Lead dealmaker Timothy Geithner portrays the problem as finding "the revenue increases we need," a formulation that takes as axiomatic the federal government’s requirement to gobble up at least $3.8 trillion a year. (Geithner, like many Keynesians, seems to forget that the master’s advice was to eventually cutspending after the crisis of slack aggregate demand has been lifted.) What the few Democrats who signal a willingness to even talk about entitlement reform say in their next breath is that specific reforms should not be part of any fiscal cliff deal. Republicans don’t have much in the way of entitlement-reform proposals to begin with, aside from the mild measure of means-testing Medicare for the rich. You can read many thousands of words about the negotiations without hearing even a hint about cutting a single government program, let alone agency or department.
So Republicans want to means-test entitlements and maybe some tax deductions, and Democrats want to effectively means-test taxes. Where does that leave those of us who would prefer instead to at long last means-test government?
Screwed, is the short answer. Americans of every income group will likely take home less of their pay, an arrangement that will probably be significant enough to push the fragile economy into a double-dip recession, but too small to meaningfully close the deficit. Washington’s chronic short-term crisis-budgeting—with its annual "patches," squandered oversight, and studious entitlement-avoidance—will likely become a permanent feature of Obama’s presidency.
The only long-term fix to this scenario has to begin at the ballot box. It will only be when enough voters express a desire to cut government, rather than simply cut taxes, that we can be sure that at least some of the negotiators on Capitol Hill will be willing to address the problems at hand.
Until then, the only grim consolation prize will be that more Americans will come to realize that the true cost of our current size of government is more stupid politics and protracted recession.