In April, a bizarre coalition of the Brookings Institution and the Heritage Foundation, released a one-sided document titled “Taking Back Our Fiscal Future” (PDF). Judging by the letterhead, the group represented a broad spectrum of moderates and conservatives, all of whom ostensibly agreed that the Republic was in dire peril because of long term deficits, mainly in programs such as Social Security, Medicare, and Medicaid.
The group included hard core rightwingers such as the Heritage Foundation’s Stuart Butler and Ron Haskins, the most influential conservative at Brookings, and Joseph Antos of AEI, as well as respected budget conscious Democrats such as Rudy Penner and Robert Reischauer of the Urban Institute, Alice Rivlin, Isabel Sawhill and Bill Galston of Brookings.
Even stranger than the bedfellows was their proposal. Its core provision would force automatic cuts in social insurance programs, but no such automatic cuts in tax loopholes. You have to wonder why Democrats such as Reischauer and Galston got so snookered, or what they were thinking. Basically, the tax-cutters at Heritage and AEI continue to propose slashing government revenues as the cure for everything from slow growth to bad breath. Then, when deficits loom, they turn into fiscal statesmen -- as long as the cure is destroying social insurance.
For a couple of months, the fiscal moderates around town seethed. Then they organized. Then they released a message of their own.
This morning, spearheaded by Bob Greenstein of the Center on Budget and Policy Priorities and Henry Aaron of Brookings (who has to be watching his back) held a press conference. Their report is titled “A Balanced Approach to Restoring Fiscal Responsibility” (PDF). Its sixteen signers match the prestige of the first group, including Nobel Laureate Robert Solow. They, too express concern about long term deficits, but point out the hypocrisy of the Fiscal Futurists, for putting social programs on the block but not tax loopholes. Says the Greenstein-Aaron report of the Brookings-Heritage document:
“For one thing, it does not focus adequate attention on the main driver of our fiscal problem -- the relentless rise in health care costs throughout the U.S. health care system. Without measures to slow the growth of total (public and private) health care spending, no solution to the nation’s fiscal challenges will prove sustainable. For another, it does not propose any action to restrain the hundreds of billions of dollars in entitlements that are delivered through the tax code and flow largely to more affluent Americans.”
This debate gives you a sense of the narrow conventional wisdom a President Obama would face. The rightwing of the debate (including several centrist Democrats) says: balance the budget by gutting social insurance. The left wing says restrain deficits by raising taxes and cutting health costs. Hardly anyone says lower health costs by passing true national health insurance, and use deficits if necessary to cure what is already the most serious economic crisis since the Great Depression. But kudos to Greenstein and Aaron for playing hardball and asking their colleagues to think harder about just whose purposes they are serving.
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