Dylan Matthews over at Wonk Blog has a remarkable little interactive budget calculator, Choose Your Own Fiscal Cliff Adventure! It is interesting to play around with. The main thing that you will notice is that liberal policies tend to improve the economy and help the budget deficit. Conservative policies tend to hurt the economy without doing much to help the budget picture. For example, extending Unemployment Insurance has a huge effect on the economy and almost no effect on the budget. Raising the retirement age, however, does almost nothing for the budget deficit while it causes great pain.
I don’t want to put too fine a point on it, but Republicans really don’t care about results. They are so locked into their ideology (such as it is) that they can’t be bothered to think about good policy. For example, one great policy for our long term budget picture is to allow a public option in healthcare. But we can’t have this, even though it would cost the government less money. Why? Socialism! So a program that makes the government smaller is socialism, but being against that program is a sign that you are for small government. Fucking brilliant!
Ezra Klein posted his choices via twitter. It is very similar to mine. In fact, we agreed on everything in the “fiscal cliff” and “stimulus” parts of it. But we disagreed a lot in the “deficits” part. In particular, he is for eliminating the mortgage interest deduction. The truth is, I’m not too keen on that deduction myself. I don’t think that home ownership is something that the government should be encouraging. Just the same, cutting the deduction would be a huge blow to the building industry that is even now in bad shape. In the model, this has no effect on economic growth. It would have an effect.
Anyway, these kinds of tools are fun and educational. They are good at teaching how policies affect the economy. Of course, that’s one of the reasons that conservatives are so bad at this little game. If a Democrat is in the White House, nothing the government does can affect the economy. Why Boehner & Co are so worried about the Fiscal Cliff I can’t say. Unless they’ve been lying these last four years…