Why the budget deficit obsession?

Kevin Drum points us to Larry Bartels and Benjamin Page to try to explain why Washington is obsessed with budget deficits — and not, say, income inequality, climate or just plain old unemployment. As Bartels and Page point out, the wealthy have different political views from everyone else and yet have quite a bit more influence with politicians. As Drum says:

So if you’re wondering why official Washington is all atwitter over budget deficits, but doesn’t seem to care much about unemployment, this is why. It’s because that’s what rich people care about.

Well, okay, but then that just moves things back one notch: Why are rich folks so concerned about deficits? That they should be opposed to raising taxes on the rich, sure; that they might favor cutting programs for the poor, no problem. But why the deficit?

I don’t think there’s a definitive answer on this, but for what it’s worth my money is on a combination of party politics, press norms and Ronald Reagan.

Party politics explains why Democrats turned against budget deficits (except in hard times, for most Democrats) right at about the time that Republicans were converted to supply-side indifference to them. That’s how partisan politics works; if the incumbent party opens up a huge hole in the budget (see especially: 1981, 2001-2003), the opposition tends to oppose them.

Then press norms kick in: Since both parties claim to be against budget deficits, the press can comfortably take sides on the issue. Deficit reduction is always portrayed by the “neutral” press as a good thing.

But wait, you say — how is there a consensus if Republicans in fact turned against balanced budgets three decades ago, and movement conservatives have opposed most real deficit reduction since then?

Well, that’s where Reagan comes in. Reagan’s particular gift was in believing the things he wanted to believe, whether they were true or not. So when Reagan accepted supply-side nonsense — which, in practice, meant favoring tax cuts even if they were not paid for and which for conservatives eventually meant opposing all tax increases, which is another way of saying that they put low revenue as a much higher priority than balanced budgets — he never gave up his beliefs in balancing the budget and the evils of deficits.

And so here we are: Democrats have backed into both operational and rhetorical support for balanced budgets, and Republicans have retained their rhetorical commitment to deficit reduction regardless of their substantive policies. Sure, if you look closely, you’ll realize that most liberals have a more complex view that supports Keynesian deficit spending at times and that most conservatives advocate policies that wouldn’t actually lower budget deficits, but for both parties the rhetorical enthusiasm is with the deficit-cutters. And press norms take care of the rest of it.

If that’s right, then the rich are deficit-crazy probably as a result of being Republicans and of supporting elite consensus policies, more than the other way around.

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