Monday, November 17, 2008

Deficits Actually Do Matter and Defense Is, In Fact, a Budget Item

With Barack Obama's convincing win, and a further consolidation of the Democratic gains made in 2006, the Republican Party is scrambling to come up with a strategy to reverse the trend. In fact, there is a veritable cottage industry of would-be visionaries springing up.

Some claim that the Party must distance itself from some of the extremism embraced by the cultural warriors within its ranks. Others suggest the opposite tack: that the GOP defeat was the result of McCain's lack of dedication to those same cultural issues. Some have chosen a form of denial by claiming that the election of a candidate derided as the most liberal politician in the Senate during the campaign is actually proof that the country is still solidly center-right. Or something.

Others, still, have claimed that it was Bush's profligate ways and lack of fiscal discipline that sunk the GOP's electoral prospects, and so they sound the call to return to traditional Republican fiscal principles. What unites most, if not all, though, is an underlying belief in the need to return to the halcyon days of Ronald Reagan's leadership (or at least an idealized version of the Reagan presidency). There are some serious flaws and contradictions in the fiscal conservative/Reagan nostalgia analysis. For one, as Matt Yglesias argues, Bush's "big government" policies weren't that unpopular:

Most of George W. Bush’s most dramatic “big-government” actions — Medicare bill, farm bill, steel tarriffs, invasion of Iraq, USA PATRIOT Act, [me: NCLB] etc. — took place during his first term. And he got re-elected. And the evidence suggests that most of those initiatives helped him.

Further, George Bush's treatment of debts, deficits and budgets was completely consistent with the Reagan approach - not some departure from the prior course. The reasons are of the utmost relevance to some of the challenges facing the new Obama administration. As Andrew Bacevich points out in his remarkable book, The Limits of Power (*more on this below):

During the Carter years, the federal deficit had averaged $54.5 billion annually. During the Reagan era, deficits skyrocketed, averaging $210.6 billion over the course of Reagan's two terms in office. Overall , federal spending nearly doubled, from $590.9 billion in 1980 to $1.14 trillion in 1989. The federal government did not shrink. It grew, the bureaucracy swelling by nearly 5 percent wile Reagan occupied the White House. [...]

Tax cuts and the largest increase to date in peacetime military spending formed the twin centerpieces of Reagan's economic policy, the former justified by theories of supply-side economics, the latter by the perceived imperative of responding to a Soviet arms buildup and Soviet adventurism. Declaring that "defense is not a budget item," Reagan severed the connection between military spending and all other fiscal or political considerations - a proposition revived by George W. Bush after September 2001. [emphasis added]

That "severing" as Bacevich terms it, renders meaningless the clamoring for "small government" and "fiscal discipline" that percolates from conservative quarters every time a Democrat inhabits the White House - even if some now rush to repudiate the Cheney claim that "deficits don't matter." Discretionary spending is a relatively small fraction of government outlays when you factor in real costs of operating government, spending on entitlements, financing the debt and, alas, defense spending (discretionary and non). And yet the small government proponents bracket off defense spending and remove it from all discussions on how to reduce the size of the federal budget. But by doing so, they have rendered the conversation moot, unless they want to really make a push to eliminate (or vastly reduce) entitlement programs. Good luck with that.

Jim Henley recently wrote about a piece by Sean Scallon discussing the failure of small government Republicans to stick to their guns. Quoting Scallon:

The conservative tradition of Burke expounded on by people like Russell Kirk or Richard Weaver simply was politically unsellable to the general public when actually tried. This why the Reagan Revolution failed, this why the Gingrich Revolution failed. The politicians then moved to right-socialism in order to survive all the while trying to fool people into believing they were still “conservatives”. This worked until 2008 when no one believed it anymore.

Henley goes on to theorize that "[t]he Republican Revolution of the mid-1990s, particularly on the House side, probably did want to deliver something like "small-government conservatism," but that the political costs were deemed too high when a showdown with Clinton cost them in the midterms. While there is truth to the belief that attempting to scale back entitlement spending is a political loser (and how), Henley gives too much credit to the would-be champions of "small government": again, few, if any, discussed real cuts in that budgetary behemoth termed "defense spending." So, at best, small government conservatism as championed by Reagan and Gingrich involved revenue-sapping tax cuts, proposed reduction in entitlement spending and a ramping up of expenditures on defense.

Small in some ways, big in others. Also: quite reminiscent of the Bush years, even if Bush strayed somewhat from the Gingrich model in terms of expansions in discretionary spending (but not the Reagan model, which tends to suggest that the position vis-a-vis discretionary spending is more a function of the party affiliation of the then-current president).

Obama will have to reckon with the legacy of Reagan and Bush as the Pentagon and faux-small government conservatives prepare to demand a vast increase in the sort of spending that Reagan laughably claimed doesn't count. Matt Yglesias:

Via David Kurtz, Defense News on the Pentagon’s looming ambush of Barack Obama:

The uniformed services are trying to lock in the next administration by creating a political cost for holding the line on defense spending. Conservative groups are hoping to ramp up defense spending as a tool to limit options for a Democratic Congress and president to pass new, and potentially costly, social programs, including health care reform.

They also like the idea of creating an unrealistically high baseline of expectations for defense spending that will allow them to claim President Obama has cut defense spending.

I’ve written about this previously for The American Prospect so you can find detailed thoughts at that link. But suffice it to say that I think it’s absolutely crucial for the larger progressive agenda that we find a way to hold the line on this. Ever since the 1994 midterms, Democrats have shown no real interest in pushing back against DOD spending requests. And the short-term cost of that wasn’t high during a time when there was no real legislative prospect of big progressive change anyway. But the situation is different now, and we need to ensure that military spending is being weighed seriously against other options.

While it is quite possible that the GOP decides on a return to the rhetoric of small government and fiscal discipline, the agenda sought under that rubric will remain the same: enormous outlays on defense spending, revenue-draining tax cuts and a masked desire to gut entitlement programs (and I haven't even discussed the hypocrisy involved in pushing for an expansion of executive power and curtailment of citizens' rights). Same as it ever was.

Yet, defense spending is, and has been, out of control for many decades, and the time of reckoning is approaching. We, as a nation, cannot continue to spend more on defense than the rest of the world combined and expect to be able to fund infrastructure, guarantee a minimum safety net and otherwise implement an effective government capable or responding to various crises, whether it be the aftermath of an event like Katrina, or a bailout out of the banking industry.

*(Regarding Bacevich's book: I tend to agree with Clark Stooksbury and Daniel Larison, with the latter remarking, "it is the book conservatives, and indeed anyone interested in a sane U.S. foreign policy, ought to read this year." For those looking for a synopsis, here is an essay by Bacevich himself, and some excerpts from a book salon he conducted recently here.)

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