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I’m fascinated by the ideological chart that Brad DeLong features in this post.  Brad’s point is that Barack Obama is not very liberal relative to other Democrats, and insignificantly more liberal than Hillary Clinton.  But what fascinates me, besides the relatively huge difference between Bush and McCain in how conservative they are, is how far apart the Democrats and Republicans are–that is, the tiny, tiny fraction of Democrats and Republicans who overlap on the ideological spectrum, in the center.

No wonder why we’re having such a hard time with “bipartisanship” and working together with our common concerns and priorities to come up with consensus policy solutions.  There’s not much there in common after all.

I always thought politicians had the incentive to move toward the center when it comes to winning elections, but maybe that model doesn’t work in practice.  I suppose the most vocal participants in the political process tend to come from the extremes and try to lure the politicians and policymakers toward those extremes, not toward the center.  And if you’re someone who tries to stay in the center, well, maybe you’re not exactly in the “middle” of lots of friends.

This polarization of opinions seems especially apparent in the blogosphere.  I noticed that in today’s Washington Post article about Netroots Nation, the liberal bloggers convention which took place this past weekend, Obama is made to sound ”not liberal enough.”

Of course, we at the Concord Coalition are used to being lonely and unpopular in staying in the center of fiscal policy, pointing out that getting the fiscal outlook in order will require everything to be on the table–both revenue increases and spending restraint.  We get conservative, supply-siders who accuse us of wanting to close the fiscal gap entirely through raising taxes and who say we don’t care about crippling the economy for the sake of deficit reduction.  And we get liberal champions of Social Security accusing us of laying all the blame on entitlement spending and wanting to destroy the programs.   Honestly, we are at neither extreme because neither extreme would produce a realistic, thoughtful strategy to reduce the budget deficit.  Only a centrist approach can get us there.  

It seems to me that until we get more of our politicians willing to come to the middle, there’s not going to be any common ground from which to work.  And until ordinary people (the voters) encourage politicians to come toward the middle, the politicians will be more inclined to listen to those loudest voices who are trying to pull them toward the extremes.

Brad DeLong speaks of “real fiscal responsibility” in his post on a new policy paper/statement put out by the Center on Budget and Policy Priorities (CBPP), onto which Brad is one of the fiscal policy experts who have signed.  The paper was designed as a counterpoint to a Brookings-Heritage paper, “Taking Back Our Fiscal Future” (TBOFF) released earlier this year, signed by another large group of fiscal policy experts, including Concord’s Bob Bixby.  Brad summarizes the CBPP group’s criticism of the Brookings-Heritage paper this way:

[T]he methods set forth in the Brookings/Heritage/Concord “Taking Back Our Fiscal Future” proposal strike us as misguided.

Specifically:

• TBOFF subjects Social Security, Medicare, and Medicaid to the threat of automatic cuts while giving a free pass to regressive open-ended tax-loophole and tax-break entitlements.
• TBOFF thus departs from the “shared sacrifice” approach that characterized the only successful budget deficit reduction efforts–those of 1990 and 1993.
• TBOFF does not focus adequate attention on the main driver of the forthcoming budget crisis: rising health care costs everywhere, not just in the public programs.
• Thus TBOFF’s attempts to restrain public health care spending growth without taking measures to alter the dynamics of the private health care markets are misguided.
• Thus TBOFF places a large share of the burden of adjustment on the poorer members of American society: it hits the weak claimants, rather than those who have weak claims on federal spending and on tax expenditures.
• Moreover, TBOFF’s strategy relies on automatic cuts–and [C]ongress has never in the past been willing to actually let the automatic cuts written into law take effect.

We believe that rather than spending time trying to design complicated budget procedures of dubious merit and effectiveness, we should focus on concrete legislative steps: policies that raise more revenue, increase economic growth, slow the rate of health care spending systemwide and nationwide, reform Medicare, and bring Social Security expenditures into balance with Social Security resources.

