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Left-Right Populism, Part 2

In a previous post, I considered what policies might offer the possibility of forging some sort of Left-Right populist consensus. As an afterthought, I realized that anything to do with eliminating waste and fraud also has the potential for cooperation. Just today, in fact, President Obama mentioned favorably a suggestion by Sen. Tom Coburn about using some method of random undercover searches to identify fraud in Medicare and Medicaid claims.

A related budgetary controversy is earmark reform, the signature complaint of Sen. John McCain. Despite the general anger directed at election-minded members of Congress who pursue pork, I’m not entirely convinced earmark reform could really generate a populist meeting-of-the-minds…but neither am I certain it is necessarily divisive, which is why I didn’t put it on the previous list or this one.

So, turning to a short list of policies that are likely to divide economic populists on the Left and Right, my sense is that the obvious, key point of division is the size, complexity and functional operation of the national government. Populists on the Right may be fine with exercising government muscle to, say, take down (or let fail) Wall Street bankers or catch Medicare billing scams. But they are not keen on populism that comes with a hefty price tag. Populists on the Left don’t mind spending more, but are wary of quick-fix solutions to structural budgeting and deficit problems.

1. Stimulus II. Though there is strong case to be made that the stimulus monies spent by the national government have worked, as little appeal the first stimulus package had for populists on the Right, another one would be greeted with even more ire. The Democratic National Committee’s “hypocrisy watch” campaign to try to embarrass Republicans who complained about and/or voted against last year’s stimulus package yet took and even took credit for some local project included in the bill may or may not work politically. But either way, it sure will make it tougher to sign up GOPers for any future such expenditures. Meanwhile, at the more abstract level, the argument about FDR and 1937 may never end. In short, consensus here will be very, very elusive.

2. Public option. There seems to be mounting support for the once-dead public option. House Democrats initially opposed to it but who are retiring may end up coming around, and Obama is targeting them; liberals are lining up commitments from Democratic senators. (Update: Three more senators have committed to vote for public option.) But this is the feature of healthcare reform proposal that populists on the Right point to first when the claims of “socialism” and “government takeover of 25 percent of the economy” getting bandied about. Little to no chance of Left-Right convergence here: To become law the public option will need to be forced through Congress almost exclusively on the strength of Democratic votes.

3. A national consumption or flat tax. Some consumption taxes make sense, particularly those impose on items with inelastic demand that create social problems—the so-called sin taxes on things like cigarettes or alcohol. And a consumption tax on gasoline might appeal to enviros on the Left and Right alike. (Question for which I’ve never quite received a satisfactory answer from conservatives: Why isn’t there more of a push for gas taxes from the Right, especially given the potential national security implications or lower demand?) But because most consumption taxes would be regressive if not highly regressive, the idea that a consumption or Mike Huckabee-style national sales tax could substitute for the income tax is a non-starter for populists on the Left. As for the flat tax? Sure, the tax code could benefit from some simplification. But the whole point of having progressive rates is, well, to add progressivity to the tax structure, and the whole point of creating various deductions from the nominal rates is to encourage or induce taxypayers (not force, induce) to make choices that are individually and collectively beneficial, like saving for college or their retirement, buying instead of renting a home (OK, that incentive proved to be somewhat problematic), making charitable contributions, and so on.

4. Balanced budget amendment. Two quick comments for the crowd advocating this reform: One, politically it will never get the two-thirds vote of both chambers of Congress, no less ratification by three-quarters of the states; and two, with the feds already engaging in trickery like using current Social Security receipts (“Lockbox”!) or taking war costs off-budget to hide the true extent of the deficit any given year, would passage of such an amendment have any real meaning? Give it up.

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