"If We Keep Throwing Cash On The Fire...."

"... Surely we'll eventually smother the flames."

Watching Paulson and friends scurry around pouring money on one fire after another, with no apparent concern for consistency other than protecting the jobs of their peers and the wealth of stockholders, is fascinating. It's a mad world.

Mad World....

Had Kerry been elected in 2004 and had he initiated a similar "bail-out", can you imagine how Republicans would be responding to the near random manner in which Bush and Paulson are running around, throwing bushels of money at the financial industry? Or that the auto industry's request for $25 billion in federal loans would seem miniscule as opposed to the Bush/Paulson blank check for the financial industry? A year, or even six months ago, could you have imagined a blasé reaction by Congressional Republicans to a Democratic President-Elect's proposed two-year $600 trillion economic stimulus package?

You can blame whomever you want for those aspects of this crisis that predate Bush's tenure. Certainly, financial deregulation that occurred under Clinton played a role in this mess. But it's difficult to get past the top-to-bottom, front-to-back incompetence of the Bush Administration. And despite their lies protestations, the leaders of financial giants like Citigroup knew that they had flushed lending standards down the toilet and were taking enormous risk in the hope of reaping huge profits - and paychecks. I don't want to seem vindictive, but if they've run their companies into the ditch to the point that they need these multi-billion dollar handouts, given that context their CEO's should be tendering their resignations.

As recently as March, we were given projections like this:

You can see this for yourself in Table VI.F8 in Social Security's 2007 trustees' report. Compare "income excluding interest" with "cost," and you get cash flow numbers. (I'm ignoring interest, because it's paid with Treasury IOUs, not with cash.) You see that the system's cash flow is projected at about positive $92 billion this year. Nice. But by 2020 it's negative $96 billion, rising to about negative $280 billion in 2025, half a trillion in 2030.

Oh my.... half a trillion dollars in twenty-two years? Strangely, back in March that seemed like a big number. So what's the cure?

It would be nice to have $2.3 trillion in useful assets in an equivalent of a sovereign wealth fund - but we can't turn back time.

We can still buy time by investing current cash surpluses in non-Treasury assets. But that would require a change in the law and a change in the Washington mindset, neither of which seems to be in the offing.

Darn shame, because if we had invested the Social Security trust fund in private securities that follow the Dow, we would have earned, no wait, lost $800 billion. You know, on paper. I think Social Security privatization is off the table for a while.

What I wonder is, has the scale of this bail-out blown any notion of fiscal responsibility straight out of the budget. What will it take to get us back into a world where a half-trillion dollars is a "big deal"?

Aren't People Embarrassed To Make This Argument?

... Yet it inevitably comes:

If rewards for America's entrepreneurs and firms are reduced through higher marginal tax rates, their incentives to earn, invest and create jobs will be diminished. Americans will have less incentive to save, and firms will have less incentive to pay dividends. Tax avoidance will become more profitable. A smaller capital stock will mean a less productive economy and lower wages for middle-class and other workers. These disincentive effects also mean that the revenue gain is likely to be smaller than Obama envisions.

Even assuming it ever becomes reality, where in recorded human history have the wealthy thrown up their hands and stopped trying to make money because they faced a 4.6% income tax increase? When in recorded history did a <40% tax on a nation's highest income earners (before deductions) cause entrepreneurs to close up shop?

Despite the authors' effort to offshift the notion onto Obama, there's also a huge element of "Who is Obama to interfere with our free lunch" in this type of argument. Obama's tax and spending proposals are not consistent with what I would do. I wouldn't struggle to slash spending or balance the budget during a recession, but my long-term view would be toward fiscal responsibility. Yet by all accounts, McCain's proposals are even worse for our long-term fiscal picture - the Tax Policy Center estimates that McCain's tax plan will add $5 trillion to the national debt while Obama's plan will add $3.4 trillion.