I very largely agree with the policy recommendations in the CBPP paper, and I believe anyone from the Concord Coalition could have signed onto the substance in that paper just as Bob signed onto TBOFF.  (Note that Concord often gets mistakenly lumped into the Brookings-Heritage mix because of our working with both groups via the Fiscal Wake-Up Tour.)  But I have these observations…

First, it’s a lot easier to arrive at a list of more specific policy solutions when: (i) the group involved thinks alike and is not very ideologically, politically diverse, and (ii) you use an effective majority rule criterion to determine the set of “group-endorsed” proposals (what the CBPP paper seems to describe) rather than the unanimous consent criterion (”least common denominator” approach) that I think TBOFF/Brookings-Heritage used.  The CBPP group is largely (entirely?) comprised of fiscal experts who lean Democratic/left, while the TBOFF group includes a much wider spectrum of experts, most notably, the very conservative Heritage Foundation.  Having participated in the meetings of the TBOFF group in its first year (when I worked for Brookings), and having worked with Heritage in other capacities, I know that Heritage analysts must stay true to their organization’s mission, which in their own words is “to formulate and promote conservative public policies.”  When it comes to promoting fiscal responsibility and working with Heritage, there’s always been a tension between the Fiscal Wake-Up Tour’s message that everything is on the table (the need to consider both spending restraint and revenue increases to address the long-term fiscal challenge), and the (mandated) resistance of the conservative members of the tour toward tax increases.  So moving to the “least common denominator” in terms of solutions will naturally mean that the group as a whole becomes a bit too silent on tax policy.  (Note:  Nowhere in the Brookings mission does it utter the word “liberal”, suggesting that the Brookings-Heritage partnerships are naturally going to fail to be as balanced as one might wish.) 

Second, I have been surprised that people have gotten so worked up about the TBOFF paper and in particular, have attached some sort of malicious intent to the budget process proposal.  I honestly think the process proposal was a lot more a ”fallback” position, the strongest policy recommendation the group as a whole could unanimously agree on.  I think you’d find many people in the TBOFF group who would agree with the specific proposals in the CBPP paper (I would have been one of them)–in fact, probably as many as those in the CBPP group who agree with the entirety of them (vs. just most of them). 

Obviously substantive reform to the entitlement and tax programs would be better than just budget process reform–the TBOFF (Brookings-Heritage) group would agree.  But getting to specifics is difficult in practice when you have to work across the aisle, and I think that’s the lesson we should take away in comparing the TBOFF paper with the CBPP paper.  If people come to the policy negotiation table with preconditions about what they cannot bring to the table (e.g., Heritage having trouble bringing the Bush tax cuts to the table), then the “bipartisanship” won’t produce anything of heavy substance–just something like TBOFF. 

That’s why I’m hoping that it’s not really true that Senator Obama and Senator McCain bring nothing in common to the Social Security reform table.  (Does Obama really rule out benefit cuts, while McCain rules out tax increases?  We have a problem here.)  Or if it is true that there’s nothing currently on the common table, I hope that that’s just for the campaign season (to make clear the truly divergent philosophies of the two candidates) and won’t be the case from their future positions in the White House and (back in) the Senate, when they get down to actually negotiating and legislating.

So really, real fiscal responsibility is hard to do… unless you’re a benevolent dictator.

Sneak it into an ad for prescription drugs.  And make reference to the presidential election, too!  Here’s what I found in this week’s Time magazine, in an ad for prostate medicine…

Pretty clever…   (Here’s a link to the pdf version if you want to get a clearer look.)

At least it’s not promoted via an ad for male “performance” drugs.  You know, those awful radio ads that say “we might not have a cure for the sagging economy, but…”

It’s not just New Jersey Governor Jon Corzine who’s finding it hard to balance the budget–at least he’s getting some things passed and is just paying the price with declining public approval ratings.  Virginia Governor Tim Kaine (my governor) is having trouble just getting things passed.

This morning’s Fairfax (Virginia) section of the Washington Post writes that Governor Kaine, in working with a Republican-controlled House and a Democratic-controlled Senate, has had a hard time getting the votes to pass any (transportation-related) tax increase that would help fund Virginia’s badly-needed transportation projects.  The story should sound familiar to anyone who’s followed the debates on the federal budget on the floors of the U.S. Congress:

Senate Democrats want an increase in the gas tax as well as minor increases in the sales tax and new regional taxes in Northern Virginia and Hampton Roads, partially offset by a reduction in the sales tax on food. Kaine, backed by House Democrats, shied away from raising the gas tax and instead sought an increase in the sales tax on vehicle purchases.

The division has made it easier for Republicans in the House and Senate to oppose both proposals. Instead of being on the defensive, GOP legislators say they now have cover to come out against both plans, arguing to their constituents that even Democrats are opposed to raising some taxes and fees to build more roads.

