How Centrists Lose

It's still unclear who the winner of the recent Fiscal Cliff deal is, but Pete Peterson, David Brooks, Alan Simpson, Erskine Bowles, and the whole austerity crowd are the clear losers.

After years of spending money, writing op-eds, and coming up with debt-reduction frameworks, this crowd came away with literally nothing. The tax deal amounts to a permanent extension of the Bush tax cuts for almost everyone, and spending wasn't even addressed.

What is incredible about this is if Congress hadn't acted at all, taxes would have automatically gone up and spending would have been cut. For the austerity crowd the entire scenario seemed like a slam dunk. What went wrong?

First, The austerity crowd has a fetish for bipartisanship. Their mantra is that each side needs to come together for a bipartisan deal, and they steadfastly blame both sides equally for the failure to do so. This creates really poor incentives for political actors to make deals. A political actor who comes out in favor of the sort of "tough" measure that these groups support will be hurt politically for proposing an unpopular measure, while still sharing half the blame when the deal inevitably falls through. A good example of this sequence: Obama puts chained-CPI on the table, Marco Rubio disavows it, chained-CPI gets dropped from final deal, David Brooks lays blame equally on both parties for lack of entitlement reform. This leaves lawmakers with no real incentive to make a good faith push for deficit reduction and instead you just get each side blaming the other for not endorsing Bowles-Simpson.

Second, each of the two political parties has certain goals. Deficit reduction is secondary to those goals. The Democrats want a secure welfare state for poorer and older Americans. In order to secure those programs in the long term they are willing to raise taxes. Likewise, Republicans want low taxes, and in order to get low taxes they are willing to cut spending. The idea of a deal where major programs are cut in exchange for higher taxes is perverse to both parties.

So what should they do? The austerity crowd needs to pick a side and lobby that side to their position. I would recommend the Democrats because Republicans are too ideologically rigid a party. Pete Peterson needs to commit to supporting Democrats in primaries and in general elections who are genuinely in favor of deficit reduction--some sort of Grover Norquist style pledge could be used.

Because of their foolish commitment to bipartisanship, the austerians have no one to champion their cause.