Our Fundamental Policy Incoherence

For more than 30 years Americans have been fundamentally incoherent in their policy preferences. They have supported the Republican drive for low taxes, while also displaying no interest in the sorts of spending cuts required by such tax cutting. The result has been massive deficits.

Dating back to the late 1970s, the unending GOP push for lower taxes has been premised upon supply sided economics— essentially the notion that cutting taxes could lead to equal or higher tax revenue because it would spur economic growth, and/or that it would force policymakers to cut spending. 

The first rationale has been thorough debunked over the thirty five years since then presidential candidate George H.W. Bush dismissed it as voodoo economics. The second theory has proven to be equally misguided because of the whims of the American public. 

Even today, as large segments of the public express concern over budget deficits (though their concern admittedly comes and goes), Americans blanche at the thought of large scale tax increases that cover more than the wealthiest members of society. Yet, they also won't countenance real entitlement reforms and spending cuts that would substantially reduce the benefits provided by Medicare and other government programs. 

In theory, they support spending cuts, but whenever pollsters ask about specific programs, the vast majority of the most costly programs appear to be sacrosanct to the voters.

In essence, Americans would like to eat a giant steak, fries, and dessert every night (except for the nights they substitute a meal consisting entirely of items originating from the deep fryer) , have three drinks per day (and not Michelob Ultra or gin and diet tonic), never enter a gym, and maintain perfect figures. 

Politicians react to this confused public sentiment by doing what they always do: refusing to make tough choices, and adopting the rhetoric of their base supporters, who are most likely to vote in primary elections (today's politicians aren't exactly auditioning for a slot in a sequel to Profiles in Courage). 

The end result today, especially during divided government (which we've had for all but 8 years and 5 months since 1980), is gridlock. Republicans refuse tax increases and demand spending cuts, and Democrats demand domestic spending increases and higher taxes on the wealthiest Americans and investment income.

At one point during the 1990s, divided government resulted in compromise legislation (the 1990 Budget Act and the 1997 Balanced Budget and Taxpayer Relief Act) that neither party liked, but which eventually led to a balanced budget. 

Today, however, Republicans find tax increases so anathema that even when President Obama offered a deal in which spending and entitlement cuts would have constituted 70% of a massive deficit reduction package, the Republican leadership refuse and broke off talks (See this fantastically reported New York Times piece for details on the negotiations).

The parties are even less responsible when given unified control of government. Democrats largely ignore deficits, spend what appears to be necessary on domestic programs, and eschew tax increases, lest they risk being accused of being tax and spend liberals. 

Republicans cut taxes without making the kinds of tough programatic cuts that risk accusations of heartlessness and substantial political damage. In fact, George W. Bush and a Republican Congress actually ADDED an expensive prescription drug benefit to Medicare while also enacting two massive tax cuts and fighting two wars. 

Who is at fault? Arguably Republicans bear far more responsibility for the current deficit situation. After all, they have repeatedly cut taxes without concomitant spending cuts. They also, amazingly, rejected a deal that gave them 70% of a loaf at a time when they only controlled the House of Representatives (in contrast to Democrats who controlled the White House and the Senate). That's like being offered 70% of the food at an expensive dinner where you will pay 33% of the bill. 

Democrats are not without fault, as they rarely seem concerned with making tough choices that would let them fund their policy priorities, but might risk political costs (like eliminating farm subsidies, reducing the carceral state, etc). They also seem to be unable to convince Americans that government can represent a positive force in society and ought to be adequately funded by the taxpayers. 

But the better answer is that the American public bears the blame for the situation. At some point, Americans are going to have to make a choice: do we want to be a society of low taxes, but sparse government benefits, or do we want to be a society with higher taxes and a more robust welfare state (not to mention functional infrastructure) a la the industrialized nations of Europe?