One of the tricks that conservatives used to maintain control during the Bush era was to always vote on tax cuts in isolation, keeping choices about taxes completely separate from questions of spending and government services. Otherwise people would realize that taxes actually paid for something and that cutting them had consequences.
Even in the Reagan years, when taxes were raised seven times, government made decisions about spending and revenues together. But starting in 2001, the first choice was always about whether or not to cut taxes, and inevitable spending cuts were pushed off into the future. In 2005, the Republicans even separated the federal budget into two bills, an early one made up of tax cuts and, months later, a package of spending cuts, so that no one in the debate about the first could point out that it forced the second. The budget deficits of the Bush era were a product of this Ponzi scheme.
Now, progressives have turned the tables. The economic crisis makes deficits not just acceptable but essential as economic stimulus. We can advocate new investment in neglected priorities such as education, clean energy, and health reform, while avoiding the annoying question: How are you going to pay for all that? Just as the Republicans were able to treat taxes in isolation, we have the privileged position -- granted by unhappy accident rather than Ponzi tactics -- of being able to spend without consequence.
But the separation of spending from taxation cannot last, either. Stimulus is, by definition, temporary. As President Barack Obama's first budget proposes, when the economic cycle turns, we will need to bring the deficit down to a historically manageable level. While economists have different views about what that level is, it is unquestionably below the level projected under current tax and spending policies.
Meanwhile, though, a third faction also treats spending in isolation but focuses on cutting it, particularly spending known as entitlements, which really means government programs whose cost is not determined by congressional appropriations: including Medicare, Medicaid, and Social Security. The warnings of an "entitlement crisis" raised by the Peter G. Peterson Foundation and various think tanks were put in their proper context at the White House Fiscal Responsibility Summit on Feb. 23, which affirmed that the long-term problems in Medicare and Medicaid could be solved most efficiently through comprehensive health reform. The entitlement crisis is really a health-care crisis.
But that fact doesn't make the problem go away. Former Comptroller General David Walker of the Peterson Foundation makes a political argument that cannot be dismissed lightly: The political process as we know it cannot be expected to make the necessary choices. "The 'regular order' in Congress is broken," Walker wrote in USA Today in February, "and achieving progress [on the budget] is not possible on a piecemeal basis." Instead, he calls for a bipartisan "fiscal responsibility commission" to put forth a set of recommendations for cutting spending, raising taxes, and changing budget processes, which Congress would have to vote on up or down.
The theory here is that Democrats will never agree to restrain spending on entitlement programs, Republicans will never accept tax increases, and comprehensive health reform, which if done right could significantly reduce the long-term costs of Medicare and Medicaid, is always too difficult. Politicians will always prefer to treat their priorities in isolation, rather than connect them and make choices.
A fiscal responsibility commission would bring a blunt and anti-democratic weapon to bear on the American social contract. But the challenge to those who resist it is to show that the "regular order" is capable of these large, connected choices. It has been capable in the past. President Bill Clinton's 1993 budget connected everything: It raised taxes, cut spending on entitlements, and even cut Social Security for wealthier seniors, while improving and expanding successful programs. But it has been a long time.
Progressives have nothing to gain from evading the long-term fiscal crisis. Genuinely transformative economic policy requires connecting the investment we favor with the taxes that will eventually finance it and being willing to restructure the tax system entirely. To build a new social contract that includes universal health care, we will have to be willing to cut costs in the old one. As one of the opening speakers at the Fiscal Responsibility Summit, Bob Greenstein of the Center on Budget and Policy Priorities, put it, "everything will have to be on the table." That table should remain within the normal, democratic process, but that can only happen if we are all willing to sit at it.
