A Lost Age of Fiscal Heroes? Not So Much.

The debate over fiscal responsibility has been muddled by the Great Recession; inevitably, perhaps, arguments over long-term fiscal problems have been conflated with debates over short-term recovery programs. Both debates have suffered terribly as a consequence.
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On May 19, the federal government will reach its statutory debt limit. To keep the wheels turning, the Treasury will then deploy a variety of "extraordinary measures" that have become really quite ordinary in recent years. At which point - probably in the fall sometime -- lawmakers will run up against a real borrowing limit.

As any number of commentators have pointed out, arguments over the debt limit are silly -- an exercise in partisan theater and political sleight of hand. The same lawmakers wielding the threat of voluntary default -- in the name, presumably, of staving off involuntary deadbeat status -- have been complicit in the tax and spending decisions that made such borrowing necessary in the first place.

Nonetheless, debt limit debates are a hallowed tradition in Washington. So, too, are threats to vote against necessary and inevitable extensions. Both have been going on for decades, and both are a particular variety of a broader phenomenon -- the search for a useful, manufactured crisis.

We've seen a string of such pseudo crises in recent years, including the 2011 debt limit showdown and last December's famous "fiscal cliff." These artificial emergencies are designed to force action from a recalcitrant Congress.

The impulse is understandable. If you believe (as I do) that politicians make tough decisions only when they must, not when they should, then you end up hoping for small disasters that might be leveraged to avoid big ones. And if you can't find a small crisis, you can always make one up.

The problem is, fake crises don't work because everyone knows they're fake. From the start, the debt limit has always been a symbolic, rather than genuine, check on federal fiscal policy. Not even in the 1950s, when Dwight Eisenhower battled Congress in a multi-year struggle over raising the limit, did anyone seriously worry about actual default. People knew then, as they do now, that lawmakers would do right -- eventually.

Yes, the current House GOP caucus does have a glint of genuine crazy in their collective eye - some percentage of its members probably would opt for default rather than face fiscal reality. But we established two years ago that Republican leaders are not going along for that ride, at least not all the way. So once again, we seem destined to follow a familiar script: the nation will wring its collective hands for a few months, and then lawmakers will vote for the inevitable extension, perhaps embellished with some meaningless window dressing (like the not-so-Super Committee of 2011).

Living in this Age of the Manufactured Crisis can be depressing. And it encourages a sort of political nostalgia - a yearning for that bygone era when tough lawmakers made the tough decisions that kept federal debt at manageable levels. Where have you gone, Wilbur Mills?

Well, sorry to tell you, but there were never any fiscal heroes. If past politicians made some hard decisions - chiefly in the form of tax increases -- it was because they believed they had to. Political leaders were particularly frightened of inflation -- so much so that they felt compelled to make unhappy choices, like the 10 percent income tax surcharge used to finance the Vietnam War.

Many of today's self-styled deficit hawks say that rising debt is dangerous, and they claim to worry a lot about inflation, too. But not many of them seem to actually believe this talk, at least judging by their willingness to sacrifice policy preferences for the sake of economic necessities.

Dick Cheney has taken a lot of (justifiable) heat over the years for his claim that Reagan showed us that deficits don't matter. In fact, it was Cheney himself (along with George W. Bush) who drove home this lesson. Reagan was careless about deficits at the start of his presidency, but got some old-time fiscal religion in the last seven years of his presidency. Bush, by contrast, never seemed to worry too much about deficits. And his complacency has been infectious.

Today, we're left with a lot of alarmist rhetoric about fiscal responsibility, but no real commitment to the idea. Not on the left, to be sure, but not on the right, either. No one cares enough to make a hard decision.

The debate over fiscal responsibility has been muddled by the Great Recession; inevitably, perhaps, arguments over long-term fiscal problems have been conflated with debates over short-term recovery programs. Both debates have suffered terribly as a consequence.

But if we keep our eye on the long-term issue, one sad reality seems clear: no one is very worried about the nation's rising debt level. At least not yet. And no string of artificial emergencies is going to do change that reality. Solutions to our real problems are awaiting a real crisis.

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