off the charts
BEYOND THE NUMBERS
BEYOND THE NUMBERS
Of Zeno’s Dichotomy Paradox, "Takers," and Deficit Reduction
February 16, 2012 at 1:05 PM
Do you know Zeno of Elea’s famous Dichotomy Paradox? More than 2,000 years ago, he noted that if Homer wanted to walk all the way to the market, he would first have to walk halfway there, then half of the remaining difference, then half of the remaining difference again so that, ultimately, he would take ever smaller steps without ever getting there. Zeno was wrong, of course, as mathematicians and philosophers have long demonstrated. Homer could get from here to there — as long as he stopped focusing only on the remaining distance.
You might not think Greek philosophy bears much relevance to fiscal policy. But Zeno’s Dichotomy Paradox comes to mind when I think about how some policymakers frame discussions of deficit reduction.
When I served as a House Budget Committee staffer, a colleague described one particular senator as a “taker.” After one side in a tough budget negotiation offered to split the difference, the senator “took” that offer, called it the new starting point, and insisted on splitting the remaining difference 50-50. He should get three-quarters of what he wanted, he argued, because the other side had already conceded the first half.
Now, let’s think about how “takers” relate to current discussions of fiscal policy.
In late 2010, the release of the Bowles-Simpson and Rivlin-Domenici deficit reduction plans laid the groundwork to start this nation on a fiscal journey. Those plans each called for trillions of dollars in deficit reduction through a combination of substantial spending cuts and substantial tax increases. Efforts last year to make major progress on that journey — through negotiations that Vice President Biden chaired in the spring with key lawmakers of both parties, the negotiations between President Obama and House Speaker John Boehner in the summer, and the negotiations by the congressional “Supercommittee” in the fall — all failed. But policymakers started the journey nonetheless by enacting large budget cuts, primarily through the Budget Control Act, which they enacted in August to resolve the debt limit crisis.
As President Obama’s new budget, which he sent to Congress earlier this week, shows (Summary Table 3 on page 207), the President and Congress cut $1.7 trillion last year from “discretionary” (non-entitlement) spending over the period 2013-2022. When you count the resulting interest savings, that figure surpasses $2 trillion. This amount came entirely from budget cuts. No deficit reduction came from higher taxes.
Now, policymakers are starting to debate the remaining part (or parts) of the journey. As we have noted, $4.3 trillion in deficit savings would occur over the next ten years through a combination of the savings enacted last year and the new measures in the President’s budget (if Congress enacts them). About three-fifths of the total (not counting interest savings) would come from spending cuts, with about two-fifths from revenues.
The “takers,” however, are having none of it. Acting as though the first $2 trillion of the journey no longer count, lawmakers such as Senator Jeff Sessions (R-AL), the Senate Budget Committee’s top Republican, are criticizing Obama’s budget because it secures most of its savings by raising taxes. The fact that the first $2 trillion of deficit reduction consisted solely of spending cuts, secured through threats by numerous lawmakers last spring to shut down the government and threats last summer to let the nation default, is conveniently swept aside. For “takers,” the journey is just starting now.
But we must view the journey in its entirety. Deficit reduction as a whole — irrespective of how many steps it comes in — must be balanced, even though the initial steps of last year were not.