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Don't just sit there. Do nothing.


twoscenarios.jpg

Due to the nature of the U.S. Senate, doing nothing is always and everywhere easier than doing something. After all, doing nothing takes only 41 votes. Doing something takes 60 votes. So when you hear Bob Bixby of the Concord Coalition say that "the easiest option [is] policymakers simply need to do nothing and let current law play out," he's not lying.

For the deficit hawks in Congress, the next few months are going to offer a rare and valuable opportunity: They can do nothing and bring the federal budget much closer to balance. At issue is the expiration of the Bush tax cuts. If allowed to lapse, they'd improve the deficit outlook by about $4 trillion over the next 10 years -- and more after that. As Joshua Gordon writes, "the difference in the publicly held debt resulting from [extending the tax cuts] represents an amount of money larger than the country's total economic output in 2035. Debt held by the public would be 187 percent of GDP instead of the 79 percent it would be under current law."

Further, imagine if Congress is able to extend the deficit-busting Bush tax cuts but not unemployment benefits. But that, of course, is what most people think they're going to do. This will be a test for any politician who claims to care about the deficit. If they're willing to let the tax cuts expire -- a tough decision, given the politics of taxes -- it's good evidence that they're serious about cutting the debt. If they're not willing to let the cuts expire, it's irrefutable evidence that they're not.

Graph credit: CBO

By Ezra Klein  |  July 1, 2010; 11:06 AM ET
Categories:  Budget  
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Comments

Presumably, 41 Democrats could get together and make this happen?

Posted by: jnc4p | July 1, 2010 11:18 AM | Report abuse

I'd be a lot more impressed by the party/politicians who pared the deficit through spending cuts.

Posted by: tbass1 | July 1, 2010 11:25 AM | Report abuse

Well, yeah, spending cuts would be more impressive. But that would require DOING SOMETHING, which is exactly Ezra's point.

Posted by: TomServo | July 1, 2010 11:28 AM | Report abuse

"If they're willing to let the tax cuts expire -- a tough decision, given the politics of taxes -- it's good evidence that they're serious about cutting the debt. If they're not willing to let the cuts expire, it's irrefutable evidence that they're not."

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Well sure, Ezra, but the same argument can easily be made on the other side (the whole doing something vs not doing something is irrelevant here)

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If they're willing to cut spending -- a tough decision, given the politics of spending cuts -- it's good evidence that they're serious about cutting the debt. If they're not willing to reduce spending, it's irrefutable evidence that they're not.

Posted by: NDawkins0 | July 1, 2010 11:34 AM | Report abuse

Right, but NDawkins0, remember that the people we're really talking about are deficit hawks here. I'm sure you'd find 40+ Dems that would agree to long term spending cuts paired with short term stimulus.

Posted by: MosBen | July 1, 2010 11:55 AM | Report abuse

jnc4p: "Presumably, 41 Democrats could get together and make this happen?"

Hell yeah. It shouldn't be hard to find that many who would filibuster cloture.

Posted by: jeirvine | July 1, 2010 11:56 AM | Report abuse

And when we have irrefutable evidence that they are not serious people, then what happens?

Nothing. Because our politicians represent people on whom television ads work.

Increasingly I find Norman Mailer's Commonwealth Club speech (http://www.commonwealthclub.org/archive/03/03-02mailer-speech.html) spot on: "[We] live in the lower regions of a monumental banana republic with a government gung-ho to cater to mega-corporations as they do their best to appropriate our thwarted dreams with their elephantiastical conceits"

Posted by: DeliciousPundit | July 1, 2010 12:02 PM | Report abuse

Some might even consider doing nothing a "two-fer" in that (a) it reduces the deficit and (b) it creates the perception of a massive tax increase in the months before an election. By failing to re-enact the tax cuts, the party refusing to participate in the tax-cutting can be characterized as the party responsible for the perceived tax increase.

It's a win-win two-fer -- with more such two-fers on the horizon!

Posted by: rmgregory | July 1, 2010 12:16 PM | Report abuse

The CBO shows that the long-term budget is more or less manageable, as far as these things can be analytically known. That's a good thing to start with.

So, starting from this point, any new tax cuts, or old tax cuts extended, should be passed ONLY with spending cuts also passed at the same time, to keep it in equipoise. Then it's simple.

The most recent big tax cuts -- a.k.a. the Bush Tax Cuts -- also evacuated the rebuilding of the Social Security Trust Fund. All of those who pay payroll taxes -- the majority of the people --have payed years of EXTRA payroll taxes to create the Social Security Trust Fund -- and this was immediately vacuumed out by the Bush Tax Cuts. Google: "Bush Tax Cuts (Macroecon.)" and watch the swindle.

Posted by: Lee_A_Arnold | July 1, 2010 12:56 PM | Report abuse

The "do-nothing" principle makes a lot of sense here.

The GOP understands this and employs it with vigor when it comes to the extension of unemployment.

Getting a handle on a few entitlements (e.g., SSI, Medicare D), defense spending, and letting those stupid tax cuts expire would put us right back in black.

... and the biggest, most politically difficult one of all, the one that rights *the* fiscal wrong of the past decade, requires... doing nothing. Taking no painful votes. Nada.

Let 'em expire. That's not a tax increase. It's getting our house in order, just like everyone's demanding. Couple it with some real entitlement changes, and you'd have a reasonable compromise that saves face for everyone involved.

Of course, who's reasonable in an election year?

And it's always an election year now.

Posted by: itstrue | July 1, 2010 1:22 PM | Report abuse

Ezra, I know you know, becuase you reported on it elsewhere, that the figures in this little piece and the graph come from a CBO analysis of two scenarios, one in which nothing changes, and the second in which NOT ONLY are the tax cuts for middle class extended but that AND assuming greater increase in Medicare payment rates to doctors, AND greater discretionary spending, AND the alternative tax would be held in check, AND that "tax law would evolve further" to hold taxes down. With ALL of those assumptions in place the deficit gets worse. No surprise. Leaving all those other pieces out of the discussion is misleading.

Posted by: TomCantlon | July 2, 2010 12:16 AM | Report abuse

Tax everybody 100%. Then the Obama regime can dole out the money to those whom they think deserve it. Sounds like a plan to me.

Posted by: groovercg | July 5, 2010 11:48 AM | Report abuse

Sarah Palin needs to explain supply side economics to young Ezra... don'tcha know!

Posted by: dpc2003 | July 6, 2010 12:13 PM | Report abuse

The comments to this entry are closed.

 
 
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