As Bill Galston points out, there’s no longer much doubt that deficit reduction has become a very large public concern over the last year. It’s a separate question as to whether Americans are willing to support actual spending reductions or tax increases proposed by either party, and thus whether there is really a popular base for a deficit reduction compromise. But no one should argue any longer that the whole subject is just being cooked up by elites.
Still, the current extend-the-tax-cuts debate in Washington demonstrates pretty conclusively that deficit reduction is not, in fact, the preeminent value of either party in Congress. Both are pursuing a path guaranteed to increase long-term deficits and debt. And since the wealthy benefit disproportionately from an income tax rate reduction in the lower brackets (that’s how marginal tax rates work), even the Democratic approach elevates tax cuts for “all Americans” (to use the Republican battle cry) over deficit reduction.
Matt Yglesias sums up the ironic situation well:
[T]here’s no debate in Washington about whether rich people should get a permanent tax cut. Nor is there any debate in Washington about whether rich people’s tax cut should be financed by long-term borrowing. Nor is there any debate about whether rich people should get a bigger tax cut than middle class people. But we “can’t afford” unemployment insurance, we “can’t afford” to pay bank regulators competitive salaries.
We have a bipartisan consensus that the short-term deficit should be made smaller and the long-term deficit should be made bigger even when all the economic logic points in the opposite direction.
Now Republicans, of course, dispute that we’re talking about “tax cuts” at all, and maintain that failing to extend the Bush tax cuts represents a tax increase, even though the reversion to earlier rates has been established in current law from the beginning, and even though the original rationale for the Bush tax cuts was to “rebate” unnecessary revenues when the federal budget was in surplus. But that’s just another way of saying that low tax rates, particularly for those “job creators” at the top, are an end in themselves for Republicans, crucial in every fiscal or economic circumstance, and thus far more important to them than deficits-and-debt.