How should liberals respond to the debt commission? The correct answer, I think, is to see it as an opportunity for a policy success or a political win. The wrong answer is to reject it out of hand.
One category of out-of-hand rejection is insistence that we don’t need to do anything about the long-term deficit. The "real" problem, according to this line of reasoning, is the economy, not the deficit. Here's Dean Baker writing in TNR:
Given the state of the economy, the co-chairs’ report reads like a document from Mars. Just to remind those of us who earn their living on planet earth (outside of Wall Street), the country is suffering from 9.6 percent unemployment. More than 25 million people are unemployed, underemployed, or have given up looking for work altogether. Tens of millions of people are underwater in their mortgage and millions face the prospect of losing their home to foreclosure.
We did not get here because of government deficits, contrary to what Mr. Bowles seemed to suggest at the co-chairs’ press conference today. We got here because of the bursting of an $8 trillion housing bubble. This bubble was fueled by the reckless and possibly unlawful practices of the Wall Street banks, like Morgan Stanley, the bank on whose board Mr. Bowles sits.
I don't follow the logic here at all. We have a short-term economic crisis that requires higher deficit spending to boost demand. And we have a long-term deficit crisis that requires, well, lower deficit spending. I wish there was legislation to address both problems. Indeed, I think the structural deficit ranks well below both the economic crisis and climate change. But that isn't a reason to ignore it.
A more common objection is that we do need to address the long-term deficit, but not this way. Kevin Drum complains that the commission’s plan ignores rising health care costs, the main driver of higher deficits:
Any serious long-term deficit plan will spend about 1% of its time on the discretionary budget, 1% on Social Security, and 98% on healthcare. Any proposal that doesn't maintain approximately that ratio shouldn't be considered serious. The Simpson-Bowles plan, conversely, goes into loving detail about cuts to the discretionary budget and Social Security but turns suddenly vague and cramped when it gets to Medicare. That's not serious.
Well, that’s true as far as it goes. But we did just pass a major health care reform law that is going to go pretty far in holding down the growth of health care costs. But the Affordable Care Act is not going to solve the deficit by itself. You also need some other budget changes. The commission plan builds upon the cost savings of the PPACA, but focuses its energies elsewhere. First we did the health care piece, shoving as much cost saving through the system as possible. Now we can turn mainly to the non-health care piece.
Another category of opposition, put forward by a broad swath of liberals, simply criticizes specific provisions in the plan as if invoking unattractive elements is sufficient refutation. Higher retirement age, bad! Slashing the federal workforce, bad! (You can see a lot of these lines here.) I agree! We could design a budget that reaches an attainable deficit and does a far better job of reflecting liberal priorities.
But that option is not on the table. The premise here is that reducing the long-term deficit is very hard. All the options are unpopular. If you try to do it while imposing your party's ideal vision of federal priorities, the other party will demagogue you to death and you'll fail. So you need to find some way to reduce the deficit that falls short of your ideal while constituting an improvement over a status quo of letting the deficit run unchecked.
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