Today, Fred Hiatt deployed a familiar canard -- that the president's budget policy is an eerie reverse of the conservative "starve the beast" strategy for shrinking government, designed to ensure that taxes increase as some kind of teleological end. This criticism has been tried before, and both Dean Baker and I found the time to explain that this conjecture only works if you ignore the various revenue-raising proposals and cost-cutting measures offered by the administration.
Eventually, though, even Hiatt admits the fact that the Obama administration is pursuing a policy agenda designed to accomplish certain goals in the public interest and that this might necessitate increasing taxes, and criticizes the president for failing to articulate that goal more persuasively. That's not that bad a point -- Matt Yglesias gets into it in an article from our last issue. Dealing with broader based revenue fixes and overall tax reform has got to be a priority of this administration, and they have not been forthcoming about the fact -- not surprising, from a political point of view, but not particularly courageous, either.
But Hiatt undermines this relevant argument with his own sophistry. He can't bring himself to admit that the president's goal of cost-cutting in health-care reform is possible, or acknowledge that Congress has rejected most of the administration proposals, from limiting the charitable deduction to stopping wasteful agribusiness subsidies, that would have helped fixed the deficit shortfall. He goes so far as to disingenuously attack the administration's student loan proposals, which would regularize the funding of Pell grants, because they would create an entitlement. Lord knows it would be simply awful if students receiving government college aid could plan ahead! Hiatt can be placed squarely among those Tories Daniel Gross expertly identified -- folks "bedeviled by the haunting fear that someone, somewhere may be getting social insurance." Incidentally, Gross offers a great explanation in that same piece for why Hiatt's inflation scaremongering is just that.
Hiatt's worst mistake is that he doesn't seem to understand the role that Congress plays in the budget process, criticizing Obama for recognizing that the Alternative Minimum Tax will be limited every year by Congress, as it always has been -- an astonishingly honest move from the president, who could have followed his predecessors ways and simply "assumed" that revenue would be available though everyone in Washington would know better. Obama's budget is actually surprisingly responsible -- starting with its willingness to face the tough facts about our fiscal situation and avoid accounting games -- and will reduce the budget deficit over the next ten years by more than if the Bush administration status quo had been maintained.
There's no question that our country's fiscal situation is unsustainable. But the current administration is moving in the right direction, not the wrong one. Comparing it to the tax cuts at any cost strategy embraced by conservatives is not just silly, it's banal. Just consider this: the signature domestic accomplishment of the previous president's tenure, the Bush tax cuts, had to be passed with sunset provisions because everyone knew at the time it would lead to serious deficit spending. But this administration's signature proposal -- health care reform -- will be deficit neutral, thanks to the president's demands. That, more than anything else, captures the difference in approach between the supply-siders and the new administration.
-- Tim Fernholz
