Tuesday, November 15, 2011

Running on hope and fear

As he has for nearly a year, Andrew Sullivan exhorts Obama to make a crusade of deficit reduction/tax reform:
I think a lot of the criticism of this president is piffle. I think he's done an extraordinary job in foreign policy and has kept this country afloat economically in times as perilous as the 1930s. But his refusal to back a specific plan to save our finances, and to do so before the crisis deepens, in order to reverse a potentially devastating confidence collapse in Europe ... this is failure of an historic kind. I understand why, politically, this is difficult. But this is a moment for transcending political constraints. This is a "Yes We Can" moment. This is why we supported him - because he seemed someone who could at times transcend politics, for the greater good.

He still can. The super-committee will almost certainly fail. Once that happens, the US will be telling the world it is less capable of grappling with its debt than Greece or Italy. Then what? If Obama seeks re-election just by not being a scary Republican, he will deserve to lose. We need him to campaign for Bowles-Simpson (or his variation thereof) and radical tax reform, and promise he will work with any Republican prepared to help finalize the deal - but that he will do it with Democrats alone if needs be. If that means ceding Medicare as an electoral advantage, so be it. We did not elect him to be a reactive defender of the Democratic machine. We elected him precisely because he said he wasn't that.

I worry that he is going to run on fear. He must run on hope - and a plan that entails risk but promise. This is the moment that will make his presidency. It is no time to think small.
Andrew is prone to apocalyptic thinking about the deficit.  But at least from April on, I'm not sure what he's expected Obama to do about it that he hasn't done. I could certainly see hitting Obama for negotiating badly --  but that's not Sullivan's point; he wants a crusade. Some questions:

1.) Since April, Obama has put forward three tax/deficit plans, if you count the near miss of a deal with Boehner (a terrible deal by Dem standards, but Obama's September plan improved on it considerably) . Were the two published plans (Sept., April)  too vague for Sullivan?  Perhaps, but ...

2) Every time Obama does produce or endorse a deficit reduction plan or outline, the battle lines harden. When the Gang of Six briefly arose from its coma in late July, Republicans damned its plan outline as soon as Obama made an encouraging noise about it.  If Obama does somehow get a tax/deficit deal done, it won't be by presenting a detailed blueprint of every loophole closing and tax rate jigger.  It will be by outmaneuvering Republicans by leveraging the pending Bush tax cut expiration -- or by winning a new majority (highly unlikely).

3) As Obama himself is fond of asserting, our debt problem is serious but not apocalyptic, as Sullivan makes it out to be. We are way under-taxed. Adjust the tax code to produce $2-3 trillion more in revenue over ten years than we would have if all the Bush tax cuts are preserved; cut defense on the scale that it was cut by Bush Sr. and Clinton; and find ways to bend the healthcare cost curve, and we're okay. That would all be quite doable if half our two-party system weren't insane.

4) Deficit crusaders put the cart before the horse. Slow growth balloons the debt.  Getting the economy going again, not deficit reduction per se, is job 1.

5) In today's WSJ, Alan Blinder argues that the cynosure of every deficit commission and think tank that's put out a deficit reduction plan -- tax reform that sharply reduces tax expenditures, lowers rates, and raises new revenue -- is unlikely to happen.  Why? "On those rare occasions when fundamental tax reform has succeeded—the remarkable Tax Reform Act of 1986, for example—the reform bill was either revenue-neutral or revenue-losing. That way, skillful politicians could arrange things so that the winners from tax reform outnumbered the losers."  I would add that Congressional Democrats in 1986 were an entirely different animal from Congressional Republicans today -- they were not ideological fanatics, they were willing to compromise, and they didn't place ensuring Ronald Reagan's failure above every other interest (of course, he had already been reelected).

6) Exhorting Obama to run on hope rather than fear sets up a false dichotomy. He will run on both. Sullivan's litmus test seem to be the degree of specificity in his deficit reduction plans, which, given the GOP's reflexive demonization of everything he proposes, is a matter of tactics, not principle. As for running on fear -- why shouldn't he? I think it's fair to assume that Sullivan is as terrified by the prospect of a Republican winning the presidency in 2012 as I am.  Any responsible politician would do his utmost to make the country fear that prospect.

7) Think about the freak show that's been the Republican nomination race, and take a step back. We have a two party system. One party is completely unfit to govern -- it wants to dismantle regulation after massive regulatory fail, cut taxes in the face of a mammoth deficit, create new spurs to galloping income inequality, and re-enshrine torture and preemptive war as our chief instruments of national security. That party demonizes policies it has advocated quite recently as soon as they become associated with the opposing party's president; it has put on stage presidential candidates who glory in ignorance, lie with impunity, smear with abandon, and announce to the world that they will commit war crimes in office.  Is the country governable under such circumstances? Only by hook, crook, and the very shaky chance of inflicting electoral defeats that will shock the GOP back to a modicum of reason before it takes power again.

Whether Obama can keep his finger in the dike depends more on the course of the economy than the level of detail in his deficit reduction plans.  Bowles-Simpson V is not going to galvanize the electorate.   Obama will run on 'hope' as he always has -- advocating investments in education, alternative energy and infrastructure; balanced deficit reform (what do the tax code details matter when one party won't consider our revenue needs?), renewed multilateralism and minimalist intervention abroad, and a sane pragmatic approach to our long-term challenges.

1 comment:

  1. Andrew Sullivan always wants more passion. It's a fault, but a better one than being overly cold and cynical.

    Your arguments are pretty strong except for #4, which coincidentally is also the shortest. You dismiss growing debt too readily. For the past 10 years, we haven't grown out of our deficits through the Bush tax cuts and or 3 years of stimulus spending. I think the last two years have shown that continued deficit spending for stimulus serves only to grow our debt, not our economy. We might be able to get away with this level of debt (unlike Greece), but it's a big risk that I'd prefer to curb.

    Other than that, quite strong, logical, dispassionate arguments that are a good reply to Andrew's passion.