Negotiations

The outcome of negotiations on the budget will depend on the number of each party that occupies each of the various political offices.  It also will depend on what their values are and how easy it is to change some aspect of the budget.  Most social spending is mandatory, while defense spending is discretionary.  This means that it requires an act of congress to reduce or eliminate most social spending.  In contrast with defense spending most of this will require an act of congress in order to be continued.

If we take the conventional wisdom that Republicans want to cut spending, reduce taxes and increase spending on defense, then this will not tell us enough about the Republicans.  We will also need to know how they value each of these.  Suppose they are given a choice between higher taxes coupled with lower social spending, and lower taxes along with higher social spending.  Which option are they likely to support?  I suspect that if we place their priorities in descending order of importance we will have this:

1. Lower taxes.
2. More military spending.
3. Less social spending.

We are simply unlikely to see a Republican politician apologize to his constituents that he had to either raise taxes or cut military spending in order to see to it that social spending was reduced.  Similarly, but less certainly, we are unlikely to see him raise taxes in order to increase military spending.

This is why I think that concerns that some people on the left have about Republicans cutting social spending are misguided.  In fact social spending continuously rises regardless of who is in power.  Some of this is due to the fact that most social spending would continue in the absence of congressional action, and some of it is due to the fact that reducing social spending is not the top priority of the Republican party.

In contrast we have the Democrats' priorities:

1. Higher social spending.
2. Higher taxes.
3. Cuts in military spending.

Or maybe this:

1. Higher social spending.
2. Cuts in military spending.
3. Higher taxes.

The point here is that the Democrats' number one priority is to increase social spending.  Democrats will not likely trade cuts in social spending for anything and they have a strong position on this issue, by which I mean they are bargaining from a position of strength since it would require action on the part of congress in order to cut most forms of social spending.

No doubt some Democrats will object to my characterization of the issue since the Democrats only want to increase taxes for the rich.  They are in favor of tax fairness, in contrast to the Republicans.  However, I believe that this is based on a misunderstanding of changes in taxes that have occurred since 1979.

In fact taxes were reduced across the board.  The rich are paying less in taxes as are the poor.  In fact if you take all taxes at the federal level including corporate income tax, taxes for the poor were actually reduced more than taxes for the rich over this period.  You can find the appropriate link here.

Most taxes continue without congressional action.  In fact, it will require action in order for  the tax cuts enacted under George W. Bush to continue.  So if congress fails to act, taxes will go up.  If you look at things this way, it seems that the deck is really stacked in favor of the Democrats.  If Congress fails to act most social spending remains, military spending is almost entirely eliminated and taxes go up.  In fact some forms of social spending will automatically increase even if congress does nothing.