Assume you are John Kerry. You've just been elected president in a close race. One House of Congress has gone narrowly Democratic, but not enough to give you a working legislative majority. The other has stayed narrowly Republican.
By now, it has dawned on you that you lack either the votes in Congress or the fiscal resources to launch a bold domestic program. Not that there's nothing to do. You can restore the United States to a respected position in the world community. You can lead a far more effective program of domestic security against terrorism while respecting civil liberties. And you can return the courts to serious jurists who are not far-right ideologues.
But the most successful - and disabling - part of George W. Bush's legacy is a structural budget deficit. Forget social needs. Seemingly, your most pressing imperative is fiscal damage control. And with a Democrat in the White House, the Wall Street worthies who cut George Bush a lot of slack on irresponsible deficits (which funded their tax reductions) will suddenly discover the damage and press you to close that deficit, preferably by cutting spending rather than restoring taxes.
The fiscal-prudence message will be echoed by your own senior economic advisers like former Treasury Secretary Robert Rubin. Moving the budget back toward balance will crowd out all but the most token spending initiatives.
If that scenario indeed plays out, it will not be good for a Kerry presidency, the Democratic Party, or the country. And if Kerry limits his imagination during the campaign because of his expectations of the fiscal constraints on his presidency, he may never get elected.
Thus far, there has been a rather stunted, two-way debate about how to deal with the enormous, long-term deficits bequeathed by the Bush tax cuts. On the Republican side, the Bushies want even more tax cuts. They propose to cut the projected deficits in half, by further cuts in public outlays, dishonest budget projections, and heroic assumptions about economic growth.
The Kerry campaign would deal with the deficits by rescinding nearly all of the Bush tax cuts on people making over $200,000 a year. Good start, but if that's all Kerry were to do, there would be almost no money available for social outlay.
Some context is important here. Federal spending relative to Gross Domestic Product is already down to its lowest level since the 1950s. A bit more program cutting and it will be down to the level of before World War II.
Because of the preexisting deficits bestowed by Ronald Reagan's tax cuts, the last Democratic president, Bill Clinton, heroically balanced the budget but also reduced federal outlay relative to GDP. Clinton did restore taxes on the wealthiest 2 percent of taxpayers, but slashed social spending.
Given that Social Security and Medicare consume a high and rising share of total federal outlay, the picture is even worse than it seems. All other forms of federal social investment must compete for relative crumbs.
So this needs to be a three-way budgetary debate. On one side, the tax cutters want to shrink government to a "night watchman state," with few services except for public safety.
On the second side, the fiscal stewards think that budget balance is the chief virtue.
But let's have a third side - politicians who actually value social investments that benefit ordinary people and that the market economy can't provide. Not so long ago, this was the view of the mainstream Democratic Party. Indeed, it was the reason that voters returned Democrats to office. And it produced a fairer and more secure economy.
If the Democrats are to be politically relevant, they need to restore some fiscal resources. Voters actually support social outlays like universal health insurance, high-quality child care, and affordable housing. The market certainly doesn't deliver them. Voters don't elect Democrats to balance budgets.
One good way to restore some revenues, without taxing the middle class, is tax-enforcement. Over $200 billion from large corporations and wealthy individuals goes uncollected because of creative accounting and the warped auditing priorities of Bush's IRS.
If he is to be more than the prisoner of President Bush's fiscal trap, a President Kerry would need to use his bully pulpit to remind the public of the value of collective endeavor - of government. He would need to restore progressive taxation not just to reduce the deficit but to serve public purposes.
Robert Kuttner is co-editor of The American Prospect. This column originally appeared in The Boston Globe.
