Stan Breaks With The Deficit Hawks: A Very Personal Story
I’m having increasing trouble identifying with the religious-like fervor many deficit hawks are expressing these days. I also don’t think the hawks are advancing the debate by their take-no-prisoners attitude that often seems to cross the line to zealotry.
I need to emphasize from the start that I’m talking about real, substantively based deficit hawks rather than those who condemn deficits only when it suits their political purposes. This definitely does not include those who only think the deficit is terrible when the other political party is in the majority. In my mind you don’t qualify as hawk if you talk about the deficit but then fail to support the spending cuts and tax increases that would actually reduce it. In case anyone is wondering, you also aren’t a deficit hawk if all you do is support largely symbolic efforts like process changes.
But I’m getting ahead of myself. Let me start from the beginning.
You can’t work on the federal budget as long as I have without being very concerned (and often sick to your stomach) about the deficit and national debt. With the exception of the four years from fiscal 1998 to 2001, the federal budget has had a deficit every year of my adult life. Since I was born there have only been nine years when there wasn’t a deficit.
That means there were deficits during Democratic and Republican administrations, Democratic and Republican congressional majorities, recessions and booms, slow and fast growth, asset bubbles, inflation, stable prices, peace, and war.
I don’t have children so I don’t much worry about what all this federal government borrowing means for my grandchildren. I do worry, however, about what it means for me and my Beautiful and Talented Wife (The BTW) because we both plan to be around for quite a while. I worry even more about what it means for my country’s future.
Because there’s no doubt in my mind about the benefit of a balanced budget when it’s economically justified, I’m more than willing to have the federal government spend less by completely not doing some things I want, or doing much less of them. This includes entitlements. I’m also willing to pay more in taxes to get the deficit down. And I have no problem recommending these policies.
Maybe I shouldn’t admit this publicly, but I thought the four consecutive surpluses from 1998 to 2001 and the prospect of paying off most of the national debt by the end of this decade – as both Bill Clinton and George W. Bush promised to do – was extremely exciting. To me, the notion that we might be able to eliminate most of the government’s annual interest expense and cut spending by hundreds of billions of dollars without reducing government services was thrilling.
In other words, I consider myself, and have frequently been considered by others, to be a deficit hawk.
But my deficit hawkishness has been tempered somewhat over the years by the realization that “stuff” (I’d use another word but this is a family blog) happens that makes it impossible or incorrect to do what deficit hawks say must be done: reduce the federal deficit at all times no matter what. Natural disasters like hurricanes and tornadoes and man-made disasters like recessions and wars don’t only occur when the government is in the appropriate fiscal condition. They have to be dealt with.
In addition, as much as some might like to believe otherwise, what the country requires and the corresponding demands on Washington change over time: the population gets older or younger and needs different things, infrastructure has to be built or repaired, the military threat grows, etc.
And, of course, as the last two years have amply shown, there is an absolute expectation that the federal government will intervene when the economy is not performing well or if markets fail. For a variety of reasons, that often means fiscal policy changes that increase the deficit.
It’s certainly not hard to understand the zeal and frustration of the deficit hawk community. As the only-nine-surpluses-in-my-lifetime amply demonstrate, polite conversation, substantive discussions, and gentle persuasion don’t work that well. And there’s definitely something romantic about thinking of yourself a fiscal Paul Revere doing the modern day equivalent of riding from town to town, that is, from cable news interview to cable news interview, telling everyone the deficit is coming, the deficit is coming (Actually, it’s already here, but you get my point).
My first problem with the hawks is that they don’t seem to realize and virtually never admit that they’re operating in a world that, except in the most unusual circumstances, seldom allows for the uninterrupted straight-line progress they want on the deficit. The U.S. economy isn’t going to grow that consistently, and no matter how much we might want it to be otherwise, Mother Nature is going to send us some combination of hurricanes, tornadoes, mudslides, ice storms, heat waves, forest fires, floods, and droughts every year.
My other problem is that, contrary to what the hawks say, it’s not necessarily a bad thing when, in situations like this, deficit reduction stalls or is reversed. In fact, in some cases, like during a recession, deficit reduction may well be the absolute worst thing to do.
This means that progress on reducing the deficit almost always will be slower than the hawks say they want. It also means that the slower-than-preferred progress isn’t automatically a failure and the people who don’t support deficit reductions in these situations should not be criticized for it.
From my perspective, rather than just being against everything all the time that increases the deficit, deficit hawks will have a much bigger impact and be far more effective if they do the following:
- Advocate aggressively and forcefully for reducing the deficit. Pay-as-you-go rules for new proposals are important, but existing programs already in the baseline shouldn’t get a free pass.
- But understand that there are times, like when the economy is in the tank, that reducing the deficit or running a surplus is the wrong fiscal policy.
- Be the one that helps define when a deficit is appropriate. One of the most important contributions hawks can make will be to communicate this so that it becomes the common wisdom. Their credibility will be enhanced in the process.
- Don’t allow the deficit to be a partisan issue. Both political parties frequently use the deficit as an excuse whenever they oppose something but don’t want to state the real reason for the opposition. That makes the deficit into more of a political football and less of a serious issue. Members of Congress, candidates, party officials, think tanks, etc. all need to know that they can’t claim to be a deficit reducer today when they advocated unwarranted deficit increases yesterday.
- Advocate as forcefully for debt reduction as deficit reduction when it makes sense economically.