…If the legislature leaves town without doing anything, Democrats remain optimistic that the electorate in vote-rich Northern Virginia and Hampton Roads will punish the GOP in 2009.

But as it stands, the session will be known as one in which House and Senate Democrats — not Republicans — have had to cast tough votes.

With all 19 Senate Republicans unified in opposition to a statewide tax increase — confident they have political cover because of the economic slowdown and the high price of gas — [VA Senate Majority Leader] Saslaw had to struggle to get the support of the Senate Democrats [for his proposal to raise gas taxes].

And that proposed gas tax increase was pretty small–according to the article:  “Saslaw’s plan [would] raise the gas tax by 6 cents over six years, which would cost the average family less than $50 a year.”  But when it seems the alternative might be to actually cut gasoline taxes (when you hear talk of gas tax holidays), any proposal to raise the tax seems relatively outlandish. 

It’s just not easy being fiscally responsible, particularly at a time when the political and economic climate encourages precisely the opposite.

AP photo

I have a friend who works on fiscal policy for the New Jersey state government and has been working like crazy lately, because Governor Corzine’s been on a mission to get NJ out of the red. 

I greatly admire the Governor for his efforts to reduce the shortfall through both the spending and the revenue sides of the budget–for recognizing the “basic budget math” that leadership at the federal level has failed to do.   (I’ve admired Jon Corzine and his economic wisdom since he served on the Joint Economic Committee, where I was often the committee staffer who sat behind him at hearings, helping him with his questions on fiscal policy and budget deficits.)

But as Stan pointed out on Capital Gains and Games, such honesty (or “testicular fortitude” as Stan puts it) comes at a political price:  Governor Corzine’s approval rating has been falling.   Here’s the AP story that Stan links to, and from which the photo above comes.  He looks weary more than “testicularly fit”, doesn’t he?  I know from my NJ fiscal policy friend that it’s been a very exhausting budget process this year.

The Governor’s experience is a microcosm of the general, huge challenge of achieving meaningful deficit reduction.  If your constituents don’t understand why deficits should matter to them, then promises to raise taxes or cut spending aren’t going to win you votes, even if they win you the admiration of economists like me.

I can’t let some of the federal-budget-related events of the past week, which I missed by being on vacation, go unnoticed here on EconomistMom.com.  So today I’m playing catch up.

First, you gotta hand it to those House Democrats, who keep proposing and passing fiscally-responsible (pay-go compliant) tax cuts.  Last week the Ways and Means Committee reported, and the full House passed, H.R. 6275, a revenue-neutral extension of Alternative Minimum Tax relief for the current (2008) tax year, with more than half of the $61.5 billion cost paid for with the highly controversial “carried interest” provision.  Such a strategy failed last year–multiple times, and ultimately–when the Senate refused to go along with the various revenue offsets in the various versions of AMT bills that came before them, and no one expects it to go any other way this year.  Even with the House Democrats taking a firm stand in insisting that the ”tax extenders” bill (H.R. 6049, which passed the House in May) must be deficit-neutral (see this letter to the Senate), they have not been nearly so strong in their talk about the AMT bill.  (Why the Senate won’t pay for those other extenders, I still don’t understand.)

And in more news portending rising budget deficits, the President yesterday signed a $186.5 billion supplemental spending bill (H.R. 2642), which includes $161.8 billion to fund war operations through next June.  This was the bill that also includes veterans’ educational benefits that the Blue Dog Democrats had hoped to pay for, but again lost out on.  (By the way, once it became clear that no one else would go along with paying for these new veterans’ benefits, the cost of the plan only grew–by more than $10 billion to almost $63 billion over ten years.)

And while I was goofing off on vacation, my boss, Bob Bixby, was really busy.  He testified before a Senate subcommittee, and got ready for a Milwaukee installment of the Fiscal Wake-Up Tour (yesterday).  I’ll highlight some of his testimony later this week in a post that will get just a bit more specific about Social Security (given some pretty intense discussions here in the past week in response to my “young people get it” post), while revisiting some of that basic budget math I talked about in the first few days of this blog.

