Beware the deficit peacock

The president’s nominee for Office of Management and Budget director, Jack Lew, faces a daunting task. Lew must take the reins of a budget that has been horribly battered from the effects of the Great Recession and nearly a decade of mismanagement. And that budget is about to suffer the onslaught of twin tsunamis: an aging population and our uniquely inefficient healthcare system. Yet these obstacles may not be the biggest barriers to getting a handle on the federal balance sheet. No, that dubious dishonor goes to the Peacock Caucus.

The Peacock Caucus is made up of lawmakers, pundits and assorted politicos who claim to care about the federal deficit, but who are resolutely opposed to any actual proposal that would make a significant dent. They are the major obstacle to budget reform because they strut around, squawking and getting in the way of the real deficit hawks.

Take the Bush tax cuts, for example. The Bush tax cuts cost Uncle Sam nearly $2.5 trillion over the past 10 years, with almost half of the benefit going just to the richest 5 percent of Americans. Those tax cuts are now set to expire, and President Obama has proposed allowing those that benefited the really rich to expire as scheduled. That would reduce the deficit by more than $800 billion over the next 10 years. You would think that any lawmaker who professes to be concerned about the deficit would jump at the chance to cut it down so dramatically.

Sen. Jon Kyl (R-Ariz.) is the second-ranking Senate Republican, and he cares so much about the federal deficit that he has repeatedly opposed a temporary extension of unemployment benefits even though the unemployment rate is at 9.5 percent. Extending those benefits would mean spending about $33 billion more during the next two years. So surely he must favor allowing the Bush tax cuts to expire since letting those cuts run out would have more than 20 times the budget effect of eliminating jobless benefits. And while the increased costs to the unemployment program would be limited to 2010 and 2011, reenacting the Bush tax cuts would affect bottom line for decades. So, obviously Senator Kyl must favor expiration. Right?

Wrong. Kyl recently went on TV to explain that we should permanently extend the Bush tax cuts for the wealthy and said that, “You should never have to offset the cost of deliberate decision to reduce tax rates.” Kyl’s assertion that tax cuts should never be paid for flies directly in the face of his purported concern over deficits. If he were a real deficit hawk, he would at the very least propose some way to pay for the huge cost of extending those tax breaks. Instead, he argues that tax cuts should never be paid for. Never mind that that’s exactly what the Bush tax cuts were — totally unpaid for — and never mind that Bush turned a massive surplus into a massive deficit.

The long-term federal deficit is a very thorny problem, and tackling that problem is going to require some compromise and lots of good faith. Deficit peacocks aren’t willing to do the former, and somewhat lack for the latter. It is hard to see how we are ever going to get back to a sustainable federal budget so long as the peacocks get their way.

Michael Linden is the associate director for tax and budget policy at the Center for American Progress.