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The Elephant in the Room for Centrist Fiscal Hawks | Commentary

By Harry Stein At the 2015 Fiscal Summit, convened recently by the Peter G. Peterson Foundation, Washington’s centrist fiscal hawks repeated their warnings about the national debt and their call for bipartisan compromise. The good news is deficits are low and the short-term budget outlook is stable, so there is no looming debt crisis. But long-term fiscal challenges remain, and the leading organizations of centrist fiscal hawks — the Committee for a Responsible Federal Budget, the Campaign to Fix the Debt and the Concord Coalition — all stress that a realistic deficit reduction plan must include both spending cuts and tax increases.  

What is missing from the conversation among fiscal hawks, at the Fiscal Summit and elsewhere, is a frank acknowledgement that a large bloc in Congress has pledged to oppose any tax increase, even in the context of a bipartisan compromise that also includes spending cuts. By failing to confront this anti-tax pledge, the fiscal hawks’ calls for bipartisan compromise to achieve deficit reduction largely amount to calls for surrender by those who believe that new revenues must be included to sustain Social Security, Medicare, Medicaid and other programs to strengthen and grow the middle class.  

According to Americans for Tax Reform, approximately half of the senators and representatives in Congress have signed their pledge to oppose any tax increase, including all of the Republican leaders in both chambers. The current Congress recently passed a budget resolution that honors that pledge by slashing trillions of dollars from programs for low- and moderate-income Americans without asking the wealthiest to pay even a penny of additional taxes.  

Fiscal hawks have two options for responding to this political environment. One course of action is to criticize the party whose leaders have sworn to oppose any bipartisan compromise with their anti-tax pledge. The second option is to pretend that this imbalance does not exist by praising and criticizing both sides equally.  

Fiscal hawks have largely chosen the second approach. When the House Budget Committee released its budget this year, a budget that included only spending cuts and no new revenue, the Committee for a Responsible Federal Budget stated that “this budget’s commitment to deficit reduction and entitlement reform is welcome news.” The statement never directly mentioned the lack of new revenue.  

When New Jersey Gov. Chris Christie outlined a plan to slash Social Security benefits, while cutting Social Security taxes, the Campaign to Fix the Debt said Christie “should be praised for his leadership on the issue and for his courage in offering real specifics — not just platitudes — for how to fix the programs.” The word “tax” never appeared in the page-long statement.  

Even when fiscal hawks criticize Republican tax policy, they are careful to avoid blaming Republicans more than Democrats, and instead declare a pox on both their houses. During the 2012 presidential race, the Concord Coalition declared, “both presidential campaigns have missed the mark” with their budgets. The Concord Coalition reached this conclusion despite recognizing that President Barack Obama’s budget “includes both spending cuts and tax increases,” while the Republican plan included no new revenue and did not even “specify the tax breaks that would be eliminated to pay for rate reductions.”  

Democratic leaders, including  Obama, Rep. Nancy Pelosi and Sen. Harry Reid have offered actual compromise. In 2013,  Obama even offered a “grand bargain” on tax and entitlement reform in writing as part of his budget.  

These Democratic offers did not lead to bipartisan compromise, but federal spending projections did fall dramatically — due in part to excessive short-term cuts that damaged the economy and increased unemployment. These cuts were imposed by the Budget Control Act of 2011 and that law’s sequestration rules, which were the direct result of failed attempts to force a grand bargain on deficit reduction.  

It is easy for politicians to pay lip-service to deficit reduction, or put abstract numbers on a page to meet arbitrary fiscal targets in their budgets. But with Republicans refusing to compromise on revenues, and Democrats now better understanding this political dynamic, the prospects for action on long-term deficit reduction are slim.  

As long as both sides are always blamed equally, neither side has any reason to change its behavior. If fiscal hawks want to break this cycle, they will need to make a different choice: support politicians who are willing to compromise, and oppose politicians-and political parties-that swear to block any new revenue and therefore reject the central tenet of bipartisan fiscal compromise.  

Harry Stein is the Director of Fiscal Policy at the Center for American Progress Action Fund. 

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