This week the House Budget Committee held a hearing on the “Securing America’s Future Economy” (SAFE) Commission Act (H.R. 473), as a favor to Jim Cooper, the House sponsor of the bill and a Blue Dog member of the Budget Committee.  Here’s the Peter G. Peterson Foundation press release on the testimony of Peterson and David Walker.  From the Congressional Research Service summary of the legislation:

Securing America’s Future Economy Commission Act, or SAFE Commission Act - Establishes the Securing America’s Future Economy (SAFE) Commission to develop legislation designed to address: (1) the unsustainable imbalance between long-term federal spending commitments and projected revenues; (2) increases in net national savings to provide for domestic investment and economic growth; (3) the implications of foreign ownership of federally issued debt instruments; and (4) revision of the budget process to place greater emphasis on long-term fiscal issues.

Requires the Commission to: (1) develop one or two methods for estimating the cost of legislation as an alternative to the current Congressional Budget Office (CBO) method; and (2) hold at least one town-hall style public hearing within each federal reserve district.

Requires the Commission to submit a legislative proposal to Congress and the President. Authorizes the President to submit to Congress an alternative proposal. Authorizes the Committee on the Budget of either chamber to publish its own alternative proposal in the Congressional Record.

Sets forth procedures for consideration of such legislation.

Requires CBO to prepare a long-term cost estimate and have it published in the Congressional Record as expeditiously as possible whenever requested to do so by the Commission, the President, or the chairman or ranking minority member of the Committee on the Budget of either chamber.

Now, to this economist, that sounds completely reasonable, but I know there are many members of Congress who oppose the formation of such a commission.  There are 95 House cosponsors, including many Blue Dog Democrats, but also some Democrats who aren’t Blue Dogs–probabaly considered more liberal than the Blue Dogs–but also some very conservative Republicans.  It is indeed a rather strange group of bedfellows.  I used to think those who opposed the SAFE commission were doing so on process grounds, but I’m starting to wonder if I’ve been too naive– that maybe the motive for some of that opposition, and maybe for some of the promotion as well, is on ideological grounds.

That feeling was clued into me through the responses here to my “Young People Get It” thread, and through a thread started by Pete Davis on Capital Gains and Games and then continued in threads started by Pete’s co-bloggers, Andrew and Stan (thanks, guys).  I now get the sense (duh?) that many of those who oppose the SAFE commission believe that the commission is intended to destroy Social Security as we know it.

I’m starting to understand the sensitivity of folks to the fiscal hawks’ lumping together of Social Security with the health entitlement programs when we talk about the unsustainability of the overall federal entitlement system.  And we fiscal hawks do certainly already understand that the overall challenge comes mostly (but not entirely) on the health costs side.  I think it’s that some of us are concerned that it’s the overall challenge that really threatens the health of all of the entitlement programs, because it’s the overall challenge that severely threatens the future economic growth that is needed to keep the programs that now don’t look so badly off (i.e., Social Security) on strong footing.

So it’s obvious that this is a conversation we need to get into more.  Thanks to all who have commented here and elsewhere in the blogosphere for making this a priority for me and for Concord. 

Now, back to my vacation!

Last week in DC, a group of young (20-something and 30-something) leaders from all over the country met with fiscal policy experts at the “Youth Entitlement Summit” (YES!) to learn more about our nation’s long-term fiscal challenges, and to coalesce around a strategy they can take, as young leaders, to help turn the situation around. 

Here is the declaration the young leaders read on national (C-SPAN) TV at the dinner hosted by the Concord Coalition, which was the culmination of the YES two-day summit.  If you watch the video, you’ll see that the young people do “get it”–and that the “old people” (no offense, Belle, Stuart, and Bob, as I count myself as one, too) are impressed:

In our democracy, there exist fundamental obligations that bind us together. This intergenerational compact compels us to leave future generations in better condition than we ourselves are in.

Our generation believes that the promise of the American dream must be continually renewed. Yet our ability to address new challenges is severely impaired. The social contract is crumbling and is taking down the rest of government finances with it.

Therefore we make the following findings and assertions:

Whereas short-term thinking has dominated our politics, the democratic process for redress of these grievances has failed . . .

Whereas honest debate has been undermined by political expediency and special interests . . .

Whereas young people are underrepresented in government despite historic levels of civic engagement and future generations cannot speak for themselves . . .

Whereas health care’s runaway cost increases require comprehensive reform to Medicare, Medicaid, and indeed our entire health care system…

Whereas America’s demographic changes, namely an aging of the population and lengthening life spans, requires significant revisions to Social Security…

Whereas Social Security’s mechanism for creating equity across generations, the trust fund, has proved inadequate. . .

Whereas Social Security, Medicare, and Medicaid are all on unsustainable paths. . .

