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The Poverty of Affordability Arguments

By Justin Logan

In the bargaining over avoiding the fiscal cliff, President Obama has taken to framing the argument this way:

We can solve this problem. All Congress needs to do is pass a law that would prevent a tax hike on the first $250,000 of everybody’s income — everybody. (Applause.) That means 98 percent of Americans — and probably 100 percent of you — (laughter) — 97 percent of small businesses wouldn’t see their income taxes go up a single dime. Even the wealthiest Americans would still get a tax cut on the first $250,000 of their income. But when they start making a million, or $10 million, or $20 million you can afford to pay a little bit more. (Applause.) You’re not too strapped.

I’m no political expert, but this seems like a pretty effective, if demagogic, frame: “Ol’ Boehner is just doing the bidding of his bazillionaire paymasters, trying to stick it to regular folks like you.” By framing the debate as being about whether very wealthy people “can afford to pay a little bit more,” Obama skews things in his favor. (On the substance of the argument about increasing taxes to close the gaping fiscal maw, try this from Alan Reynolds or this from Sen. Rob Portman (R-OH).)

And what does John Boehner think about Obama’s framing? Not much, obviously: “We have a huge national debt because Washington spends too much, not because it doesn’t tax people enough.” Boehner rejects the whole affordability frame, proposing his own—“is the problem taxes or spending?”—and adding on an argument that increasing taxes will hurt economic growth. So you’ve got dueling frames.

But what’s of interest to me is the analog of Obama’s frame in the foreign policy/defense spending discussion. In that debate, neoconservatives and liberal imperialists have framed the debate the same way Obama has framed the fiscal cliff debate: except in that case, it’s not about whether wealthy people can afford to pay higher taxes, but whether the United States can afford to continue spending around 50 percent of world military expenditures. Take it away, Robert Kagan:

What about the financial expense? Many seem to believe that the cost of these deployments, and of the armed forces generally, is a major contributor to the soaring fiscal deficits that threaten the solvency of the national economy. But this is not the case, either. As the former budget czar Alice Rivlin has observed, the scary projections of future deficits are not “caused by rising defense spending,” much less by spending on foreign assistance. The runaway deficits projected for the coming years are mostly the result of ballooning entitlement spending. Even the most draconian cuts in the defense budget would produce annual savings of only $50 billion to $100 billion, a small fraction—between 4 and 8 percent—of the $1.5 trillion in annual deficits the United States is facing.

Here again, if the debate is about whether the United States—let’s call us the One Percenters here—can afford to continue frittering away money playing globocop, the advantage is with Kagan and his confreres. But in both cases, Obama and Kagan try to substitute an affordability argument for a propriety/desirability argument. Of course wealthy people can “afford” to pay higher taxes—they’ve done so before, after all. By the same token, the United States can afford to continue funding its globe-girdling military presence. But in neither case do these affordability arguments answer the question: What should happen? To say something is affordable is not to say it is preferable

Obama doesn’t say, “We’ve spent a ton of money over the past 10 years and entitlement costs are ballooning so we’re going to squeeze as much as we can out of the rich and then see where we go from there.” Similarly, Kagan doesn’t lead with his argument that the debt and deficit should be fixed by increasing taxes and sprinkling pixie dust on entitlement costs. Instead, he wants to have the affordability debate. As well he ought to, since the public is increasingly disenchanted with the interventionist foreign policy program.

In neither case should we let the affordability argument carry the day. Boehner rejects the affordability framing of the tax increase debate. Conservatives ought to realize in both cases that something’s affordability is not synonymous with its propriety.

The Poverty of Affordability Arguments is a post from Cato @ Liberty – Cato Institute Blog