Why Obama Is Almost Certainly The Real Austerity Candidate

Moneybox
A blog about business and economics.
May 25 2012 10:19 AM

Why Obama Is Almost Certainly the Real Austerity Candidate

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US President Barack Obama speaks during a campaign event at the Paul R. Knapp Animal Learning Center in Des Moines, Iowa, on May 24, 2012.

Photo by JEWEL SAMAD/AFP/GettyImages

There's little doubt that the medium-term trajectory of federal non-defense spending will be higher if Barack Obama is re-elected than if Mitt Romney becomes president. But in terms of short-term fiscal policy, which candidate would run higher budget deficits in 2013 and 2014 when the economy will likely continue to be operating well below potential? Brian Beutler tries to answer the question by delving into the details of the candidates' plans but there are no real answers here because "[u]nlike Obama, Romney leaves black boxes on both the tax and spending sides of his budget."

Perhaps the better way to look at this would be in terms of a persistent partisan disagreement about the political process.

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Ever since the election of Ronald Reagan, the Republican Party has not taken the view that tax or spending measures that its leaders favor on the merits must be paired with offsets. The party's thinking on whether it's desirable to reduce various forms of spending has changed over time. Under George W Bush, the GOP wanted to make Medicare more generous. Under Paul Ryan and Mitt Romney they seem to want to make it less generous. Under Ronald Reagan they wanted to spend more on the military and under George HW Bush they wanted to spend less. But in all cases, spending and tax decisions have operated on separate tracks. The deficit per se, in other words, has never been a bar to spending more on the military to reducing taxes or to spending more on domestic priorities. If they think K-12 spending should be raised (as they did in the "compassionate conservatism" era) then they raised it, and if they think it should be cut (as they do now) they propose cutting it. But the budget deficit doesn't enter into the calculus.

Democrats have governed very differently. With the admittedly important exception of the American Recovery and Reinvestment Act of 2009, the governing practice of the Democratic Party has been that tax or spending changes should be paired with offsets. Even proposals like the more recent American Jobs Act that are meant to fit in a Keynesian fiscal stimulus frame are structured so as to be deficit-neutral in the medium term. The non-ARRA exceptions to this involve elements of the Democratic caucus voting for deficit-increasing legislation favored by George W Bush.

Which is all just to say that it would be a major break with practice for Romney to make the passage of tax cuts actually contingent on his offsets getting through congress. That procedural rule makes it much more likely in practice that Romney administration would run a loose fiscal policy. 

Matthew Yglesias is the executive editor of Vox and author of The Rent Is Too Damn High.

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