Does Fix the Debt Want To Fix the Debt, or Keep Tax Rates Low?

A blog about business and economics.
Nov. 27 2012 12:03 PM

Does Fix the Debt Want To Fix the Debt, or Keep Tax Rates Low?

Here's a response to me and some others from Fix the Debt that, again, illustrates the very misleading way the group is trying to position itself:

Both Paul Krugman at the New York Times and Matt Yglesias at Slate have made the claim that those who advocate for debt reduction should love the cliff. After all, it does significantly reduce the debt, sending it below 60 percent of GDP by 2022.

We've challenged this myth in the past, as the sudden and blunt nature of deficit reduction in the fiscal cliff would have a devastating impact on the economy. It also ignores tax and entitlement reform that could minimize harm and address the future drivers of debt. For these reasons, the fiscal cliff is the second worst option, only behind kicking the can further down the road and not addressing our rising debt.

So let's be clear. I'm not saying Fix the Debt or anyone else "should" love the cliff. I'm saying that a group that genuinely believed deficit reduction was the most important issue on the planet would love the cliff. A group that doesn't love the cliff has some priority other than deficit reduction. Sometimes Fix The Debt says the thing they prioritize is the need to avoid unduly rapid austerity. Hence they claim to worry that "the sudden and blunt nature of deficit reduction in the fiscal cliff would have a devastating impact on the economy."

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But here, again, there's a problem of consistency. If you believed that avoiding short-term austerity was the most important problem you'd favor kicking the can further down the road. But they say that's actually the very worst policy option around.

So it's not a group dedicated to avoiding premature austerity at all costs and it's not a group dedicated to deficit reduction at all costs either. But it does include among its "core principles" that we need to reduce entitlement spending and enact "comprehensive and pro-growth tax reform" that, among other things, "lowers rates." That sounds a lot like the agenda of a group that's dedicated to rate-cutting tax reform and entitlement spending cuts, rather than to any particular view about the appropriate timing of deficit reduction.

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