Event Recap: "Red Ink and Bad Blood: What Do Federal Budget Politics Mean for the Next President and You?"

At the Urban Institute this morning, a panel of budget heavyweights gathered to discuss the politics of the federal budget, focusing on Wall Street Journal editor David Wessel's new book Red Ink. The panel included Urban's Eugene Steuerle, former CBO and OMB director Alice Rivlin, and the Committee for Economic Development's Joe Minarik.

Wessel began by going through certain facts of the federal budget that he thought would most inform people about the state of fiscal policy. He pointed out that the budget has increasingly been taken up by mandatory spending programs, and that trend would continue if nothing is done. Also, considering health care's importance in the fiscal outlook and the fact that our defense budget in 2011 outspent at least the next 15 countries' budgets combined, Wessel argued that both health care and defense spending should be addressed. He also said that cutting federal employees or consolidating departments would not get the job done by itself. Finally, he discussed how middle class families (those in the middle quintile of income distribution) have seen a rising amount of benefits received and a declining amount of taxes paid over the past roughly 30 years; therefore, a solution will likely involve them to some degree, despite the claims of many lawmakers.

On the topic of the Presidential race, Wessel said he was somewhat discouraged by the discussion on the topics of health care and tax reform. He noted that despite the finger-pointing about cutting Medicare, both President Obama and Governor Romney have proposed reducing Medicare spending compared to the status quo. More broadly, both campaigns have failed to engage in a productive and clear discussion about health care solutions. Wessel, like many others, hopes true tax reform would be able to be enacted and that it would be part of a budget plan that raises revenue.

Rivlin spoke next on the campaigns, saying that the rhetoric has been counterproductive in two ways: the candidates have been confusing about their own plans and have tried to scare voters about their opponent's plan. Rivlin believes it would be more productive for the candidates to make clear how they would deal with the twin problems of short-term economic recovery and longer-term deficit reduction. On the fiscal cliff, she pointed to a two step process along the lines of what the Bipartisan Policy Center proposed last week as the best way to circumvent the potential political hurdles of the normal congressional process.

Minarik started his talk by chiming in about confusion on the budget, citing misguided views of the budget that still persist (such as how much of the budget goes to foreign aid or food stamps). On the topic of a budget deal, he held the view that whichever party lost the presidency--but also either party--should be ready to make a deal when the next Congressional session starts. Minarik said that assuming a split government is the post-election outcome, neither party would be able to get their own solution enacted for at least four years, which is too long to wait to act. Thus, the parties should be ready to adapt to the political environment that exists beyond the election to arrive at an agreement.

Overall, the event included several interesting perspectives on the current state of fiscal policy from a panel of experts who know their way around the budget and the politics involved with it. You can view the full video of the event below.