It also gets into the pie-eyed wishful thinking that we can deficit spend, in increasing amounts, forever. If we're to support McCain's larger deficits because Obama will impose a modest tax increase on the wealthy, this argument isn't, "We can't raise taxes on the rich." It's, "We can never raise taxes at all, and we should deficit spend until the end of time." They argue that middle class tax cuts must be accompanied by spending cuts - but leaving aside the short-sightedness of that notion as we enter what appears to be a serious recession, haven't they notices the giant hole that their boy, G.W., burned in our pocket? Or the even bigger hole McCain is eagerly proposing to burn? You don't even get into Grover Norquist-style nonsense about drowning the government in a bath tub - the authors aren't even pretending to oppose McCain's out-of-control spending proposals and massive deficits.

Funny... it took three people from the American Enterprise Institute, a fount of low-quality anti-Obama hit pieces, to write this claptrap. Three? And this is the best they can do? Well, if it's good enough for Fred Hiatt and the Washington Post, it should be good enough for everybody. Right?

The Absurdity of Running Against Earmarks

John McCain's official campaign position on earmarks:

I will veto every bill with earmarks, until the Congress stops sending bills with earmarks.

John McCain, acting as a Senator:

Republican presidential candidate John McCain said Sunday he probably would have voted for legislation to keep the federal government running after midweek, even though it was packed with the kind of "outrageous pork-barrel spending" he has long opposed.

"That's the way they always do," the Arizona senator said dismissively of fellow lawmakers. "You put in the, you put in the good deals, and then you put in the pork, as well." He said separate votes should be allowed on the bill's different provisions.

McCain did not vote on the measure when it cleared Congress on Saturday, although he returned to Washington after Friday night's campaign debate in Mississippi. McCain said he was working on other matters at the time of the vote, including negotiations on a bailout of the financial industry.

"I certainly would have done everything in my power to remove those earmarks," he told ABC's "This Week" in an interview. "But I may have voted for it if, I probably would have ended up voting for it, but I decry a system where individual members are, are faced with taking all this unacceptable, outrageous stuff that has contributed to the largest growth in spending since the Great Society."

So as a Senator he sees the necessity of voting for a bill, loaded with earmarks, to keep the government running or to avoid a financial crisis, but as President he would veto the bill and shut down the government or allow the credit markets to freeze up? Why do I doubt that.

Focusing on government waste and excess is easy because there are so many measures that either appear wasteful or are wasteful, and people don't like to see their taxpayer dollars wasted. But they're a reality in our political system, and it's not realistic to threaten to veto "every bill" that contains earmarks. There's also the question of whether particular earmarks, even those that are among the easiest to ridicule, are inappropriate uses of federal funds. Does McCain understand the purpose of analyzing bear DNA in Montana? If so, does he oppose the goals of those who requested and obtained that earmark? Also, unfortunately, we can't balance the budget, or even make an appreciable dent in the deficit, even with the total elimination of earmarks - technically they don't even increase the budget, but instead allocate funds that have already been appropriated to specific projects.

I'm singling out McCain hear because of the particular absurdity of his concession that, yes, he would vote for bills with earmarks (and in fact voted in favor of the bill containing the Grizzly Bear DNA earmark). I'm not sure, though, if it is worse to throw out fake "solutions" to deficits, or to take Obama's approach, pretty much ignoring the issue. I don't expect Presidential candidates to spend a lot of time talking about how to balance a budget, save perhaps for those rare occasions when they're fighting over how to burn through a budget surplus. But I wish we were in a culture where we could have a mature discussion of deficits and tax policy within the context of a Presidential election, or for that matter at any other time. There's a media failure here, but it's also a societal failure of will.

The Debt Spiral

An organization called the "Institute for American Values" has produced a report, For A New Thrift: Confronting The Debt Culture that, in its own modest words, "powerfully addresses the linked problems of overindebtedness, lack of savings, and growing inequality in the United States."

