Lawrence Summers

With the release of the president’s budget, Washington has once again descended into partisan squabbling. There is in America today pervasive concern about the basic functioning of our democracy. Congress is viewed less favorably than ever before in the history of public opinion polling. Revulsion at political figures unable to reach agreement on measures that substantially reduce prospective budget deficits is widespread. Pundits and politicians alike condemn gridlock as angry movements like Occupy Wall Street and the Tea Party emerge on both sides of the political spectrum, and partisanship seems to become ever more pervasive.

All this comes at a time of great challenge. Profound changes, as emerging economies led by China converge toward the West, will redefine the global order. Beyond the current economic downturn, which is surely the most serious since the Great Depression, lies the even more serious challenge of the rise of technologies that may well raise average productivity but displace large numbers of workers. Public debt is running up in a way that is without precedent except in times of all-out war. And a combination of the share of the population that is aged and the rising relative price of public services such as healthcare and education pressure future budgets.

Anyone who has worked in a political position in Washington has had ample experience with great frustration. Almost everyone involved with public policy feels as I do that there is much that is essential yet infeasible in the current political environment. Yet context is important. Concerns about gridlock are a near-constant in American political history and in important respects reflect desirable checks and balances; much more progress is occurring in key sectors than is usually acknowledged; and American decision making, for all its flaws, stands up well in global comparison.

It is a commonplace that the missing center makes political compromise impossible. Many yearn for a return to what they imagine as an earlier era when centrists in both parties had overlapping opinions and negotiated bipartisan compromises that moved the country forward. Yet fears about the functioning of our government like those expressed today have been recurring features of the political landscape since Patrick Henry’s 1791 assertion that the spirit of the revolution had been lost. It’s sobering to consider the degree of concern about paralysis that gripped Washington during the early 1960s when the prevailing diagnosis was that a lack of cohesive and responsible parties precluded the clear electoral verdicts necessary for decisive action. While there was a flurry of legislation passed in the 1964-66 period after a Democratic landslide, what followed were the cleavages associated with Vietnam and then Watergate, all leading to President Jimmy Carter’s famous declaration of a crisis of the national spirit. Whatever the view today, there was hardly high rapport in Washington during the term of Ronald Reagan. President Bill Clinton worked hard to establish rapport and compromise with a Congress controlled by the opposition only to be impeached by the House of Representatives after a bitter struggle.

Intense division and slow change have been the norms rather than the exceptions. While often frustrating, this has not always been a bad thing. Probably there were too few not too many checks and balances as the United States entered the Vietnam and Iraq wars. By my lights and that of many others, there should have been more checks and balances on the huge tax cuts of 1981, 2001 and 2003 or on unpaid-for entitlement expansions at any number of junctures. Most experts would agree that it is a good thing that politics thwarted the effort to establish a guaranteed annual income in the late 1960s and early 1970s or the effort to put in place what would today be called a single-payer healthcare system in the 1970s.

Since the election, American public policy debate has been focused on prospective budget deficits and what can be done to reduce them. The concerns are in part economic, with a recognition that debts cannot be allowed, indefinitely, to grow faster than incomes and the capacity repay.  And they have a heavy moral dimension with regard to this generation not unduly burdening our children.  There is also an international and security dimension: The excessive buildup of debt would leave the United States vulnerable to foreign creditors and without the flexibility to respond to international emergencies.

While economic forecasts are uncertain, the great likelihood is that debts will rise relative to incomes in an unsustainable way over the next 15 years without further actions beyond those undertaken in the 2011 budget deal and the end of year agreement that averted a fall over the “fiscal cliff.” So even without the risk of self-inflicted catastrophes — like the possible failure to meet debt obligations or the shutting down of government — it is entirely appropriate for policy to focus on reducing prospective deficits.

Those who argue against a further concentration on prospective deficits on the grounds that – contingent on a forecast that assumes no recessions – the debt to gross domestic product ratio may stabilize for a decade counsel irresponsibly. Given all uncertainties and current debt levels, we should be planning to reduce debt ratios if the next decade goes well economically.

Arithmetic done under the constraints of politics is always suspect, and one should always examine carefully the claims of those seeking votes. But smart observers have learned to distinguish between the claims of political candidates and their advisers on the one hand, and proposals that have been evaluated by independent scorekeepers like the Congressional Budget Office on the other.

This principle has never been better illustrated than by the “budget analysis” put forward by Governor Romney’s chief economic adviser, Glenn Hubbard, in a recent Wall Street Journal column. Hubbard constructs a budget plan he imagines that President Obama might propose someday, engages in a set of his own extrapolations and then makes a set of assertions about it. He does not discuss President Obama’s actual plan or how it has been evaluated by the CBO. Nor does he invest his credibility in defending the claims that Governor Romney has made regarding his own fiscal plans – he simply states that, “Yes, President Obama and Mitt Romney have budgets with competing visions. But Governor Romney’s budget makes tough choices…” without delving into the specifics or trade-offs that Romney’s “tough choices” entail.

President Obama put forward a plan earlier this year that would reduce deficits by more than $4 trillion over the next decade. It would bring discretionary spending to its lowest levels since the 1960s. It includes $2.50 in spending cuts for every $1 in additional revenue. It also asks everyone to pay their fair share of taxes, repealing the Bush tax cuts for families making more than $250,000, and closing loopholes and shelters like preferences for private jets, hedge fund managers and offshore investments.