The Agenda

Evan Soltas on Structural Deficits

Evan Soltas makes a useful contribution by estimating the extent of the structural budget deficit, i.e., the budget deficit that remains after we account for the fact that a depressed economy tends to reduce tax revenues and increase outlays on safety net programs. What I find strange about his post, however, is that he frames the fact that the structural budget deficit doesn’t appear to be very large as a reason “deficit hawks” aren’t to be trusted while acknowledging the an aging population and medical cost growth are likely to increase the size of the structural budget deficit considerably in the coming years unless we embrace some kind of structural reform. That is, Soltas’s argument only applies to an extremely vulgar form of deficit-hawkery that groups like the Committee for a Responsible Federal Budget and the Bipartisan Policy Center, among others, explicitly reject.

Some critics of CRFB, BPC, and other “deficit hawk” organizations deride these groups for expressing alarm over the “fiscal cliff,” given that the expiration of the Bush-era tax cuts, the Obama-era fiscal stimulus measures, and various automatic spending cuts will tend to reduce deficits. But of course this reflects the fact that these organizations are primarily concerned with structural budget deficits and the goal of achieving fiscal sustainability over the long-run. One can disagree with the priorities expressed by these groups, but it is important not to caricature their views. 

In fairness to Soltas, it seems that he is concerned with people who are exercised by trillion-dollar near-term deficits as such. His more interesting point, in my view, is only made implicitly: 

Income tax revenues, for example, have become more cyclically volatile as the burden has shifted in recent years toward high earners, whose incomes are less stable.

The federal tax code also encourages overreliance on volatile taxes bases at the state and local level, which is particularly problematic given state-level balanced budget requirements. It could be that we just have to learn to live with a more volatile tax base. But if not, we need to consider relying more heavily on broad-based consumption taxes, with narrow income taxes designed primarily to maintain overall progressivity. 

Reihan Salam — Reihan Salam is executive editor of National Review and a National Review Institute policy fellow.

Most Popular

Politics & Policy

Kat Timpf Chased Out of Brooklyn Bar

Fox News personality and National Review contributor Kat Timpf was forced to leave a bar in Brooklyn over the weekend after a woman she had never met became enraged upon learning she worked in conservative media. Timpf, who has twice previously been harassed while socializing in New York City, first described ... Read More
Film & TV

The Dan Crenshaw Moment

Given the spirit of our times, things could have gone so differently. On November 3, when Saturday Night Live comic Pete Davidson mocked Texas Republican Dan Crenshaw’s eye patch, saying he looked like a “hit man in a porno movie” — then adding, “I know he lost his eye in war or whatever” — it was a ... Read More

Fire Brenda Snipes

Brenda Snipes, the supervisor of elections in Florida’s Broward County, does not deserve to be within a thousand miles of any election office anywhere in these United States. She should be fired at the earliest possible opportunity. Snipes has held her position since 2003, in which year her predecessor, ... Read More

How Immigration Changes Britain

Almost nothing is discussed as badly in America or Europe as the subject of immigration. And one reason is that it remains almost impossible to have any sensible or rational public discussion of its consequences. Or rather it is eminently possible to have a discussion about the upsides (“diversity,” talent, ... Read More

Florida’s Shame, and Ours

Conspiracy theories are bad for civic life. So are conspiracies. I wonder if there is one mentally normal adult walking these fruited plains -- even the most craven, abject, brain-dead partisan Democrat -- who believes that what has been going on in Broward County, Fla., is anything other than a brazen ... Read More