THE POLITICS OF DEBT
June 23, 2010
Greece, Portugal and President Barack Obama have at long last combined to turn the common Washington wisdom about government spending on its head.
Washington insiders insisted for decades that those who say they favor fiscal restraint in the abstract really want more government benefits – regardless of cost. As a result, neither Republicans nor Democrats have made serious attempts to restrain spending.
Republicans usually promise to cut spending but have instead concentrated on keeping taxes low and arguing, not entirely incorrectly, that lower taxes stimulate economic growth and produce more revenue. The problem is that this argument has given Republicans an excuse to talk tough while doing little to fight spending.
Democrats have been even worse. They have simply tended to argue that deficits and debt don’t matter. In the sixties and early seventies the late Hubert Humphrey derided fiscal conservative concerns about growing deficits and debts as irrelevant since “we only owe the money to ourselves.” That was before the Chinese bought up our debt and before interest on the debt threatened to eat up more tax revenues than the Cold War.
Until recently, common wisdom seemed correct. Concern about deficits and debt didn’t show up in polls as viable political concerns and both parties’ politicians spent money to please supporters, buy votes and get their pictures in the paper at the dedication of bridges, highways and monuments to themselves.
All that has changed. Americans are afraid that things have gone too far and that we may be heading for real disaster. The old belief that “it can’t happen here” is being rapidly replaced by a fear that it is happening. This fear is palpable and helps explain the interest in politics this year by men and women who have sat on the sidelines in the past and even may not have voted. This fear morphs into anger against politicians who don’t seem to get it or are dismissed for having contributed to the problem.
As a result, Democrats and Republicans alike are trying to get on the right side of the issue. Blue Dog Democrats who destroyed their fiscal credentials by voting like old yellow dogs for every spending proposal presented to them have resurrected the concept, if not the reality, of a “balanced budget amendment” as a shield against charges that they don’t get it. The president is worried, too — if not about spending itself, at least about the growing public belief that his administration is fiscally irresponsible — and has set up a commission to make recommendations on reducing the debt. Since the debt is only a symptom of the real problem, which is that we are spending far more than we are taking in, reducing it can be done in one of two ways: cutting spending or raising taxes. The president and his party are loath to cut or reduce the growth of spending, so everyone knows how his commission will come down: lip service to spending reduction and real tax increases on the middle-class taxpayers Mr. Obama so recently promised to hold harmless.
Republicans, meanwhile, continue to rail about “earmarks,” which is admirable but won’t solve the overall problem, which stems from a system that has, for as long as anyone can remember, rewarded fiscally irresponsible behavior. This was recognized by important figures in both parties in the waning days of the last century. The result was legislative attempts like Gramm-Rudman-Hollings in 1985 to impose some discipline on the process and proposals to amend the Constitution itself to force Congress to balance the federal budget, except when confronted with a real emergency, and to require a “supermajority” vote to raise taxes.
There were arguments, articles, hearings and objections to any real change. Gramm-Rudman-Hollings was gutted then repealed when Congress feared it might actually make spending money more difficult.
The balanced budget amendment was mugged by spenders of all stripes, but a watered-down version passed the Senate in 1996. Its principal sponsor was the late Paul Simon of Illinois, who in arguing for its passage warned that although the government wasn’t running a deficit that year, he feared what things would look like in 10 years if the amendment were not adopted.
Were he with us today, he would be shocked but not surprised. Fortunately, there are a few in both chambers convinced real reform is possible. Sen. Jim DeMint (R-S.C.) and Rep. Bob Goodlatte (R-Va.) are leading the fight for a new, strong balanced budget amendment — and this time, millions of Americans who didn’t know what the brouhaha was all about in ’96 are hoping they’ll succeed.
We believe that the Constitution of the United States speaks for itself. There is no need to rewrite, change or reinterpret it to suit the fancies of special interest groups or protected classes.