I am a self-identified progressive. My favorite economists in the public arena are Paul Krugman and Robert Reich. But I am also a deficit hawk. Today, I received an email from Nouriel Roubini’s consulting business that addresses America’s likely long-term fiscal deficit. The picture is bleak. This is the main reason that I think America’s political system is broken. There is an inability or unwillingness to address major problems that are known to be problems. America simply cannot afford to continue to fund its current military spending levels, which should be reduced for both economic and political reasons. A combination of tax increases and spending reductions should be passed. On the spending side, neither entitlements nor defense can be sacrosanct, but in Obama’s proposed spending freeze, both are exempt.
Here are representative quotations from the Roubini group’s email (I receive only the free email and am not a subscriber to the paid service). “…The fiscal deficit is likely to remain near US$1 trillion and exceed 5.0% of GDP over the next decade (and trend higher thereafter). Near-term spending on fiscal stimulus and defense will remain high at least until 2011, as Obama’s proposed three-year freeze on discretionary spending excludes defense and entitlements…Obama simply lacks the political support to implement aggressive fiscal reforms. The Senate recently voted against Obama’s proposals on spending freezes and the establishment of a fiscal commission, whose role would be to send fiscal reform legislation to Congress that would have to be voted on or thrown out without the possibility of amendments. Moreover, if policymakers extend the 2001 and 2003 tax cuts beyond 2011, when they are scheduled to expire, the impact on the fiscal deficit and U.S. fiscal credibility would be immense. Washington has not signaled strong support for wider tax reforms, such as introducing a value-added tax (VAT)… Despite the ticking fiscal bomb, mid-term and presidential elections in November 2010 and 2012 respectively will further constrain political will to undertake necessary reforms.”
As I recently posted, I believe that the senate has outworn its usefulness as an institution in its present form and that this anachronism is a deficiency of the US Constitution. Towards the end of a recent bloggingheadstv conversation between Brook Lindsey of the Cato Institute and Mark Schmitt of “The American Prospect,” Lindsey, a libertarian/conservative, characterizes the view that there is a structural polticial problem preventing necessary action to address the long-term federal deficit as a progressive one, and it is a view that he does not share.
If this really is primarily a progressive view, that seems odd to me. It was only about thirty years ago that conservatives were proposing a new constitutional convention. It is not odd that people who are deeply frustrated with political events should look to constitutional reform. But it is odd that progressives are at least as worried about America’s long-term fiscal deficit as conservatives, if not more so.