Friday, November 12, 2010

The Easiest Job You'll Ever Whine About: Debt Commission Co-Chair

-- Posted by Neil H. Buchanan

Earlier this week, the co-chairs of President Obama's anti-deficit commission issued a draft proposal. That document is non-binding, but it is garnering quite a bit of attention. I plan to write both my FindLaw column next Thursday and my Dorf on Law post next Friday on the report, critiquing some of its specifics as well as assessing its gestalt. Here, I will focus on the first big lesson that we can learn from the release of the report: Being a co-chair of this commission looks difficult, but it is actually the easiest job in the world.

The two co-chairs of the bipartisan commission are Erskine Bowles, former chief of staff in the Clinton White House, and Alan Simpson, former long-serving U.S. senator from Wyoming. The press conference in which they announced their joint recommendations was a major media event. Both chairs sat grimly at a table and discussed their very, very difficult job. Simpson offered up gallows humor about how much everyone would hate them and their handiwork. Bowles talked about how important -- yet how unpleasant -- their work was.

It is difficult to take any of this seriously, however. We are talking, after all, about a commission that has operated under the radar for its entire existence this year, with all of the commissioners knowing that they would almost certainly produce nothing that would become policy. The 18-member commission must, according to the presidential order that created it (over Republican opposition, even though Republicans first proposed the idea), find a 14-vote super-majority for any final proposal even to be presented to Congress for a vote. The co-chairs' draft proposal is even less important, because it represents only the shared opinions of two men.

The best thing about being in the positions of Bowles and Simpson is that they could do no wrong. Anything that they did was guaranteed to be hailed as an example of "the grown-ups" entering the debate, making tough choices after taking a sobering look at our fiscal plight. The co-chairs' pronouncements were sure to be taken very seriously by people who view themselves as very serious. The op-eds practically write themselves. And sure enough, the editorial page of The New York Times immediately lauded the report as "a welcome antidote to the low-minded debate that dominated the midterm elections," a document that "frankly acknowledges what most politicians are too cowardly to admit — that deficit reduction will require shared sacrifice." The editors go on to credit the co-chairs for being daring, even while viewing their proposals as "sensible."

What nonsense! The co-chairs were in a no-lose situation. All they had to do was hew to the conventional wisdom of the Beltway discussion -- deficits require shared sacrifice, everything is on the table, now is the time to set aside partisanship, both sides are wrong -- and the co-chairs were sure to be cheered as champions of responsible, thankless leadership. So long as the recommendations included items guaranteed to offend various constituencies (higher taxes, Social Security cuts, military spending cuts, etc.), it would be viewed as a momentous achievement.

Even so, there had to be content, right? And surely the content matters, with difficult choices necessary every step of the way. Right? Actually, no. Because the federal budget has so many different items in it, and the tax system can be changed in so many ways, it is no achievement to collect items that might be cut to save money. The specifics will be lost in a blur, so long as they all sound politically fraught. The bigger items are especially useful, because their very size proves that they are popular -- which (in the dominant narrative) makes it all the more impressive that the co-chairs had the courage to face down the small-minded defenders of the status quo.

The co-chairs, and the commission more generally, thus operate under the best conditions imaginable. Everyone believes that the commission's work is important. Everyone will credit the commission for its statesmanship and service to the country. And every criticism of the commission's work must begin by acknowledging the monumental task that the commissioners faced. So long as the recommendations adhere to the conventional script of non-partisanship and shared sacrifice, there is simply no way that the narrative could be otherwise.

Given this favorable environment, what could anyone in this position hope to achieve, beyond the guaranteed credit for a tough job well done? There seem to be two possibilities. First, one might want to produce a document that is absolutely sure to be ignored immediately. Issue a proposal so extreme in its offense to political realities, and (at least as a somewhat related matter) so painful to so many actual people, that anyone with a pulse would know that the proposal is dead on arrival. Even such a negative reception would not shake anyone's belief that the commissioners had taken on a difficult task. Universal rejection would, in fact, simply confirm that the task was impossible in the first place. Comparisons to Sisyphus sure to follow.

