Kinder, Gentler Cuts

Kinder, Gentler Cuts

The Age of Austerity:
How Scarcity Will Remake American Politics

by Thomas Byrne Edsall
Doubleday, 2012, 272 pp.
Arizona has sold its state capitol. Government budgets are contracting, especially when it comes to services and goods essential for the poor. A quarter of a million state and local government workers have been cut in the past year alone. Conservatives look to privatize and voucherize what remains of the Great Society and New Deal.

According to Thomas Edsall, it’s going to get worse for liberals. He argues that for reasons ranging from ideological temperament to political convictions, liberals are at a huge disadvantage when there is slow growth and budget cuts. Conservatives, however, thrive in such an atmosphere.

Edsall contends that an aging population putting stress on the welfare state, combined with a weak recovery following the Great Recession, is forcing contraction in government spending. This austerity leads to a politics of what Edsall calls loss allocation, under which someone—either the military, the sick, the poor, the rich, or several other groups—has to take real losses. For deficits to be reduced someone has to pay more or get less, and assigning these losses is not easy in a democracy. Retrenchment leaves each group fighting for its own stake, and cooperation breaks down.

Using the latest research on the “moral underpinnings of partisan conflict,” he argues that conservatives and liberals have different values that have important implications for loss allocation. Conservatives are concerned with “the institutions of family, patriotism, loyalty to one’s group, and recognition of the legitimacy of hierarchy and order as beneficial to the larger society.” Conservatives are also less tolerant of compromise and more willing to see force as an appropriate response to conflict situations. Dismantling the welfare state is an appropriate target for someone with these values. The poor get tough love to break their dependency while the winners in the economy don’t have to pay a larger share. Liberals, on the other hand, value compromise and avoid conflict, which means the Democrats’ base is less likely to view partisan conflict as a necessary step toward achieving their ends.

Conservatives haven’t blinked at cutting programs for the poor. And they’ve turned out to be much more capable and willing to do this than liberals are to raise taxes on the rich. Liberals spent 2011 arguing that those making more than $250,000 but less than $1 million a year aren’t technically that rich, and that tax increases shouldn’t impact them. Conservatives had no such conflicts in determining which poor are desperately poor—they have shown equal opportunity in cutting.

The other major advantage that conservatives have in the battles over austerity is that their base is more homogenous and more affluent than their opposition. Edsall identifies two overlapping sets of coalitions in the austerity battles. The first set consists of haves versus the have-nots. Those who have benefitted the most from the changes in the economy over the past thirty years tend to side with conservatives, while those whose incomes have stagnated or dropped side with liberals. Those with more would like to see programs cut, while those with less would like to see taxes raised on the rich.

The second conflict is between an older, whiter coalition that skews conservative and a younger, demographically diverse population that is more liberal. Liberals believe that demographics are stacked against the conservative movement. The next generation will be more diverse ethnically and more liberal socially. This influx of nonwhites constitutes an emerging Democratic majority. Nevertheless, Edsall argues that the 2010 election demonstrates that conservatives can appeal to older, whiter voters, and can ignore or antagonize rapidly expanding groups such as Latinos and win elections for the time being.

ONE BIG problem with The Age of Austerity is that Edsall assumes that the high deficits of the Great Recession are a problem requiring a solution. In fact, deficits normally go up in recessions for two reasons. There’s less tax revenue because fewer people are working. Spending goes up because automatic stabilizers such as unemployment insurance and Medicaid go up. Less money coming in and more money going out will naturally bring about a larger deficit.

These are appropriate responses to a recession, because running a larger deficit is the optimal response of the government to boost a weak economy. The real government debt problems are long-term issues surrounding health care. Edsall never questions whether a debate over austerity is the proper one to have during a time of high unemployment (hint: it’s not). And he gives short shrift to the fact that the U.S. government’s current ultra-low borrowing costs would make this an ideal time for the government to be spending more on public infrastructure.

Edsall also presents a symmetry between conservatives and liberals, claiming that both groups try to reduce the deficit. But this doesn’t capture what is happening in this recession. The GOP budget plans create large tax cuts for those at the top of the income distribution, which explode the deficit rather than reduce it. And instead of being focused primarily on budget issues, two of the first battles Tea Party state conservatives have waged have been against unionized workers and Planned Parenthood. The initial budget of the conservative governor of Wisconsin, Scott Walker, cut corporate taxes, changed the funding structures for unions in an attempt to destroy them, went after family planning, and had provisions for no-bid sales of such state assets as power plants.

The conservative movement has pushed to expand abortion restrictions, voter registration laws, and laws that impede or dismantle unionization. Meanwhile, its voters are dismantling the already fragile welfare state for the poor alongside mass layoffs of government workers. This may be their last chance to dismantle the Great Society and the New Deal, completing the revolutions Reagan and Bush started, before their base disappears, and they are taking it. This is a program far more radical and expansive than that of the budget-conscious conservatives Edsall presents in his book.

EDSALL NEVER considers that there is another path for liberalism than the austerity debates. Rather than finding a kinder way of doing painful austerity, the liberal approach should be an aggressive government program to provide for full employment and a growing economy. The last downturn of this magnitude brought the country the New Deal and the Keynesian revolution. And that is precisely what we need now. A large infrastructure bill designed to boost employment, a strengthened safety net, aid to states and localities to prevent layoffs, and a public jobs program would all increase demand and speed the recovery while laying the foundation for future growth. Aggressive debt restructuring in the housing market would get households spending again and reduce the spillover effects of mass foreclosures. These actions would put people to work, which ultimately will reduce the deficit.

For a brief moment Barack Obama seemed to represent the alternative path for liberalism. The original stimulus program was an important step in the right direction. It was too small and that has allowed Republicans to argue that the whole effort was futile. In fact, it was Obama’s premature turn toward austerity and his futile attempt to work with Republicans that has failed. If Edsall is right, and the political debate is over how we implement austerity, then Democrats are likely doomed. But if the debate is austerity versus growth and fairness, that might lead to a very different kind of outcome.

The austerity battle is costly and unnecessary. The short-term deficit is a result of a weak economy. The long-term deficit is the result of health-care costs, which, if not confronted, will bankrupt the entire country. For all the references to scarcity in his book, Edsall’s argument doesn’t point out that we’ve never been richer as a country. The economy is currently weak because of a lack of government action, not too much deficit spending.

The book does an excellent job of tracking why liberals are losing the fight over austerity. The real question that needs to be answered is why they are even bothering to play.

Mike Konczal is a fellow with the Roosevelt Institute, where he works on financial reform, unemployment, inequality, and a progressive vision of the economy. He blogs at Rortybomb.wordpress.com.


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