Whereas a failure to correct the paths of said programs will lead to their failure, total budget insolvency, inequity for current and future generations unprecedented in the history of the United States, and inability to address other priorities, and declining economic prosperity…

Therefore, we hereby declare our generational interdependence.  We will work to achieve reforms that are fair for all generations, including those to come.

Pursuant to our study of these issues, we resolve:

1) Fair and effective action MUST be taken up by the next President and next Congress. Delay compounds both the inequity and the difficulty of reform.

2) Changes to the tax and benefit formulas of Social Security, Medicaid and Medicare must be considered together to meaningfully fix the system.

3) For those who can work, a delayed and flexible retirement age will improve generational equity, match the original promises of the program, and strengthen our nation’s economy.

4) Meaningful savings mechanism, in concert with investment in financial education and fiscal literacy for those disproportionately impacted, would help ensure retirement adequacy and fairness and offer young Americans more control and ownership of their future.

5) To address Medicaid and Medicare requires nothing short of a comprehensive overhaul of the larger healthcare system. 

6) Our current budget system – complex, burdensome, and riddled with concessions to special interests – is an impediment to entitlement reform; tax and spending reforms should be part of the solution.

The preceding is the result of our coming together for an intensive, two day summit investing the challenges facing our generation.  We come from various ideological perspectives, but share the common goal of strengthening this country and our future.  No politician who claims to represent young people can in good conscience ignore these issues.  We call on our leaders to act- and act now.

DC-area EconomistMom.com readers:  You’ve got to check out this week’s Silverdocs Film Festival (in Silver Spring, MD), where on Sunday the 22nd the documentary I.O.U.S.A., featuring the Concord Coalition’s ”Fiscal Wake-Up Tour” and starring Concord’s Bob Bixby (on left, above) and former Comptroller General David Walker (on right), will be showing on Sunday.  (I’ve wrote about it before, on the “about” page of this blog.)  Out of 108 movies that will be showing there over the next 8 days, the “Going Out Gurus” of the Washington Post’s blog recommended just 5 documentaries–and I.O.U.S.A. is one of them:

“I.O.U.S.A.”: Most of us are not fiscally-minded. We don’t spend a lot of time thinking about the national debt or trade deficits. But “I.O.U.S.A.” makes a convincing argument that we should. Featuring commentary from such financial authorities as former Comptroller General David Walker (who embarks with a few colleagues on a Fiscal Wake-Up Tour of America), this documentary raises significant questions about the economy at a time when they couldn’t be more relevant. (Screens Sunday, June 22 at 3 p.m.)

Check it out if you’re in town, because it won’t hit wide distribution in the theatres until late summer.  If you’re someone who enjoys this blog, you’ll enjoy the movie, for sure.  Unfortunately, I’ll be in Arizona with the family next week, so again I’ll have to miss a screening event.  (I’ve already seen the movie but never on the big screen.)

Good news for columnist Mark Shields, who wrote in 2004 (as we had just posted a record $413 billion federal budget deficit) that he missed Ross Perot (as had many of us who label ourselves budget hawks).  He’s back!  Not in a candidacy for the presidency, but at least in time to maybe influence the quality of debate during the campaign.  Ross Perot has just launched a website (with blog and lots of charts) called Perot Charts.  (I’m adding it to my blogroll today.)  It’s very much in the spirit of the Concord Coalition and in particular the Fiscal Wake-Up Tour, in its mission.  I think the “giant sucking sound” that Perot used to use to express his objections to free trade policy can now be applied to his dismay over the federal debt and all the borrowing from abroad our country’s doing.  From the premiere blog entry (and press release):

“The economic crisis facing America today is far greater than anything since the Great Depression,” said Perot. “Our federal government continues to spend us deeper into debt. The American people must get directly involved and demand an end to deficit spending. This website will provide information for citizens to do just that.”

Like the economic charts Perot employed in his 1992 and 1996 presidential campaigns, which served as snapshots of complex economic issues presented in simple terms, PerotCharts.com features the latest official government figures about the real conditions of our economy for everyone to see and consider. The site is designed to be a reservoir of information about the economy, and provides an accurate look at where the money comes from and where it goes.

…“We simply cannot wait any longer to do something about runaway deficit spending,” Perot said. “This website addresses a number of issues, and we will add more in the coming weeks and months. But there is a common thread running through all of them. We cannot solve these problems unless we have the ability to pay for the solutions. Getting spending under control is the first step in that process.”