Martin Feldstein Doesn't Get The Joke
Eminent economist Martin Feldstein, former chairman of the Council of Economic Advisors during the Reagan Administration, had an op-ed in The Washington Post earlier this week that shows he just doesn't understand what's happening with the budget conference.
Here's the money quote:
The key to a political compromise is to recognize that raising revenue does not require increasing tax rates. Substantial revenue could be raised by limiting the government spending built into the tax code."
Feldstein accurately notes that this would give congressional Democrats enough of what they want in a budget deal to agree to changes in mandatory programs, especially "slowing the growth of Social Security and Medicare."
But this analysis is based on Feldstein totally misreading the current budget tea leaves. He is assuming that there is a desire to compromise on the budget in Congress and that there's a strong desire to come up with a new significant deficit reduction plan that, in Feldstein's words, "would cause the national debt to grow more slowly than GDP until the ratio of debt to GDP is again down to 50 percent."
Feldstein's math may be true but his understanding of the politics of the current budget debate absolutely is wrong. There is little to no interest in a major additional deficit reduction plan on Capital Hill at the moment. To the extent that there's a desire to do anything, it's much more limited than the larger tax (or in Feldstein's terms, "revenue") and mandatory spending deal Feldstein is recommending.
The only thing the budget negotiators are focused on is a substitute for the $21 billion sequester that will take place in mid-January unless Congress and the White House agree to an alternative.
This is a critically important point that is being missed is the reports about and analysis of the meetings of the budget conference. The fact that the House and Senate conferees are getting together (another largely desultory public session was held yesterday) doesn't mean that there's a desire for a compromise or that a big deal is in the offing. To the contrary, the creation of the conference committee was the compromise and the deal. Nothing else needs to happen to satisfy most members of Congress.
Feldstein's op-ed shows that he doesn't get the joke. His op-ed proposes a substantive solution to a group of representatives and senators who are not thinking substantively.