It's Not Spending or Revenue - It's the Politicians - The American Spectator | USA News and Politics
It’s Not Spending or Revenue — It’s the Politicians

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. 

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