The focus is on institutions. When a society creates democratic institutions to encourage thrift, more people are likely to engage in the positive activities of saving, conservation, and asset building. When a society fails to nurture such institutions, limits access to them, or supports institutions opposed thrift, more people are likely to over-spend, fall into consumerism as a philosophy of life, and go into debt.

I don't know whether to congratulate them for being sufficiently thrifty to make the report available by mail for a mere $7, or point out that they could save money and trees by offering it for download. But my biggest regret in their selling the report is that it leaves me unable to see the source for David Brooks' latest column, The Great Seduction.

I think Brooks is being sincere in his column - he's a rich man, earning probably at least a mid-six-figure income, has no meaningful contact with anybody who works a low-end job, and doesn't understand why the average American can no longer save 10-20% of their wages. After speaking of the nation's "Puritan legacy", Brooks declares,

The United States has been an affluent nation since its founding. But the country was, by and large, not corrupted by wealth. For centuries, it remained industrious, ambitious and frugal.

Right.... The nineteenth century, for example, has no glaring examples of corruption by wealth. That's why terms like "robber baron" don't exist in the English language.

Over the past 30 years, much of that has been shredded. The social norms and institutions that encouraged frugality and spending what you earn have been undermined. The institutions that encourage debt and living for the moment have been strengthened. The country’s moral guardians are forever looking for decadence out of Hollywood and reality TV. But the most rampant decadence today is financial decadence, the trampling of decent norms about how to use and harness money.

Is Brooks trying to be elitist and condescending, or did it just come out that way? He truly believes that the growth of debt, and the associated decline in savings, within the middle class is a form of decadence? Here's a dose of ugly economic reality - the economic changes that have led to a negative savings rate arise primarily from the costs of maintaining a two-income family, not from overspending.

Now let me take a step back here, because there's a fair response to what I just said - which is that if you're spending more than you make, you're overspending. Period, end of story. That's the way I lived most of my life, and at times I lived well below my means so I could bank funds and pay off my student loans. I've been self-employed for most of my adult life, and the best way to avoid cash flow problems is to have a decent sum of money in the bank. From the time I got my very first credit card, I've paid off my balance in full each month. I'm the type of consumer that I suspect lending institutions secretly hate - I may have a good credit score, and be a fantastically low risk borrower, but they have a hard time making money off of me. Seth Godin's advice here, on getting out of debt and staying out of debt, is tough - but I would still recommend it. My natural income is to tell people who "can't" save money, "You're not trying hard enough."

But I'm not going to condescend to a family with two wage earners, who have purchased a home in a neighborhood with decent schools and who need two cars to commute to their jobs, and who aren't being financially irresponsible in any traditional sense of the word but still can't manage to save money, or have to run up a credit card bill to cover the increased cost of their commute. I'm certainly not going to condescend to a family that has to run up some debt due to the sudden loss of income due to an illness or layoff. There's very little cushion for the modern middle class, wages are pretty stagnant, and as Brooks has profited during the Bush II "invisible recovery" he has managed to miss how his gain has come at the expense of others. Changes in the savings rate are not, as Brooks sees it, a "deterioration of financial mores" - they're a manifestation of the deterioration of the economic ground beneath the middle class.

I also don't care for his "there are two types of people" caricature of the problem:

Second, the transformation has led to a stark financial polarization. On the one hand, there is what the report calls the investor class. It has tax-deferred savings plans, as well as an army of financial advisers. On the other hand, there is the lottery class, people with little access to 401(k)’s or financial planning but plenty of access to payday lenders, credit cards and lottery agents.

If he were referencing the financial trends of the past thirty years, and the increased concentration of wealth in the hands of "the investor class", he might have a point. But a lot of the middle class people who are sqeezed and who aren't saving money have tax-deferred savings plans. Some of them have had to cash out those plans or borrow against them. It's also terribly condescending to those people suggest that, as they're not saving, they're part of a "lottery class" - they're borrowing to make the mortgage payment and car payments, put groceries in the fridge, and fill the gas tank, not to play the lotto. It seems that in Brooks' world the middle class isn't just disappearing - it has completely disappeared. (Or is it actually that the middle class is beneath his notice.)

