In this round-up of “experts” (Cramer?!) on whether to “soak the Rich” at the WaPo (the title of which, given the actual Obama budget plans, reminds one that mainstream discourse has really lost sight of the true rich-soaking possibilities), what really bugged me was this from Laura D’Andrea Tyson selling spending restraint in the Obama budget:
It is a shibboleth among critics that President Obama’s budget relies almost exclusively on tax increases on the wealthy to fund increases in government spending, yet this not an accurate representation of the facts…
It reduces non-defense discretionary spending to 3.6 percent of GDP, compared with an average of 3.8 percent between 1969 and 2008. [emphasis added]
This begs the question of why the level of non-defense discretionary spending from an era of mostly Republican presidents and lately Republican Congresses should be considered adequate. Indeed, there seem to be more public investment funding shortfalls than funds so far committed to them.
Now a clever and socially useful direction signaled in the stimulus package is to address transition problems upfront for, e.g., sensible climate policy so the future implicit or explicit taxes aren’t seen as quite so much of a hold-up for those unfortunate enough to have taken extra advantage of the legacy policy of free emissions. Properly executed, that can help keep the well-intentioned but wobbly on board with programs that need all the support that can be mustered to overcome entrenched interests. The risk is getting no more than the appearance of transformation, which would represent at a minimum a lost opportunity — especially given that it may be dawning on the public that not everything in the U.S. is optimally arranged.
Perhaps some of the administration’s policies can be implemented as tax expenditures to direct private-sector activity in accordance with public policy, and I suppose (but don’t know) that might not be included in the 3.6 percent. Some areas may be so starved for funding that they’re regarded as hard to get off the ground quickly, though that’s not so much of an issue over the longer planning horizons of the regular budget. It seems unavoidable that seriously unscrewing up the transportation and energy networks, the publicly-funded education system, and so on will at some point require some serious funding beyond the couple percent of GDP of extra stimulus spending. The administration might as well figure out what they really want and make a case for it, since as we’ve seen from the Kevin Hassetts among other right-wing, uh, luminaries, they’re going to be tarred as dirty commies by the right whatever they do.