequester to be averted through a mix of roughly equivalent concessions by both sides.

I understand, as a practical matter, it makes sense to talk about it. It gives the impression, though, that Our Party is simply pro-revenue. This, I think, feeds into what Paul Krugman calls the mirror-image fallacy, that since the Other Party knows they want lower taxes, we must (in their eyes) want higher taxes. And in point of fact, I think (and many of us in the Party think) that total revenue levels should be higher than they are now, but not because I like high revenues. No. I like the things that the money is buying, and I am willing to raise revenues enough to pay for them.

Digression: Actually, I feel much the same way in my own life. I would gladly make less money (by working fewer hours, or even at a different job), only I want to use more money for various things. Including investments (or savings, which are at this point investments) as well as bread and roses. And actually, the investments are really only so that I can have more bread and roses later. I’m not maximizing revenues, I’m balancing spending (on things I want) with revenues (which are generally obtained through unpleasantness of some kind). While it’s clearly an error to confuse household incentives with government incentives, I suspect that my instincts on money, bread and roses for my own use have something to do with my instincts on government policies. End Digression.

So the compromise here is that the Other Party wants spending cuts, and My Party wants fully-funded programs. Or, even more accurately, My Party wants bridges and tunnels, subsidies and grants, courthouses and officers, railways and airports, hospitals and medicines, power and water, inspectors and regulators, markets and money, and all sorts of things. Well, not all sorts—we like subsidies that encourage consumers to buy low-energy refrigerators and insulating windows, and we don’t like subsidies that encourage energy companies to despoil the land. But on the whole, it’s not wrong to say that we like fully-funded programs.

So, instead of calling it a compromise between cuts and revenues, we could say it’s between cutting programs and funding them. The problem is that we can’t then call it a 50-50 split between cutting programs and funding them—that compromise doesn’t cut our spending in half, so the cuts are a small percentage of the total funds. On the other hand, the 50-50 thing isn’t really working out very well as persuasive rhetoric, now, is it? Not much of a loss. And we could probably call it a 50-50 split between program cuts and new funding for programs, if we had to use that even split language.

And, of course, this is all complicated because the Other Party wants to more than a hundred billion in funding from the budget, but doesn’t want to talk about cutting anything popular, like most actual programs. So Eric Cantor talks about a $266,821 political science grant. Awesome! We’re .0002% there! Even the whole budget for grants in the social sciences is $250 million—leaving only $99,750,000,000 left unspecified. When we point out the Other Party’s intransigence when it comes to paying for popular programs, they shrug and say that they are in favor of those popular programs—it’s those other unpopular ones they want to get rid of.

Well, and that’s politics, too. It’s My Party’s business (and my business) to try to nail them down to some actual policy preferences. We don’t have to accept it, but we can only fight it by actually fighting it. And while we’re at it, we don’t have to accept their frame around the budget fight, either. We don’t like new revenues, and higher taxes isn’t a victory for us. Having the things those taxes pay for—the national bread and roses—those would be the victory.

Tolerabimus quod tolerare debemus,
-Vardibidian.

Comments

V., "Bread and Roses" is a brilliant substitution for "Guns and Butter." (Why do economists want so much guns and butter when everyone knows the unhealthful effects of both?) There is an enormous amount of deeply flawed rhetoric coming from both sides of the political spectrum right now. The compromises to date have gotten us $16+ trillion in the hole. Obama's own OMB says it's going to be a $26.3 trillion national debt by 2020. The Fed bought the vast majority of US Treasury debt last year, by puching buttons on their computers; this is our equivalent to cranking the printing press.

Most folks (even on the right, if you ask them the right way) will say that we had mostly peace and prosperity during the Clinton presidency. In the last Clinton years, the budget was basically balanced, with federal receipts and federal outlays both being in the high teens as a percentage of GDP. If we had peace and prosperity at that level, why do we need to keep spending in the mid-20% of GDP, where it's been for the past few years? We don't. After watching Simpson Bowles for some time, and seeing Alan Simpson speak in person (he mentioned that 100 prominent groups and government agencies all came before the Simpson Bowles commission, and every single one basically said, "this country has a massive spending problem that needs to be addressed, but if you cut my program one dollar, the country will fall into the abyss), I have become convinced that the only way to do this is with a sledgehammer, a 25% spending cut for every single item in the budget, phased in over a few years. I'm okay with more revenues, too--let's go back to the late 1990's level of revenue. If we don't address this soon, every government program that you or I like is going to be crowded out by interest on our debt. Or, we will simply print more money. That movie has an ending that is not felicitous, as witnessed by the 100 trillion dollar Zimbabwe bank note I have in my desk drawer. In 1980, the Zimbabwe dollar was worth about $1 US dollar. In 2009, when the 100 trillion dollar Zimbabwe note was printed, it was worth about 29 US dollars. I bought it for $5 on Ebay and it arguably is worth less than that--it has value only as a collector's item. I am not saying it's going to happen next year in the US. But I am saying that just because Paul Krugman's bond vigilantes have not ridden into town yet doesn't mean they never will. One reason they are still camping outside of our burgh is that the Fed is buying so much of our government debt right now. As the Fed's balance sheet balloons, the bond vigilantes are grooming their horses for a ride into town. As George Will says, "it's the inexorable math of deficits." You can't keep going like this indefinitely.