Describing what he sees as a loss of social consciousness about money and debt, Brooks writes,

The agents of destruction are many. State governments have played a role. They aggressively hawk their lottery products, which some people call a tax on stupidity. Twenty percent of Americans are frequent players, spending about $60 billion a year. The spending is starkly regressive. A household with income under $13,000 spends, on average, $645 a year on lottery tickets, about 9 percent of all income. Aside from the financial toll, the moral toll is comprehensive. Here is the government, the guardian of order, telling people that they don’t have to work to build for the future. They can strike it rich for nothing.

My guess is that David Brooks is among the "some" who would call the lottery a "tax on stupidity". I personally find better uses for my money. But you know what? There are people who play the lottery for fun. And contrary to what Brooks suggests a lot of the tickets aren't sold on the premise that you'll win $millions. They're sold on the basis that you'll win a few dollars, or maybe a free ticket, with a chance at a five to six figure windfall if you "hit it big".

Also, even at the alarming $645, 9% of income rate Brooks observes, this unusual household (one supported by a single minimum wage earner?) is only spending $12.40 per week on the lottery. As vices go, that's about as cheap as you're going to find. I would bet that many of those people do recover a percentage of their expenditure in $2, $5, and $10 wins - with few exceptions, well below what they spend, but perhaps reducing the actual weekly loss to $10 or so. Brooks imagines that these people dream of striking it rich for nothing? Possibly in an abstract, "Imagine what we could do if..." sense, but in my experience most people who play the lottery understand the long-shot odds.

Brooks also criticizes payday lenders,

They seductively offer fast cash - at absurd interest rates - to 15 million people every month.

True, but now we've moving away from the earlier discussion of credit card debt, and into the world of people who have maxed out their cards or who can't qualify for conventional credit. Is there a person on the planet who would turn to a payday lender as their first choice? Although I admit to having little sympathy for payday lenders, there is some truth to their argument that if they could not charge their ridiculous interest rates and fees they could not serve their community of borrowers. There's enormous risk in serving the bottom end of the financial market - the people with the shakiest job histories and the worst credit scores.

Credit card companies have played a role. Instead of targeting the financially astute, who pay off their debts, they’ve found that they can make money off the young and vulnerable. Fifty-six percent of students in their final year of college carry four or more credit cards.

Speaking as somebody who could reasonably be described as a financially astute person who pays off his debt, I can tell you this: I get targeted by credit cards. I can't recall the last time a week went past without my getting a "You're preapproved!" credit card offer in the mail, along with proposals for me to transfer balances between cards at "attractive" rates, "convenience checks" to use to pay bills with a credit card... it's huge a stack of junk mail. But as I mentioned earlier, I'm not where the money is. I have no fee cards, effectively use them to float an interest-free loan for one to two months, then pay off the cards in full. The only way a credit card company makes money off of me is through the commissions they charge to merchants.

Credit card companies haven't suddenly realized that there's more profit to make off of people who don't pay off their bills - they've known that from day one. But I got my first credit cards in college, probably had four by the time I graduated, and still managed to be a responsible (and probably unprofitable) credit card borrower.

Congress and the White House have played a role. The nation’s leaders have always had an incentive to shove costs for current promises onto the backs of future generations. It’s only now become respectable to do so.

Respectable? In what sense? In the sense that hack pundits who would have been jumping down the throat of a President Gore or President Clinton, had they demonstrated the same type of fiscal irresponsibility that has been a hallmark of the G.W. Bush presidency? As perpetuated by John McCain in his effective call for larger deficits and his attacks on Obama's call for modest tax increases on the wealthy? When can we expect David Brooks to "call out" McCain on that one?

