Yuval Levin argues that the left should be disappointed by the “fiscal cliff” deal. Why? Because “their best opportunity in a generation for increasing tax rates (which is the only fiscal reform they seem to want)” has come and gone with only a minimal increase in tax revenue achieved:
This deal is projected to yield $620 billion in revenue over a decade — increasing projected federal revenue by about 1.7 percent over that time. And that’s about it. The Democrats have made the Bush tax rates permanent for 98 percent of the public, which Republicans couldn’t even do when they controlled both houses of Congress and the presidency. . . .
If even under the conditions of the past month — with a very liberal president just re-elected, Republicans in disarray, public opinion on taxes seemingly friendlier to them than it has been in decades, and higher tax rates automatically taking effect — the Democrats can’t get more than a tiny pittance of revenue and no chips to use later, then their basic approach to fiscal issues just won’t work.
Levin’s assessment is correct, I think. But this doesn’t mean that Republicans have won. The Democrats at least obtained something on the revenue side. The Republicans so far have received nothing on the spending side.
Since party politics is often a zero-sum game, how is that both parties can lose when it comes to the debt reduction contest? The answer is that the public isn’t willing to sacrifice anything in the name of debt reduction.
The left wants to tax the public more, not in order to reduce the debt but to finance big government. But the public won’t accept higher taxes except on the wealthy. That’s why Obama had to announce in advance that he would not increase taxes on those making less than $250,000. As Levin says, the president basically lost the game before it began.
Conservatives want entitlement reform and spending cuts. But the public wants Medicare and Social Security to remain as it is. That’s why Republicans are so relunctant to propose specific cuts to these programs without Democratic cover which, of course, isn’t forthcoming.
The public favors spending cuts in the abstract, but politicians reasonably fear that any resulting reduction in services will carry a backlash. And they fear that cuts in defense spending will result in lost jobs and (at least as far as Republican politicians are concerned) reduced national security.
In sum, public sentiment is blocking both the liberal agenda — higher taxes to finance an expanding welfare state — and the conservative agenda — reduced spending to enable us to live within our means and reduce the size of government. As my friend Bill Otis likes to say, we are addicted to living, through credit, beyond our means, so no majority exists to put an end to this unhealthy practice.
I fear that only a major crisis can change this, and it’s not clear that even that would be enough.