The second strategy could be to issue a report so extreme that it simply provides cover to anything that might come next. Even better, the political cover would be bipartisan. Don't like that X% tax hike that the commission proposed? No problem. The real politicians are only proposing an (X - epsilon)% tax increase. Can't believe that the commissioners recommended cutting Y jobs from the federal payroll? No problem again. This is why any report has to cover every area of the budget and taxes, so that it can be characterized as extreme, even while framing the future debate. This is especially important for expanding the playing field to include things like Social Security. The co-chairs, we are all meant to understand, must be forgiven -- even praised -- for being willing to face the fierce attacks by petty defenders of every entrenched special interest. Everything must be on that table!

These two explanations are not, in fact, mutually exclusive. The commission can expect its report to be dismissed out of hand, even while knowing that it will frame the debate. This is even more true of the co-chairs' draft, which has the extra virtue of being advertised as trash-ready, even as the co-chairs can pose as beleaguered Cassandras.

So far, the script has run perfectly. Even people who disagree with Bowles and Simpson pay homage to their hard work. Everyone agrees that the conversation has been advanced. The fact is, however, that we know absolutely nothing more than we did three days ago. It is no trick to take fractions of budget numbers and add them up to show how the budget could be cut. Anyone reading this blog could do it in less than an hour. (There are even on-line calculators sponsored by various groups of deficit hawks, supposedly designed to show the public how difficult the choices are.) If partisan political considerations are supposed to be set aside, as was the commission's mandate, then any combination of proposals is as good as any other. The co-chairs have done nothing but confirm that it is easy to adopt the pose of persecuted sage, while soaking up credit for showing various ways to inflict pain on the public.

4 comments:

egarber said...
This comment has been removed by the author.
egarber said...

Hi Neil,

Greenspan was on MTP this morning. He warned of an imminent bond market crisis because of current deficit levels. He issued a similar alert when Bill Clinton came into office, but this seemed more severe.

In your view, how serious a threat is that? I mean, if the U.S. fails to address healthcare and other debt drivers, then sure, governments and investors might start to dump treasuries -- but that seems like a 10-20 year horizon, not anything immediate. For now, it seems to me that as long as our economy continues to grow (even if slowly), demand will remain stable for treasuries.

But even if true in the short term, does that mean the answer is austerity now? A deflationary spiral would only accelerate the bond crisis timeline, since growth would head in the other direction.

Also, when it comes to quantitative easing (or credit easing, as Bernanke labels it), why aren't the benefits of a weaker dollar being played up more? If the Fed drives up demand for long-term U.S. debt -- lowering yields -- that will put downward pressure on the dollar. But isn't that a good thing? After all, it's the equivalent of stimulus for U.S. exports. A lot of economists think that for us to survive after the "reset", the trade imbalance will need to find a better middle point.

Neil H. Buchanan said...

The short answer is that Greenspan has no credibility on this issue. He's a natural for the talk shows, because he's the classic insider and can talk the austerity talk in appropriately somber tones. But everything he says has been shown to be nonsense (and driven by ideology and partisan politics).

More to the point, what Greenspan is saying is nonsense. Joe Stiglitz (who actually has credibility) nailed it recently: "To choose austerity is to bet it all on the confidence fairy." http://www.guardian.co.uk/commentisfree/cifamerica/2010/oct/19/no-confidence-fairy-for-austerity-britain

I agree with the latter two paragraphs of egarber's comment, without further elaboration or amendment.

Neil H. Buchanan said...

By the way, note that Peter Orszag (another Washington insider) pronounced the co-chair's (unnecessary and damaging) proposals re Social Security to be "brave" on today's NYT op-ed page. http://www.nytimes.com/2010/11/15/opinion/15orszag.html?ref=opinion