I don’t much care about deficits and never have. I worry about the long-term fiscal problem of Medicare and Social Security, and worry about short-term deficits insofar as they make that problem worse. But I don’t worry about deficits’ effects on interest rates and the like. The presidential candidates have, however, been jousting over who would be better at fighting the deficit. Jonathan Cohn argues that the answer is Kerry.
Cohn makes three basic arguments for Kerry’s being better on the deficit than Bush. First is that Kerry and Edwards have repeatedly said that they would scale back some of their spending plans–e.g., on national service–if necessary to meet deficit targets. Bush hasn’t said anything comparable. Here, he’s got a point. Second is that Kerry wants budget rules that impede both tax cuts and spending, whereas Bush wants budget rules that impede only spending. If you are narrowly concerned about the deficit, and not about the growth and burden of government, again, Cohn has a point. But it’s a point that makes me look more favorably toward Bush, since in this instance he is prioritizing the growth-of-government and deficit issues the right way.
It’s Cohn’s third, and biggest, point that I find weakest: “[I]ntroducing private savings accounts into Social Security as Bush has proposed would incur $1 trillion to $2 trillion in new costs. (The reason it costs so much is that the government has to finance benefits for today’s retirees while tomorrow’s workers start building up their accounts.) Add those costs to the bottom line, and Bush’s budget suddenly explodes the debt by two to three times as much as Kerry’s” (emphasis Cohn’s).
How are those “new costs,” rather than a shift of existing liabilities forward in time? Let’s say you have a Social Security reform plan that lets workers invest some of their payroll taxes in return for a cut in their traditional benefits. Workers who think that their investments plus a reduced traditional benefit will amount to more than the traditional benefits will take that option–in many and perhaps most cases, bettering their own welfare while reducing the Social Security program’s shortfall. If your concern is the federal government’s long-run financing problem, you’d support that plan even if it did involve a short-term deficit.