Addressing deficit: Difficult but necessary

President Barack Obama’s National Commission on Fiscal Responsibility
and Reform held its first meeting last week — and some have suggested
its impact will be limited. Even Commission co-chair, former Sen. Alan
Simpson, acknowledged that “If [elected officials are] worshiping the
great god … called reelection,” they won’t want to take the hard
choices of enacting deficit reduction soon.

It’s true: The Commission (with ideological antagonists Rep. Jan Schakowsky, D-Ill., and Sen. Tom Coburn, R-Okla., as members) probably won’t resolve the nation’s deficit woes in one single report. But a somewhat hidden set of factors —political, historical and cultural — could force the country to tackle the deficit in the coming months and years.

{mosads}Pressure is building on lawmakers and the White House to take action. The news media, for starters, has spotlighted the problem. Columnists routinely blast the nation’s fiscal imbalances, and even if the commission doesn’t achieve a consensus on how to proceed, it will continue to put a spotlight on the deficit problem.

The commission also is far from the only force applying pressure on officials to bring the deficit under control. The Bipartisan Policy Center (disclosure: I’m a
visiting scholar at the BPC), for example, has a Debt Reduction Task Force. Co-chaired by former Clinton Office of Management and Budget Director Alice Rivlin (she’s also a member of Obama’s commission) and former Sen. Pete Domenici, its recommendations – due out later this year – could provide a substantive alternative to Obama’s more ideologically fraught presidential commission. And last week the Peter G. Peterson Foundation hosted a high-level debt-reduction confab that featured former President Bill Clinton, among others, making an urgent case for fast action to tamp down deficit spending.

Even if voters are much more likely to vote on the economy as a whole rather than the issue of debt and federal deficits, the deficit topic seems to have assumed its place as a kind of cultural symbol of an age of excess — typifying the Great Recession and the near-economic collapse of the past two years. It’s become, as it has during a handful of moments since the early ’80s, a hotly contested political issue.

During Reagan’s presidency, the federal debt rose from to $1 trillion in 1980 to just shy of $2.8 trillion in 1989. Even Reagan, who prioritized slashing taxes, sought to curb the federal budget deficit during his two White House terms. He agreed to increase the gas tax in 1982 and signed an agreement with House Speaker Tip O’Neill to raise Social Security payroll taxes in 1983. His 1986 tax reform initiative brought a hike in capital gains taxes, too.

Deficits continued, of course, due partially to increased military spending and Reagan’s devotion to tax cuts. So President George H.W. Bush made his own stab at trimming the deficit. While his 1990 budget ultimately backfired politically on Bush (he infuriated his base when he broke his No New Taxes vow), he regarded his budget deal as a sensible step towards fiscal discipline.

Indeed, much of the politics of the 1990s were defined by the debate about deficits and surpluses. Ross Perot’s 1992 third-party White House run helped thrust the issue into the spotlight. Perot took 19 percent of the vote, thus raising the specter of an anti-Washington, deficit-trimming candidate who could emerge prior to the 2012 presidential election. And Perot’s showing was a factor in convincing President Clinton that raising taxes and prioritizing deficit-reduction in his controversial 1993 budget was smart politics.

Although that ’93 budget harmed Democrats in the ’94 mid-term elections, it arguably fueled economic growth during the rest of the decade by helping turn deficits into surpluses and bringing interest rates down. Clinton won re-election partly due to the strength of that economic growth. Just as Clinton sought to blunt the charge that Democrats were the party of fiscal irresponsibility, so, too, will Obama want to avoid that toxic label heading into the 2012 campaign.

In the end, then, it’s too easy to call the deficit issue simply a product of Washington politicians unwilling to make the hard decisions — with no end to the deficit spending in sight. In recent decades, the deficit has served as a potent cultural symbol — an unsavory image of fiscal recklessness and Washington dysfunction that politicians from both parties, at times, have done what they can to blunt, lest they be branded poor stewards of the nation’s budgets. 
 
Dallek, a visiting scholar at the Bipartisan Policy Center, teaches history and politics at the University of California Washington Center. He is the author of The Right Moment: Ronald Reagan’s First Victory and the Decisive Turning Point in American Politics.