Stan Collender tells Ezra Klein that he thinks next year it’ll be necessary to propose tough measures to put us back on the path to deficit reduction:
First, the Democrats with the most difficult reelection battles are the freshmen elected in Republican-leaning, fiscally conservative districts. They’ll need something to show for their time in Washington, and along with the Blue Dogs, they may well be able to get it.
Second, and arguably more importantly, the markets are increasingly nervous about the size of our long-term deficits, and without credible action to reduce them, interest rates could rise, choking off the recovery. That would be the worst possible outcome for the administration, as nothing will be as politically potent as tangible evidence of recovery, and nothing will be as damaging as a return to recession. As Collender sums it up, “proposing difficult reductions next year will be difficult and dangerous. But so will not doing them.”
That first point is, I think, almost certainly wrong. If you recall what happened with the FY2010 budget, what happened is that the Obama administration proposed a budget that (a) dispensed with some Bush-era accounting gimmicks, and (b) left medium-term deficits at the outer bounds of sustainability. Centrist Democrats, being somewhat electorally vulnerable and enjoying the politics of deficit reduction, complained about this and swore they’d produce something better. But what they did, in practice, was make the deficit bigger by striking out some tax increases and then make the deficit seem smaller by putting some of the accounting gimmicks back in. Ta-da!
Which is just to say that the politics of deficit reduction are different from actual deficit reduction. Back in 1993 among wonks it was centrists who were most eager to see Bill Clinton prioritize deficit reduction. But that meant putting forward a “tough choices” budget. And centrist politicians are incredibly averse to voting “yes” on unpopular measures, so lots of center- to center-right Democrats wound up joining with the GOP in voting “no” on exactly the sort of balanced deficit reduction package that they notionally would favor.
The bond market issue is another matter.