Thursday, July 21, 2011

The Cult of the Big Deal

For all their differences over raising the debt ceiling, there’s one thing that Obama and John Boehner agree on:  they both want a “big deal” that enables us to regain our macro-economic footing in one fell swoop. From their own separate standpoints, the only trouble is that they’re swooping in different in directions: Obama wants to agree now on spending cuts, tax increases and modest entitlement reforms that will mostly take effect in the future; Boehner wants to enact spending cuts and entitlement reforms now that will take effect now and in the future without raising taxes now or in the future.  A lot of sanctimonious pundits are telling us we should be ashamed of ourselves for not wanting them to get a big budget deal done.

If you ask me, Obama, Boehner and the pundits are all succumbing to a consoling illusion, like desert travelers who, having improvidently used up their water supply, drag themselves toward an alluring mirage. My reasons for saying that have a lot in common with Paul Krugman’s dour outlook on the debt-ceiling negotiations (my emphasis):
“If I seem sort of quiet on the debt ceiling stuff, it’s because (a) I have no idea how the political brinkmanship will play out (b) I believe that any deal like the Gang of Six proposal or whatever, even if enacted, offers little guide to what will actually happen starting after next year’s election. If it’s a Republican sweep, they will quickly dissipate any spending cuts with another round of tax cuts. If Democrats hold the White House and possibly even regain the House, they might conceivably turn to a solution that makes sense."

“So does this mean that I regard the president’s enthusiasm for a big deal as foolish? Yes.”
I think that Krugman’s skepticism about a big deal is warranted as far as it goes, but it doesn’t go nearly far enough. Two thoughts seem be driving him to his conclusion:  first, that any long-term spending/taxing plan agreed to now by Obama and this congress is likely to be undone by future presidents and future congresses before it takes effect; and second, that owing to widespread macro-economic stupidity and spectacular bad faith on the part of Republicans, the only hope for a sensible spending/taxing plan—which for Krugman means more stimulus spending and tax increases now and spending cuts later—turns on Democrats winning the next election decisively.

Leave aside the fact that Republicans think that Krugman’s the guy who doesn’t understand macro-economics and Democrats are the ones acting in bad faith. For present purposes, the important thing is that the first of Krugman’s thoughts undermines the second. Any Krugman-approved plan that Democrats conceived and executed unilaterally would still be a decision now to undertake future acts on which, in all likelihood, future presidents and future congresses will decide not to follow through. The problem Krugman’s first thought points to isn't the difficulty of converging on a decent budgetary plan, but our institutional incapacity to commit ourselves to the execution of any plan over time.

People pining for the big deal think that we’re collectively like a binge-eater headed for an early grave if he doesn’t change his ways. The only way out of his predicament is for him to decide now to go on a healthful and sustainable diet from now on. That means committing himself now to resist the temptation presented by the French fries that are sure to pass before his eyes in the future. Granted, success is possible (if, given the current contour of his waistline, still a little unlikely) because the guy deciding to go on a diet today knows that he’s the same guy, with the same will, as the guy who will have to resist those fries tomorrow. If his will weakens to the point where he wolfs them down, he’ll experience a pang of regret because he’ll know that he let himself down.

The relation between this president and this congress and future presidents and future congresses isn’t like that. People who’ve seen the movie Memento have a better analogy ready at hand. That, for those who haven’t seen it, is a story about a guy without memory who wakes up every morning not remembering what "he" did, or why "he" wanted to do it, the day before. He can consult the notes "he" took yesterday to give "himself" some idea about what “he” was thinking and intending. But for all practical purposes, he’s a different guy today, with a different will, than "he" was yesterday. In that respect, he’s like a sitting congress that can determine what a prior congress decided to do by consulting the Congressional Record, but has to decide for itself whether to follow those statutes or change them. A sitting congress can have better or worse reasons for changing them, but two things it can’t have are an obligation not to change them or the sense that it’s somehow betraying "itself" if it does.

Does that mean that, fiscally speaking, we’re all doomed? Not necessarily. The fact that the guy in Memento would be, for all practical purposes, a different guy tomorrow than he is today, doesn’t mean that he’ll act today as if he's indifferent to that guy’s well-being. Ethically speaking, he owes the guy “he” will be tomorrow roughly the same consideration that he owes other people today. So doing right by the other person "he'll" be in the future may be hard, but it isn't impossible, and it isn't any harder than doing right by other people today. It’s a matter of acting responsibly, not on any day in particular, but day-by-day. 

The same goes for our elected representatives.  Being responsible isn't something that they can take care of between now and August 2nd.

1 comment:

Anonymous said...

Great analogy. There should be a screening of Memento in the halls of Congress and the White House. And, as to Krugman, let's just hope he never runs for Congress. More stimulus? All he wants to do is spend money.