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The Pathologies Of The Anti-Deficit Lobby

The anti-deficit lobby is a powerful force in American political life. The lobby consists of a loosely aligned network of think-tanks, institutions (many funded by Pete Peterson), and allied journalists. Of course, the anti-deficit lobby does not always win -- indeed, it usually loses,as its basic mission runs in opposition to the general tendency of politicians to avoid unpopular choices as well as the specific ideology of the modern Republican Party ("Reagan proved deficits don't matter"), which refuses to accept the notion that revenue levels ought to bear any relation to spending. The anti-deficit lobby has had extraordinary success, though, in making the deficit the top item on the Washington agenda.

And yet the strange thing about the this lobby is that, unlike almost all other lobbies, which are dedicated to rewarding political allies and punishing enemies, the anti-deficit lobby largely avoids doing so. This is because the most committed members of the deficit hawk lobby are committed to bipartisanship, which they understand as a disposition that assigns blame for most problems equally to both parties.

Washington Post editorial page editor Fred Hiatt is a key member of the anti-deficit lobby. In the face of news reports that House Republicans have rejected a deficit package heavily tilted toward spending cuts endorsed by President Obama, Hiatt has written a column framing the question as a series of choices facing Obama:

[T]he Aug. 2 deadline offers three potential strategies. One is to join Nancy Pelosi and go for broke on “Mediscare”: Accuse the Republicans of getting ready to wheel every granny out of every nursing home and otherwise threaten civilization as we know it.
A second would be to end up with Mediscare but first appear open to compromise, to appeal to independents, while assuming there can be no grand bargain with Republicans.
The third is to go for something real: a long-term debt reduction plan that would increase revenue, begin to control entitlements without threatening granny and reassure financial markets that the American political system can get its act together when push comes to shove.
After this weekend, option three is looking like a longer shot than ever. It may be that Obama missed his moment to make it work, when he shunned his Bowles-Simpson fiscal commission. It may be that the Republicans and his own liberal caucus always were fatally inclined toward intransigence.
But it’s also true that the political path to a $2 trillion deal doesn’t look all that much clearer than to a $4 trillion deal. And the bigger bargain still offers the biggest payoff. It would most enhance Obama’s chances for reelection. By controlling the national debt, it would give him in a second term the most scope for the kind of action that is off-limits to him today.

There are a lot of strange things about this analysis. One is that it presupposes Obama has the option to engage in "Medicare," which is the anti-deficit lobby's term for any kind of criticism of a plan to trim, privatize, or essentially eliminate Medicare. How does this get Obama through the debt ceiling fight? Does he think Republicans will lift the debt ceiling with no concessions? Hiatt does not explain.

A second oddity is that Hiatt omits the possibility of Obama agreeing to a $2.5 trillion deficit reduction plan in return for lifting the debt ceiling, an outcome that seems like the most plausible path forward and would amount to a major step forward.

But the strangest thing about Hiatt's analysis is that he persists in presenting the question as Obama's choice. He urges Obama to go for the big deal. I really don't understand what he's saying here. The House leadership has made it perfectly clear they they won't pass an agreement like that, or any agreement that contains a net tax increase. I don't see how this could be any clearer.

But this strange analytical tic is perfectly reflective of the anti-deficit lobby's style. You have one side embracing its proposal, and the other side rejecting it, and the instinct of the anti-deficit lobbyist is... to urge the former to embrace its position. Aside from the bizarre disconnect from political reality, this simply highlights a huge problem with the incentive structure. Aren't you supposed to reward politicians who agree with you, and impose some cost on those who oppose you?

Obama surely has other political and substantive factors on his mind. But to the extent that the anti-deficit lobby impacts the political discourse, it ought to create an incentive structure where a president who embraces the lobby's position can expect adulation from the lobby's members, and when a House caucus opposes the lobby's measures it can expect some harsh words. Instead you have someone like Hiatt going out of his way to lay at least partial blame for the opposition of the hostile party upon the doorstep of the party who's adopting his position. It's bizarre.