The Liberal Case for Deficit Reduction

Today on Ezra Klein's blog, Derek Thompson (who contributes to a great blog over at The Atlantic) makes the liberal case for deficit reduction. He notes that current budget policy debates can leave you depressed because Congress lacks both the appetite for high impact spending today and the will to cut the deficit down the road. We know the feeling all too well.

"Progressives want new spending for education, innovation and infrastructure. But under the Republican House's cut-go rules, new spending must be offset with spending cuts. That leaves the stimulus crowd with two options: (1) identify low-impact policies to cut and shift the money toward better ideas, like an infrastructure bank, export financing or community college support; or (2) stimulate the economy in ways that cost next to nothing..."

"The second option is to pursue stimulating policies that cost basically nothing. Under this category, you could enact deficit-neutral corporate tax reform; reform the Byzantine rules for export control; increase visas for skilled foreign students; and even announce cash prizes for innovation breakthroughs that won't cost Washington a cent, unless companies really crack the code on photovoltaic efficiency, or whatever sweepstakes we want to set up. All of these measures would make the U.S. economy more productive (sorry, competitive), and you could have all of them and more for a bargain."

In essence, to pave the way for more growth-friendly policies and to further invest in education and infrastructure for the future, we've got to deal with deficits to create the budgetary flexibility. These sentiments were also echoed in the Fiscal Commission's idea for a Cut-and-Investment Committee. Also be sure to check out Rep. Earl Blumenauer's (D-OR) version of the liberal case for fiscal reform at the New York Times.

Back in October, CRFB president Maya MacGuineas made the case for additional ways to strengthen the recovery, but with strings attached to force fiscal reform at the state and federal level.