Wall Street has played a role. Bill Gates built a socially useful product to make his fortune. But what message do the compensation packages that hedge fund managers get send across the country?

Funny, I don't think that hedge fund managers' compensation makes much of an impression on the country. If it did, Congress would make short work of passing the reform bill that would tax their earnings as income, rather than turning a blind eye to the pretense that their earnings are capital gains.

The ideas Brooks describes as coming from the report, for the most part, seem reasonable.

Foundations and churches could issue short-term loans to cut into the payday lenders’ business. Public and private programs could give the poor and middle class access to financial planners. Usury laws could be enforced and strengthened. Colleges could reduce credit card advertising on campus. KidSave accounts would encourage savings from a young age. The tax code should tax consumption, not income, and in the meantime, it should do more to encourage savings up and down the income ladder.

The exception, of course, is the passing reference to taxing "consumption, not income". That sounds like a call for the most regressive of tax "reforms", removing the tax burden from the wealthy (who can afford to save their money), while increasing the tax burden on those who are already living paycheck-to-paycheck, or who are falling deeper into debt each month.

I also take issue with the suggestion that we need to enforce and strengthen usury laws, as I see a broader need for reform. It's insane, for example, that it's usury for me to lend my neighbor $500 at an 8% interest rate, but it's perfectly legal for a bank, credit card company, or "payday lender" to charge effective interest rates at many times that rate. It's even more absurd that I would be committing a crime if I were to lend somebody money "at a rate exceeding 25% at simple interest per annum", but that's par for the course (and sometimes would be a favorable rate) among lenders who serve the poor. Michigan's usury laws aren't about protecting the poor - they're about protecting commercial lenders from competition.

Brooks concludes,

There are dozens of things that could be done. But the most important is to shift values. Franklin made it prestigious to embrace certain bourgeois virtues. Now it’s socially acceptable to undermine those virtues. It’s considered normal to play the debt game and imagine that decisions made today will have no consequences for the future.

I understand why Brooks has drawn this conclusion. I just happen to see it, at least from a "real world" perspective, as elitist crap. The people I've met who are in a spiral of debt, fighting collection agencies or struggling to pay off a payday loan that instead grows with each new paycheck, are not imagining that there are no consequences to their debt spiral. The middle class family that sees its credit card debts grow each month, and can't quite stretch their paychecks to make ends meet, is not enjoying its high debt lifestyle. Real people are worrying themselves sick over debt.

The people who enjoy debt, and play with it as if it has no consequences? The lenders, financial managers, CEO's and others who... you know, fall within Brooks' present peer group.

A Clash Of Faiths

On one side, the inimitable Michael Gerson,

But compassionate conservatism has come under criticism for a variety of reasons. For some, it is fundamentally at odds with fiscal conservatism -- no social priority is deemed more urgent than balancing the budget. For others, it is a violation of their vision of limited government -- the state's only valid purpose is to uphold markets and protect individual liberty. But by drawing these limits so narrowly, such critics would relegate conservatism to the realm of rejected ideologies: untainted, uncomplicated and ignored. And by leaving great social needs unmet, they would grant liberalism an open field and invite genuine statism.

On the other side, (sort of) free market advocacy from Daniel Larison:

How tiresome it is to hear that “social needs” are unmet because government is not involved in meeting them, or that government must be involved if those needs are, in fact, unmet. If they’re unmet, they’re probably unmet because someone whining in the name of “compassion” forty years ago complained that the government wasn’t doing enough, so the state usurped the proper social functions of existing institutions that have since withered and died from neglect and lack of support, and now all we are left with is recourse to still more government.

A big part of the problem with "compassionate conservativism" is that it was a lie from day one, with perhaps Michael Gerson being the only living person not to have come to terms with that fact. The term represents typical G.W., attempting to depict himself as a centrist who will reinvent the social safety net to help people climb out of poverty, coupled with a promise to dole hundreds of millions (perhaps billions) of federal dollars into religious organizations. He didn't mean the first part and, as far as I can see, for G.W. the second part was solely about getting votes. I've seen no evidence that G.W. cares about the efficacy of vouchers (and in fact "No Child Left Behind" and voucher programs appear calculated to prevent direct comparison of public schools to private schools, by doling out money to private schools while exempting them from NCLB's testing requirements and standards).

