The collapse of the grand $4 trillion debt reduction deal is a useful illustration of how the never-endng Left-Right War of Position works in practice. For Matt Yglesias, it is a reminder of a familiar truth:

The collapse of negotiations around $4 trillion in debt reduction and House Speaker John Boehner’s preference to scale the scope of discussion back to $2 trillion in hopes that will somehow generate a deal with no tax increases isn’t surprising.

As we’ll see in a moment, how we understand the composition of the $4 trillion in debt reduction is contested terrain.

A movement that actually believed that reducing federal spending was extremely important would, it seems to me, be quite willing to make concessions in order to obtain large quantities of spending cuts. Viewed in that light, it’s not obvious to me that backing away from a $4 trillion deal primarily composed of spending cuts constitutes a “more conservative” option than saying yes. You’re seeing that very little has changed in practice from the Bush years, when the GOP agenda consisted of aggressive tax cutting made palatable by refusing to pair the cuts with spending reductions. Now, ostensibly, cutting spending is the order of the day. But the bargaining strategy is entirely built around a tax-focused goal rather than a spending-focused one. [Emphasis added]

“Primarily composed of spending cuts” is important here, particularly when paired with the idea that a movement that actually believed in reducing federal spending would accept such a deal. One wonders, however, if it is possible to believe in reducing federal spending on social insurance programs plagued by misaligned incentives while, for example, maintaining a high level of defense expenditures. A movement could believe that security expenditures are different in nature from other expenditures, e.g., because, as Joseph Nye memorably put it, “security is like oxygen,” and there is a strong incentive to oversupply security rather than to undersupply it in an unpredictable, chaotic international environment. This strikes me as something a serious person could actually believe, though I personally favor deep cuts in defense expenditures. As we’ll see, the decrease in debt service payments might also play into the politics of a negotiated compromise differently from a reduction in other expenditures.

Keith Hennessey wrote an excellent post that raises a number of questions about how we’ve been talking about the role of spending reductions and the role of revenues.

1. As I explained yesterday, how you measure a spending cut depends on how you define the starting point for that measurement. If you begin by assuming no change in troop presence in Afghanistan and Iraq for the next 10 years, then you can claim credit for a roughly $1 trillion spending cut merely by implementing policies that have already been decided. This allows Team Obama to inflate their “spending cut” numbers in their ratio calculations, just as it allows them to make the entire deficit reduction package look bigger.

As Hennessey notes earlier in the post, the president and his allies have been arguing that we need a balanced approach. You concede something, we concede something. Given that I don’t think either coalition wants to or can sustain current troop levels in Afghanistan and Iraq, using these numbers in the ratio might give us a misleading picture.

2. Eliminating a tax deduction is a tax increase. In many cases it can be good tax policy, but it’s still a tax increase and needs to be included on that side of the ledger. Team Obama relabels this as “cutting spending [through the tax code].” Somewhat ironically, in the 2009 stimulus they relabeled in the other direction, calling new refundable tax credits “tax cuts” when they’re actually spending increases.

Hennessey’s argument regarding the tax measures in the 2009 stimulus law is important and often neglected. Backers of the stimulus law often point to the role of tax expenditures as evidence of its reasonableness and substantive bipartisanship.

3. In their ratio Team Obama counts reduced spending for interest as a spending cut, even when it results from a tax increase. Imagine a deficit reduction package that consists of only one policy change, a $1 trillion tax increase. Lower interest payments that would result would reduce the deficit by an additional $200 billion. The Administration would label this package, which only raises taxes, as a “5:1 ratio of tax increases to spending cuts.” If you buy into the ratio concept at all, then reduced interest payments should be excluded from the ratio or allocated proportionally based on the nature of the policy changes.

Though some will object to Hennessey’s characterization of the issues at stake, I’m struck by how plausible it is yet how rarely one will encounter something like Hennessey’s take in “mainstream” accounts of the ongoing debate.