Some Mythbusting of Our Own
You might have seen a piece featured in The Nation last week arguing “How the Austerity Class Rules Washington,” noting in the very first line how the Committee for a Responsible Federal Budget held a “high profile” symposium recently urging the Super Committee to think big and exceed its current mandate. The article continues on to make the case that CRFB and its leadership has been one of the “central organizers” behind an “austerity class” of experts and organizations here in Washington pushing for austerity over job creation, using national media, congressional testimonies, opinion pieces, newspaper editorials, events, and other methods to get its message out.
Well, first off, we didn’t realize we were so powerful! We’re truly honored to see that some people think we rule Washington. While that conclusion is debatable, there are a couple of things in the article we’d like to quickly clear up.
We completely agree that the economy needs to be the country's number-one focus. Where we differ with the opinions expressed in the article is that credible and gradual debt reduction is one of the best things lawmakers could do for the economy, this decade and beyond. There is evidence that our debt levels are already affecting the strength of the economy (see Reinhart and Rogoff, Stephen Cecchetti), and putting in place a plan today that gradually phases in savings as the economy strengthens can improve business and consumer confidence, increase more productive private investments down the road, increase the size of the economy over the long-term, and ultimately eliminate the risk of a fiscal crisis—which would be an anathema to an economic growth and job creation strategy.
So it’s not an either/or kind of deal. Deficit reduction is part of a pro-growth strategy, and would even provide fiscal space up front to allow lawmakers to focus on the economic recovery. However, simply relying on deficit-increasing policies in the short-term without addressing our long-term challenges would not have anywhere near the same benefits.
We’d also like to clear up a few factual mistakes in the article. The article states that when Congressman Paul Ryan (R-WI) released his Roadmap for debt reduction in 2008, we “lauded his ‘thoughtfulness and courage’” but that we “failed to mention that Ryan’s plan would increase the deficit, from a debt-to-GDP ratio of 60 percent in 2010 to 175 percent by 2050.” This is incorrect on two counts: the CBO estimate showed debt increasing to a high of 100%, and we raised serious concerns over how the plan’s debt levels “could be quite dangerous” in the very same press release and blog where we gave credit for the political courage. We applauded the “leadership and political courage” to put forward a plan, not the debt levels. CRFB has made this point many other times regarding other fiscal plans, including from the President.
That was also the rationale behind the “FI$CY” Award given to Congressman Ryan this past January for his contributions to promoting fiscal responsibility in FY 2010. The FY 2011 budget resolution he proposed this spring was well after the award, and while we gave Congressman Ryan credit for significantly reducing debt in his revised proposal and again showing political courage, we noted that all parts of the budget needed to be on the table, including revenues, and that the national debate had moved beyond just offering specifics to actually working toward a bipartisan compromise.
The article also claims that the Bowles-Simpson report “took aim at the social safety net”, when in fact the report lists protection of programs for the disadvantaged as one of its guiding principles. The plan did not include any reductions in safety net programs, and it contained recommendations which would strengthen the safety net and provide for greater progressivity in the tax code than current policies. Bowles and Simpson have consistently reiterated this principle for deficit reduction as well as the need to avoid cuts that could harm the fragile economic recovery, most recently in a Washington Post op-ed in which they wrote that the Select Committee:
“must be smart in how they achieve savings. They should avoid making immediate deep cuts that would jeopardize our fragile economic recovery….. And they should not make cuts that would harm the disadvantaged.”
CRFB works very hard to maintain its image as an independent and non-partisan arbiter of budget proposals. People are certainly entitled to their own opinions concerning the economy and rising debt, but we wanted to clear up the facts.