I dunno, this seems sort of obvious to me. What we're talking about is imposing some costs to gain some benefits. Of course the people who oppose this are going to focus on the costs, while the people in favor are going to focus on the benefits. Neither is telling the whole story, or offering a fair comparison.

A better question, I think, is to acknowledge that we all want nice things; the question is, is it more effective/moral/etc to get them via taxes and government, or via the free market. Libertarians who want to slash all kinds of government programs aren't opposed to the existence of the things that those programs buy; they're opposed to the idea of the government buying them with taxes. (I'm not defending Republicans, about whom I care not a fuck, not even a flying one.)


Jay:

I must respond, as respectfully as possible, that the sort of "fiscal austerity" you are pitching here is counterproductive and would inflict deep and lasting suffering on children (who need education), the working poor (who need health care), the elderly (who need a decent income on which to live), and most orderinary citizens (who need, a civic infrastructure in good repair and robust environmental and public health programs).

If we are going to compare the present moment to the Clinton years, it's worth noting that military spending late in the Clinton presidency was 50% lower than it is now, and taxes were higher. The budget has been busted by a) reckless wars paid for by reckless borrowing, b) pointless tax cuts for the very wealthy, and c) the economic meltdown to which a and b contributed, and were topped off by criminally lax regulation of financial markets, which allowed the mortgage-securities bubble to inflate so as to conceal the fundamental harm to the economy inflicted by a + b until the whole Ponzi scheme collapsed.

Gutting the social safety net through austerity is worthless as a response to this problem because it tanks the economy (see exhibits A and B, Great Britain and the European Union). We're almost out of the reckless wars at last, so that will help, we've made some progress on reversing the pointless tax cuts, so that will help, and, if we don't plunge the economy back into recession by pursuing the asinine sequester policy, we'll continue to make progress on the third main cause of the deficit.

Personally, if one must get exercised about the future of the country, I'd recommend climate change as a somewhat more significant issue. Indeed, I'd be happy to see the federal government run up WWII level debts if all the resources so mobilized were directed toward converting the country to a renewable energy infrastructure in a decade. The physics of global warming are considerably more inevitable than the math of deficits.


As far as I can see, there's plenty of historical experience with unregulated markets, and they have not demonstrated any ability to deliver a passel of good things I want, such as healthy ecosystems, universal education, health care for all, and financial security for the elderly. I'm not sure if or how libertarians propose that such public goods might be provided by a free market. Not to say that markets have no role to play, but what would a serious proposal to get any of these kinds of goods without a strong role for government in equitably distributing wealth and regulating the use of the commons actually look like?


The pat libertarian answer is that most "unregulated markets" were actually heavily politically regulated, just in favor of businesses. It's not the free market if corporations can beat up workers, defraud rural landowners, and various other lawbreaking activities.

I don't know offhand what the closest real-world approximation of a really free-market society is, which makes me somewhat less persuasive to practical-minded skeptics like yourself. :^)

But, I know that history is certainly filled with examples of corrupt and horrible central-planning type governments, which makes me particularly skeptical of them.


Thanks, irilyth, for your reply to my question, which was not at all rhetorical.

The pat libertarian answer certainly challenges my conception of what libertarians are proposing, if by "free markets" they do not mean "unregulated markets" but "markets legally regulated to provide meaningful freedom to all participants." That's not the sort of thing my local Libertarian party candidates are saying (LP has a ballot line in Indiana and usually runs candidates U.S. House Rep in my district and in state-level races), as far as I have noticed. If they do, I'll start paying more attention to them!

To track down the closest real-world approximations to what you are suggesting, I would need a more detailed statement about the characteristics of a free market and what sort of legal frameworks could properly be employed to secure that freedom.

Which gets us back to the problem raised by V. in the originating post: how can participants in the political debate more effectively communicate what their real goals and real means are, so as to minimize the capacity of corrupt politicians and the interests they represent from thriving on the confusion they sow.


I'm not going to chime in on the substance here; my post was on the way supporters of My Party were discussing the difference between My Party and the Other Party. And as irilyth says, it ought to be obvious that those of us who support the programs talk about the benefits rather than costs. Only we don't, or at least many of us don't: it has become standard even for us to talk about our demands being for higher revenues. Which in practical terms is the change that's needed, so I understand it, but politically… let's just say that I would rather My Party behave just a trifle more cynically and less honestly on this one.

Oh, and I certainly can't take credit for bread and roses, which is more than a hundred years old (wow!), but I would be very pleased if economists would use it all the time.

Thanks,
-V.


Are our current levels of wealth and income disparity a problem for our society? I think that they are clearly at a level of economic injustice, and I think that economic injustice contributes to injustice in all areas of our society.

If wealth and/or income disparity are problems, the obvious way to fix them is through taxes. As long as we have taxes at all, and therefore can make decisions about who should pay how much in taxes, those taxes will necessarily be more or less confiscatory and redistributive, and therefore have an impact on wealth and income disparity. Those impacts recently have been in the direction of greater disparity rather than less. The only way to change that is to raise taxes on the wealthy, and for that reason I would actually consider higher taxes on the wealthy to be a victory in and of itself.


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