Playing games with the deficit
“To the extent that Washington is "broken" (and I’d argue it’s less broken than some suggest) it’s because it suffers from being, unusually, both fat and musclebound. No wonder it finds it difficult to move or, once underway, to change direction.
I don’t really see how it can be any other way. Not when you try and govern 300m people in a quasi-modern democracy. A new agenda of competitive federalism might be the best bet (conveniently it also accords with my own philosophical prejudices!) but getting from here to there will be difficult, not least because there’s precious little evidence that either party has the wisdom to agree with me. Or, you will find, with you either.” ~ Alex Massie
This comes after Alex – with the stroke of a digital pen – solves the U.S. deficit problem. You can, too, by playing this NYT’s deficit-destroying game (I played and ended up with a ridiculous surplus, cutting virtually everything I could find, tossing in some magical thinking, and bumping up taxes to boot). Indeed, one could quite easily balance the budget and turn deficits into surpluses if they were so inclined and had dictatorial powers. Alas, such is not the case in a representative democracy. I can hear Tom Friedman pining now for the beneficent totalitarianism of the Chinese ruling class. Yes, if only we were more like the Chinese we could cut our deficit down to size and save the planet. If only.
David Leonhardt, on the other hand, proposes something slightly more sensible: economic growth as deficit slayer. Increased productivity and economic growth will have serious long-term positive effects on the deficit. It’s not a magic bullet, but then again nothing is. The particulars of Leonhardt’s proposal are certainly up for debate, of course – when it comes to economic growth there are serious divisions between members of various political camps on which policies will have the best (and worst) outcomes.
I favor direct stimulus now (payroll tax holiday, checks in the mail, etc.) and long-term, phased in austerity alongside a massive simplification of the tax code. Sweeping cuts during a deep recession are hard to sustain; not fixing our healthcare and pension system, and kicking our fiscal problems down the line ad infinitum is also not an option (though we are likely to exercise it none the less).
I like Massie’s competitive federalism idea, too, though his concerns are well placed: getting from here to there is indeed the hard part. Perhaps the impossible part.