Deficit Hawks on Steroids

Budget cuts will be one of the early and defining battles of the next Congress.

Robert Kuttner
American Prospect

With the election of a Republican House, we can expect even louder calls to shrink government. These come linked to demands for a smaller deficit, though Republican pressure to extend the Bush tax cuts would increase the federal deficit by about $4 trillion over a decade.

The only way to shrink the deficit and reduce taxes, of course, would be to massively cut government spending. Some federal outlay, such as the bloated military budget, is ripe for cutting. Other spending, disguised as tax loopholes, also deserves reduction. But for the most part, reducing spending in a deep recession is bad economics. Were it not for the emergency spending of the February 2009 Recovery Act, the unemployment rate would be around 12 percent, according to the Congressional Budget Office.

But public outlay, though the necessary cure for a deep recession, is doubly on the defensive -- once from newly feisty Republicans and again from an elite army of deficit hawks.

During the next several weeks, there will be a carefully orchestrated drumbeat of demands for a massive budget cutting as the improbable cure for a prolonged economic slump. Two privately funded commissions and one presidential commission will all be issuing reports calling for austerity.

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