Washington's Deficit Games

08/12/2010 01:44 pm ET | Updated May 25, 2011

The federal budget deficit is the Number One political topic in Washington this summer. The Keynesians want to raise it as a means of avoiding another economic dip. Hard conservatives are trying to use it as a means to shred the social safety net that FDR, LBJ and Barack Obama put into place. So far, the result is gridlock.

In December, the President's deficit reduction commission will issue a report whose principal recommendations are likely to be cuts in Social Security, Medicare and the newly enacted health care reform. Left off the table are other actions such as raising taxes, stopping the war in Iraq and Afghanistan, bringing home the troops from Europe and Asia, repatriating corporate taxes on income earned abroad, cutting tax breaks for Wall Street speculators and ending the hundreds of billions of annual federal subsidies handed out to our largest corporations.

The most effective political players in this debate are on the hard core right, which is pursuing a "starve the beast" political strategy. As described by Grover Norquist, a prominent Republican architect of this political tactic, "My goal is to cut government in half in twenty-five years, to get it down to the size where we can drown it in the bathtub." "Drowning" the federal government, of course, means no Social Security, Medicare, Unemployment Insurance, or most any other public program put into place since the days of Herbert Hoover.

To the "Beasties, " increasing the national debt to the point that more federal borrowing is impossible is merely a means toward their larger goal

Their position is absolutist: Always and in every circumstance, they refuse to raise taxes unless there is a corresponding decrease in spending elsewhere in government. Their political agenda is reinforced by what is known as "The Pledge." When adherents take office, they take two oaths. The first is the oath of office.

The second is The Pledge against taxes, which says in full:
I, _________, pledge to the taxpayers of ________, and to the American people that I will: ONE, oppose any and all efforts to increase the marginal income tax rates for individuals and/or businesses: and TWO, oppose any net reduction or elimination of deductions and credits, unless matched dollar for dollar by further reducing tax rates.

As of August 2010, 174 Members of the House of Representatives and 34 U.S. Senators have signed the Pledge. Listed on that site are also 1,080 state legislators and nine governors, almost all of whom are Republicans. Put into context, as long as these 34 U.S. Senators honor their Pledge and Senate rules require a 60-vote majority to beat a filibuster, the U.S. Senate is paralyzed -- it cannot consider raising any tax for any purpose regardless of necessity, even to pay for national security, unless it cuts an existing expenditure. Accordingly, Congress is financing much of the existed federal expenditures, including the wars in Iraq and Afghanistan, with borrowed monies.

In 2005, the Pledge's advocates tried to eliminate the social program they detest most, Social Security. Even with the GOP's solid control of the House and Senate, President George W. Bush could not privatize Social Security. House and Senate Republican leaders would not even allow Congress to vote on the issue. The attempt was so politically toxic that it was an important factor in the GOP's loss of the Presidency and control of Congress in the 2006 and 2008 elections.

The fiscal residual of the Pledge left by George W. Bush's administration was a doubling of the national debt, an additional $5 trillion, in only eight years.

The Pledge movement today is seeking a Constitutional "balance the budget" amendment. Forcing the U.S. into "pay-as-we-go" budgeting would sharply limit the federal government's capacity to use fiscal policy as an economic management tool. It also will create a moment-of-truth for office holders - forcing them to either cut programs or raise taxes.

The assumption is that politicians will cut programs rather than raise taxes, but that may not be true. Today, almost half of all Americans who are subject to the tax laws pay no income tax whatsoever because they do not make enough income. For them, social programs, such as Social Security, are likely to be more important than lower taxes.

Ironically, future GOP attempts to implement the starve-the-beast strategy, as with President Bush's attempt to privatize Social Security, could give the Democrats a historic opportunity to energize those voters and seize effective political control of the national government as FDR did during another era of economic tough times.

While I have no illusions about the organizational capacity, political sensitivity and policy priorities of the Democratic Party's leadership, there are times when even they accidentally get an opportunity so great they almost cannot fail.

Nor do I have any illusions about the capacity of the GOP to create such an opening: they have done so repeatedly in the past on other issues.

After the mid-term election, there may be enough moderates in each House of Congress who are willing to put all federal spending and all federal taxes on the table and devise an agenda of shared sacrifice. I would like to think that our federal leaders can put aside partisanship and pettiness on an issue of such vital importance to our country. We all are in deep trouble if that too is an illusion.