Friday, July 8, 2011

An Ideological Tipping Point?

Let’s admit to Socratic ignorance at the outset. When it comes to the secret negotiations over the debt ceiling between Obama and the Republican congressional leadership, the one thing we know for sure is that we know practically nothing about what’s really going on. Reports that Obama is upping the ante by putting substantial entitlement cuts on the table in exchange for substantial revenue increases might just be a ploy to steal the high ground from Republicans by offering them a reasonable-sounding deal that he knows they won’t accept.

You can’t blame straight-laced liberals, however, for fearing that Obama’s about to prove once and for all that he isn’t the ideological comrade they once thought he was. Glenn Greenwald has already passed from fear to resignation. It sounds like Paul Krugman is traveling the same path (my emphasis):
“[L]et’s be frank. It’s getting harder and harder to trust Mr. Obama’s motives in the budget fight, given the way his economic rhetoric has veered to the right. In fact, if all you did was listen to his speeches, you might conclude that he basically shares the G.O.P.’s diagnosis of -what ails our economy and what should be done to fix it. And maybe that’s not a false impression; maybe it’s the simple truth.”
As you'd expect, the evidence Krugman cites for the thesis that Obama has forfeited liberals’ trust is mostly a matter of Obama’s apparently having made public-debt reduction a higher priority than reducing unemployment in the near- and medium-term. But Krugman’s obviously alluding to some broader liberal principle that encompasses more than his macro-economic concerns. Let’s try, in a rough-and-ready way, to get a bead on it.

By all accounts, modern liberalism is importantly a matter of socializing risks through governmental action. Most of what we recognize as liberal social policy redistributes risk from individuals and their families to taxpayers: Unemployment Insurance socializes the risks of navigating your way through the private labor market; Social Security and Medicare socialize the risks of old age, ObamaCare socializes the risk that people of any age will suffer catastrophic ill-health. If you had to reduce liberal justification of all these policies to a simple maxim, you could do worse than this: all other things being equal, risks otherwise born privately by individuals that can be transferred to taxpayers, should be so transferred.

That's not the most inspiring practical maxim you've ever heard.  But it does explain why liberals like Krugman think it’s so perverse for Obama to be acting as if current levels of unemployment are a less immediate concern than lowering the deficit. Economists can argue over the macro-economic effects of current deficits and levels of public debt until they're blue in the face.  But there’s no room for argument about this:  most of the risk of long-term unemployment is born privately by individuals and their dependents while, however formidable they may be, the risks of government insolvency are widely shared and transferable through tax policy to the people most able to bear them. So it’s hornbook liberalism to postpone deficit reduction in deference to the need for economic stimulus now.

Our maxim helps explain, moreover, why both liberals and conservatives are treating entitlement cuts as an ideological tipping point. Conservatives believe that, past a certain point, socializing risks through government compulsion not only exacts too high a cost in individual liberty, but generates socially unsustainable levels of moral hazard. So, from their standpoint, capping entitlements is less a compromise with necessity than a golden opportunity to start redistributing risk currently born by taxpayers back to individuals and their families where it belongs. The Republican idea of turning Medicare into a “premium support” program under which there’s no guarantee that subsidies will keep up with the rising health care costs is the most dramatic case in point. But every reduction in entitlement benefits transfers a little more risk from the collectivity of taxpayers to beleaguered individuals.  Any way you look at it, $3 trillion worth of spending cuts privatizes a lot of formally socialized risk--from the little we know about the negotiations, a lot more than it takes to get a debt-ceiling deal done.

Were I a betting man, I’d put my money on the proposition that Obama’s newfound zeal to cut entitlements  is mostly for show. I still think of him as a pretty conventional liberal who's not about to burn his ideological bridges.  But if I'm wrong, the liberalism I grew up with might never be the same.

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