The past few days have seen some serious
conservative-on-conservative violence. It started when Indiana
governor Mitch Daniels contemplated a VAT (value-added tax) in the
context of broader tax code overhaul plans. In response, Americans
for Tax Reform president (and frequent Spectator
contributor) Grover Norquist warned,
in his inimitable way, that Daniels better have a good excuse for
considering a VAT — such as “large quantities of crystal meth.”
Then Norquist himself came under friendly fire from Kevin
Williamson at National Review, who
accused Norquist of living in “candyland” for thinking that our
debt problem can be solved without a VAT or other such
revenue-increasing vehicle.
I think that each link in this chain is speaking past the
others.
Daniels, whose record of fiscal conservatism in Indiana is as
strong as they come, was speaking abstractly, not proposing a VAT
for the immediate situation. The rhetoric in Norquist’s response is
in line with his usual irreverence — for example, look at his
recent
statement on disqualifications for the 2012 GOP nominee:
An odd number of sex change operations would be unhelpful.
Really bad stuff has to have taken place before one is “born again”
or at least before Google. Preferably no sex tapes that make one
look chubby. No visibly communicable diseases. No votes for tax
increases in one’s public record.
Rhetoric aside, the point of contention probably stems
from the fact that Norquist thinks of deficits not in hypothetical
terms, but as part
of a negotiating strategy with Democrats:
“At some point conversations about unicorns are tedious, because
they don’t exist in the real world,” Norquist told The Hill.
“Budget deals where they actually restrain spending and raise taxes
are unicorns.”
Norquist said the focus needs to be on spending cuts alone.
Norquist’s jokes might might surprise people unfamiliar with his
style, but the underlying philosophical disagreements between him
and Daniels are probably not be nearly as irresolvable as it
appears.
Accordingly, Williamson’s concern that Norquist is
unserious on the question of the debt is probably overblown.
Furthermore, I think that there’s a faulty assumption in
Williamson’s logic, indicative of a slight misunderstanding of the
debt scenario and the proper strategy for reducing deficits, that
contributed to his conclusion that ATR is not on the right side
when it comes to debt reduction.
Williamson says that in opposing tax increases instead of
spending increases, ATR is waging a “campaign against math.” The
problem, he thinks, is that spending eclipses revenues by 36
percent, and that while he would love to this deficit reduced by
spending cuts alone, he “would also like to be dating Marisa
Miller, driving a Morgan Aero, and running a four-minute mile,
developments that are about as plausible as Congress’s cutting 36.3
percent of federal spending. Not going to happen.”
Here he is overstating the debt problem. A balanced primary
budget, as worthy a goal as it would be, is not necessary in the
short run to bring debt accumulation to a sustainable level. The
problem isn’t current spending outpacing current revenues, the
problem is the threat of ever-more costly entitlements that
politicians of both parties are mostly ignoring.
Look at Paul Ryan’s Roadmap plan. It is widely heralded by
serious fiscal conservatives for addressing the debt in a realistic
way. The Roadmap isn’t focused on eliminating short-term deficits;
in fact, the CBO projected that it would lead to debt stabilizing
at 100 percent of GDP around mid-century, before dwindling
thereafter.
That level of debt certainly poses a serious risk, one that
Williamson may not want to stomach. But the plan was devised to
approach political viability — if stabilizing the debt were the
only consideration, Ryan could simply have submitted a plan
abolishing Medicare, and washed his hands of the matter. Even the
Roadmap, though, is not at all politically manageable at the
present time.
In other words, the right wing, if it had absolutely power,
would easily come up with a spending-only plan for reducing the
debt. As Daniel Mitchell of Cato
has noted, absent health care cost inflation, the primary
budget could be balanced by the middle of this decade simply by
holding the budget to a 2 percent annual increase — and that’s
assuming the extension of all the Bush tax cuts. And as various
left-wingers have noted, simply following current policies as
written (i.e., allowing all the Bush tax cuts to expire and leaving
the AMT unchanged) would also stabilize the debt at about 60-70
percent of GDP, through increased revenues.
The challenge, then, is not simply how to resolve the escalating
debt, but how best to do so given the political environment and the
fundamental disconnect between the two parties regarding the size
of government. As Howard Gleckman noted this morning, a
significant number of Congressional Republicans have taken the ATR
pledge not to raise taxes, and a comparable portion of
Congressional Democrats have signed the Progressive Change Campaign
Committee’s pledge not to cut entitlements. Clearly finding a
compromise between the two will not be easy — probably not much
easier than finding a unicorn.
Daniels is trying to stand above this debate, while Norquist is
trying to to shift it so conservatives have the high ground. This
seems like a legitimate difference in judgment to me, not a
question of one person or another is acting in bad faith or
succumbing to fantasy.
