Cassandra Was Right

Matt's got a good post on why Katrina isn't the sort of expenditure you want to pay for through cuts,, but through deficit spending, and why Bush's fiscal philosophy has really cut off the option.

The genuine issue here is that before the hurricane there was a lage gap between revenues and expenditures. Spending is, right now, about where it's historically been as a share of the economy. Tax revenues, meanwhile, are far lower. The best solution is to restore revenue. But if you want to close that hole on the spending side, you need to do it on an ongoing basis. Playing around with phase-in dates accomplishes nothing. What you could easily cut out of the Medicare bill is the plan to increase subsidies to private insurance companies that agree to cover senior citizens. All the evidence shows that Medicare itself can provide this coverage more cheaply. That would do something to reduce the deficit on a sustainable basis... [But] fundamentally, there either needs to be a tax increase or else a sea-change in attitudes toward defense spending or federal responsibility for retirees. That's where all the money is.

That last line is interesting. Theoretically, given the current state of the budget and the philosophies of the two parties, there should be two relatively unpopular choices being trotted out for voter evaluation. The Democrats should be suggesting a tax hike and the Republicans should be suggesting entitlement cuts. But that's not happening. Out of power and interested in regaining it, Democrats aren't saying much of anything about taxes, even if restoration of the estate tax and a slight hike on the rich might actually prove popular right now. And Republicans, well, Republicans really aren't saying anything about entitlement cuts because the really serious bill is going to come from Medicare, which Bush just massively expanded.

It's not, contra some Cassandras, certain that this country is headed for fiscal wreckage. But a crash would be a hell of a lot less likely if the party in power weren't so allergic to uttering hard truths that the party out of power hasn't a prayer if they broach one. The result is two parties whistling their way past an insane deficit and continuing to promise as if we had a surplus. Recently, whenever I try and wrap my mind around this, I keep orbiting around the same thought: in the myth of Cassandra, the curse was that her dark prophecy was right but nobody listened. In modern times, we invoke her to tar potential prophets whose gloomy predictions leave us uncomfortable. It's fairly eery.