Opinion

Reihan Salam

Paul Ryan, Patty Murray and a budget walk into a bar

Reihan Salam
Mar 15, 2013 15:38 UTC

This week, House Republicans and Senate Democrats released budget resolutions that illustrate the chasm that separates the two parties.

The Republicans, led by House Budget Committee Chairman Paul Ryan, aim to shave $4.6 trillion off of the federal government’s spending trajectory. They get there primarily by reducing the growth rate of domestic social programs like Medicaid and rolling back the coverage-expanding provisions of the Affordable Care Act. Although the Ryan budget accepts the revenue increases that were part of the fiscal cliff deal and the Affordable Care Act, it does not allow for any further revenue increases.

The Democrats, led by Senate Budget Committee Chairwoman Patty Murray, aim to reduce spending by $975 billion. Yet they also call for $100 billion in new stimulus spending and shutting off the $1.2 trillion in automatic spending cuts scheduled to take place under sequestration, which suggests that spending reductions will be more than balanced by spending increases. And while the Ryan budget resists revenue increases, the Murray budget calls for $975 billion in revenue from unspecified cuts to loopholes and spending in the tax code.

Beneath the surface of these two budgets lie coalition politics. The Ryan budget, for example, delays its major Medicare reforms until today’s 55-year-olds reach retirement age. It also leaves Social Security largely untouched. One way to look at this is as a concession to the political reality that older Americans tend to support Republicans, and so reforms that reduce benefits for older Americans will be met with strong intra-party resistance. At the same time, the main beneficiaries of Medicaid expansion are low-income adults who are not, as a rule, inside the GOP tent. Conservatives generally believe that smaller government is better for everyone, including the poor. Yet conservative politicians have more to fear from voters who rely on Social Security and Medicare than from voters who rely on Medicaid, which explains their reluctance to make deep cuts in old-age social programs and their willingness to make cuts in programs that tend to benefit the young.

The Murray budget, in contrast, tries to unite a very different coalition. Democrats represent low-income adults who rely on programs like Medicaid; unionized public employees and health-sector workers who rely on federal spending to make a living; students and educators who count on higher education subsidies; and college-educated professionals who favor tax increases on people richer than themselves. This unwieldy coalition makes it very difficult to cut spending. There is a strong intellectual case that Democrats should embrace a single-payer system like Canada’s to shrink health costs, thus allowing the federal government to spend more on, say, green energy investments. But for every left-of-center Democrat who likes the idea, there is a Democrat who represents hospitals and insurers who does not. And though Democrats are far more open to tax increases than Republicans, they have backed themselves into a position in which they can only raise taxes on, at best, the top 2 percent of earners.

Does Britain’s austerity hold lessons for the United States?

Reihan Salam
Jan 4, 2013 16:16 UTC

The dog’s breakfast of a deal that “resolved” the fiscal cliff fell far short of expectations. In the hours after it passed, deficit hawks at the Committee for a Responsible Federal Budget and the tag team of former Senator Alan Simpson and former Clinton White House chief of Staff Erskine Bowles all expressed disappointment in a bargain that was anything but grand. Senate Republicans gritted their teeth to accept a small increase in taxes on America’s highest-earning households while Senate Democrats made permanent the bulk of the Bush-era tax cuts. A number of tax provisions that hark back to the 2009 fiscal stimulus law were extended, as were unemployment benefits, thus delivering a modest income boost to a large number of low-income households. But the Social Security payroll tax cut, a Republican-backed replacement for the more narrowly targeted Making Work Pay tax credit that was part of the stimulus law, which benefited a wide range of affluent households as well as families of more modest means, was allowed to lapse. Long-term spending levels, meanwhile, were left largely untouched, which is why rebellious House Republicans came close to scuttling the delicately constructed compromise.

One group that offered at least two cheers for the deal were deficit doves, who believe that premature fiscal consolidation poses a grave threat to America’s sluggish economic recovery. Paul Krugman, the prominent economist and popular left-of-center New York Times columnist who never shrinks from apocalyptic pronouncements, was almost pleased to see that the deal avoided any serious spending cuts and that it entailed relatively modest near-term tax increases.

There is a coherent approach to reconciling the concerns of deficit hawks and doves, which has been championed by former Senator Pete Domenici and former Clinton budget director Alice Rivlin of the Bipartisan Policy Center’s Debt Reduction Task Force. Essentially, it entails addressing the federal government’s structural budget deficit — the gap between revenues and spending levels when the economy is humming along at its “normal” pace — while allowing for substantial deficits so long as the economy is in recovery mode.

Fighting threats in the age of austerity

Reihan Salam
Nov 13, 2012 17:36 UTC

Now that President Obama has been reelected, he faces a number of basic questions about the future of America’s national security strategy. The most immediate of these concerns how the president will address the deep cuts to defense expenditures that will be triggered under last year’s Budget Control Act if congressional Republicans and Democrats can’t reach an agreement on a deficit deal. Answering this question requires a broader sense of the threats we face and what we ought to do about them.

When compared to the height of the Cold War, when the Soviet empire had nuclear weapons trained on virtually every inch of U.S. soil, it is fair to say that the world is a much less dangerous place for Americans, and we shouldn’t forget it. But when compared to the relative peace and security, Islamic terrorism notwithstanding, we’ve enjoyed in the two decades since the Soviet collapse, there is good reason to believe that the threat level is increasing. This is happening at the same time that sluggish economic growth and rising social expenditures are squeezing America’s ability to pay for an enormous military establishment.

Since the 9/11 terror attacks, America’s national security conversation has focused primarily on the threat of mass-casualty terrorism. Hundreds of billions of dollars have been devoted by the public and private sectors to harden domestic targets, with no small success. A fundamental problem, however, is that a free society will always be vulnerable to conventional terrorist attacks, which can be executed by disaffected individuals as well as by highly-trained violent extremists. And while we can harden one set of targets, like airplanes and airports, there will always be softer targets for terrorists to exploit. Moreover, conventional terrorist attacks, as horrifying as they may be, are much less of a threat to public safety in the United States than, say, traffic accidents. John Mueller, a provocative political scientist at Ohio State University, has observed that far fewer Americans died in 2001 from transnational terrorism than from peanut allergies, yet the U.S. government has yet to declare war on peanuts. As awful as it sounds, the best approach to conventional terrorism might be for Americans to allow the intelligence services to do the difficult, painstaking work of containing it while accepting that it will be part of our future in a violent world.

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