But what of Larison's cult of the free market? What social support network is he imagining, flourishing some forty years ago, but that has now disappeared? It's a fiction presented as fact.

That's not to say that the government has not stepped into places where charities, particularly religious charities, once dominated. Counties offer free and discounted medical care that one might have historically received through a hospital founded by a religious group. Poor people get food stamps (or should I say an EBT card) rather than queueing outside of the Salvation Army offices or some other soup kitchen. Housing subsidies and government funded shelters have largely replaced charitable shelters.

But when you look at why this happened, it was due to the failure of private and religious charities to meet the needs of an industrialized society. Giving full respect to the significant charitable efforts made by many people and organizations before the dawn of the so-called "welfare state", there was no glory day when the needs of all of the nation's poor were well-met by charity. Religions and charities did not shutter workhouses and orphanages, in favor of keeping families together. Religions and charities did not bring about universal public education. Religions and charities still do operate hospitals - but for most of us, the bill isn't any smaller than it would be at a private or public hospital, and they would be overwhelmed and bankrupted if they were to open their doors to the nation's poor with no charge and without requesting reimbursement through Medicare and Medicaid. Moreover, the government can administer programs evenly across states or the entire nation, where charities did not and cannot. In short, we're dealing with two issues: The fact that the world Larison depicts as an ideal never existed (and never will), and the fact that society has changed from the days when charities and religious organizations could partially fulfill the needs now served by government.

The question of whether it is better to serve up charity with a religious sermon or a dose of shame, or if it is better to leave charity to hands that can deny relief to people deemed "undeserving" (whether because they're not seen as making a sufficient effort, or because they're of the wrong faith or perhaps even ethnicity) is apart from the question of whether private charities and religions could take the place of public social assistance in a modern industrialized society. They cannot. You want to talk about ending dependence? I'm all ears. But it's a separate issue.

Gerson seems to recognize the failure of non-state actors, arguing that fiscal conservatives, "by leaving great social needs unmet, ... would grant liberalism an open field and invite genuine statism." Where he devolves into the comical is in the idea that the "alternative" is for state and federal governments to tax their citizens then pass the money along to third parties to administer in a "charitable" manner. There's no evidence presented, nor argument given, that this approach saves money, increases efficiency, or reduces dependency.

Larison objects to the continuation of dependency, arguing,

However the program or initiative is designed, it will always be another form of dependency and another means to concentrate power in the state by creating these bonds of dependency on government initiatives. How insulting to listen to someone who has never blinked at proposing spending other people’s money on the problems of people he has never met mock fiscal responsibility, and then claim that those interested in the profoundly moral effort to not pass on our debts to our posterity supposedly believe that balanced budgets are the top “social priority.” What is Michael Gerson’s top social priority? It seems that gratifying his undying need for atoning vicariously through good works that he isn’t doing that are paid for by wealth he isn’t creating in places he will never go is his top priority, and woe betide the moneychangers who block him on the path of righteousness!

Well, a big part of the problem probably starts with turning this into a religious debate, dictated by unseen forces emanating from our WWJD bracelets. The fact is that as long as there have been churches, there have been collection plates. Shall we discuss tithing, which at times and places in history was little different from a tax? What churches offered straw polls to let people decide where and how they spent the collected money? Save for individual efforts and those of small groups, something that cannot take the place of large-scale social programs, this has always been about paying money to third parties who decide if and how it will be expended for the benefit of the poor.

