That fiscal cliff: Beware of “shared sacrifice”

December 3, 2012
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As the President faces a second term full of fiscal problems, a historically stubborn opposition in Congress, and after much talk of shared sacrifice needed for solving those problems,  spreading new deficit-solving pain around to all groups will be tempting. Indeed, the President has called for shared sacrifice before, during the debt and deficit negotiations in 2011, although that was a call for the wealthiest individuals to share in the sacrifice the middle class was already making. Unfortunately, 2013 is shaping up to resemble 2011 in that “fiscal cliff” negotiations will likely be the major political issue of the coming year. This means the temptation to turn talk of shared sacrifice into new cuts for all groups will once again tempt Democratic lawmakers and the President.

 

 

 

 

 

 

 

 

The matter is made especially difficult considering the role of stimulus spending in spurring economic recovery, as the needed level of stimulus requires temporarily increasing deficits. Four years after the crash in 2008, economic recovery is still tepid and tenuous, meaning every bit of economic stimulus (from consumer spending to ongoing programs like SNAP/food stamps to limited stimulus-specific programs) is vital. Cutting any of it threatens a return to recession. Indeed, a push to reduce deficits in 1937 helped bring a return to recession after several years of tenuous recovery.

 

Still, deep deficits add to the debt and put a strain on the budget, and there is political pressure to dig out of the fiscal hole. Shared sacrifice sounds like a wise and fair way to go about it, right? Well in Illnois, Governor Pat Quinn has been doing exactly that, being fair-minded in spreading the pain around in attempts at bringing down the worst budget deficit in the nation. The Illinois Governor proposed both tax increases and spending cuts, spreading the pain to every level of society and the political spectrum, including the most vulnerable and core Democratic constituent groups.

 

Unfortunately this alienated his base while inflaming his opposition, playing a large part in Quinn’s fall to being a Governor with catastrophically low approval ratings. The voting public is not so much a melting pot receptive to collective action for the greater good, but rather a collection of many groups, each looking out for their interests. As both Obama and Romney demonstrated in this most recent campaign, victory and all that follows comes from an appeal to a collection of groups that add up to a win. It’s not pretty, but that’s the reality the President, Governors, and legislators have to work in. Making cuts to and raising taxes on all groups is the road to electoral defeat, while minimizing the pain for the winning coalition while burdening the rest is the recipe for future victory, ugly as it may be.

 

With a government divided between the GOP held House and the Democratic held Senate and Presidency, each side has their winning coalition, with less overlap than ever. The fiscal cliff is about to make one of its increasingly regular appearances; someone has to back down, and who really has the winning coalition will soon be known. One can only hope that in this battle, the President and Congressional Democrats and Independants recognize the siren song of “shared sacrifice” for what it is, and act accordingly.

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