Toward the Precipice
From the November 29, 2010, issue of NR.


The happy circumstances — economic, demographic, and geopolitical — that yielded budget surpluses and high-level talks about entitlement reform 13 years ago have all deteriorated, forming today’s perfect storm for fiscal-policy makers. The prospect of surpluses then meant that the quid pro quo for cutting entitlement spending would have been postponing and limiting tax cuts. That package would have been hard to sell, politically. The prospect in 2010 of federal deficits that will average $1 trillion a year for the next decade, and raise the federal debt to a level nearly equal to the gross domestic product by 2020, means that the concessions needed to make a deal are going to involve spending cuts and tax increases.

That combination of measures, with something to infuriate everyone, is going to be even harder to assemble and sell. The chances of finding enough votes to assemble a 60 or even a 51 percent coalition are surely lower in 2010 than they were in 1997. Following leaks that the Bowles-Simpson Commission has been considering a mix of entitlement reductions and tax increases, liberal bloggers denounced the “cat-food commission” and the “Social Security death panel.” Many conservatives, by the same token, have stated that proposals for any tax increases are non-starters.

Adversaries are supposed to make concessions during negotiations, rather than before and outside them. Maybe these unalterable positions are the kind of non-negotiable demands that savvy politicians make in the understanding that they’ll wind up getting altered as talks get serious. Between the rise of the Netroots and the Tea Party since Bill Clinton and Newt Gingrich held their wary discussions, however, it’s clear that the determination not to yield has grown considerably stronger on both sides.

As a conservative, I’m completely sympathetic to the idea that America’s fiscal challenges should be resolved through spending cuts rather than tax increases. Bending the growth curve of federal outlays until they meet tax revenues that remain constant as a percentage of GDP is, for example, the essence of the Ryan Roadmap. But the numbers have to work. In America’s grave fiscal circumstances, a zero-tolerance policy on tax increases is governmentally tenable only if the dollars are there, if the politically feasible spending cuts are of sufficient size to steer the nation away from insolvency without higher taxes. This means it’s politically tenable only if the votes are there, in Congress and the country, for budget cuts of that magnitude.

Right now, the votes are not there. According to a New York Times poll from earlier this year, three-quarters of Americans believe “the benefits from government programs such as Social Security and Medicare are worth the costs of those programs.” Three-fifths of the people who express support for the Tea Party movement share that belief.

Neither are the votes there for the large and widely applied tax increases that would be necessary to balance the budget without any spending cuts. Liberals and conservatives are both hoping that intransigence will be rewarded in the end. Liberals believe that when voters reckon with the spending cuts necessary to make the conservative fiscal approach work, they will accede to a policy based overwhelmingly on higher taxes. Conservatives believe that when voters realize the magnitude of the tax increases necessary for the liberal approach to work, they will swing decisively to the position that spending cuts are the lesser evil.