The dichotomy Larison implies - and it's a false dichotomy - is that we have a choice between balancing the budget and providing public assistance to the poor. We can also balance the budget by increasing taxes or cutting other areas of spending. So if we're going to speak of a "profoundly moral effort to not pass on our debts to our posterity", we must ask why the most "moral" solution is to put social spending on the chopping block, while preserving current levels of corporate welfare, military spending, and those provisions of the tax code that are exceedingly favorable to the rich, or instead of raising taxes to cover the difference. Larison argues,

Instead of a supposedly libertarian Christ, Gerson offers us Christ the social worker, which is an appropriation every bit as unpersuasive as the other caricatures he rejects, and the disciples of this social worker have an unerring ability to be extremely annoying.

You can make a strong libertarian case for prioritizing a balanced budget and cutting social welfare benefits first, but spare me any argument that it's dictated or even supported by Christ's teachings.

No, We Don't Need Another Perot....

Michael O'Hanlon and a Alice Rivlin take on domestic politics and the budget.

We hear that Ralph Nader is running again, but the third-party candidate we need is Ross Perot. In 1992, with his squeaky voice and endless charts, Perot focused attention on the rising federal deficit. His warnings helped keep the major-party candidates from talking budgetary nonsense.

Well, whatever credit we can extent to Perot for bringing attention to the budget, it's not like the deficit and massive national debt are a state secret.

For now, let's play along and assume that the Perot candidacy was truly about balanced budgets, and not about dissatisfaction with the major parties. We can overlook the fact that the poorly articulated Perot platform allowed voters to project their own wishes and desires for the country onto Perot, as evidenced by the collapse of the "Reform Party" pretty much the moment it tried to form a coherent platform. And of course, we'll overlook the fact that Perot didn't win.

For all of their impressive qualities, this year's presidential candidates are woefully short on fiscal prudence. And the next president will face two daunting budget problems. The winner will inherit a large deficit resulting from a weak economy, an expensive war and the persistent political inclination to spend more and tax less. The bigger challenge? Promises made to the growing population of retirees as health-care spending continues to soar.

So they want to resurrect a 1992-era candidacy that promised health care reforms and could lead to a balanced budget? That (despite the failure of his attempt at health care reforms) was Bill Clinton, not Ross Perot. As for promising tax increases, how did Alice Rivlin, view tax increases back in 2001? She saw George H.W. Bush's tax increases as having constituted "political suicide". That's political suicide after being elected, in contrast with Walter Mondale's politically suicidal promise to raise taxes during an election. Like it or not, the odds of having a viable candidate emerge and promise tax increases to cover O'Hanlon's favorite expenditure, the military, plus the cost of trying to stabilize health care cost and (for the two of three candidates who care about the issue) broadening health insurance coverage to most or all Americans? About zero percent.

I'm not entirely clear on what O'Hanlon and Rivlin see as the solution, other than a massive tax increase. It's reasonable to assume that O'Hanlon, a leading cheerleader of the Iraq war and a long-time proponent of military spending, would oppose saving money by ending the war or limiting military spending. They don't say, "candidates should promise to slash Social Security, Medicare and Medicaid, and continue to decline to invest in the nation's crumbling infrastructure", another platform pretty much guaranteed to bring about a crushing defeat in November. What effect do they believe a new Perot would have on this election?

As for trying to elicit a promise not to make the deficits worse, Rivlin has previously noted that deficit spending can boost a troubled economy - I'll grant that she's been arguing that the Bush Administration has been fiscally irresponsible, but is it truly best to demand restraint now, such that yet again we see a Reagan/Bush/Bush-style massive deficit coupled with massive accumulation of wealth among the richest Americans, followed by the tired excuse the minute the Democrats take power, "We can't afford to help you."

I'll also share an annoyance about analysts like O'Hanlon, who seem to want fiscal responsibility only when their own budgetary priorities are not at stake. He's happy to tell us that we can't afford health care reform without a massive boost in tax revenues, but where's his column explaining how we similarly can't afford to toss $120+ billion per year into the fiscal black hole commonly known as the Iraq War?