U.S. Hill Dems Try To Recast Fiscal Vote by Warning of Austerity

Published Jun 5, 2013. By John Shaw. In Market News International.

WASHINGTON (MNI) - Analysts often observe that the key to winning policy debates in Washington is to be the first - and the most persuasive - in defining the terms of the debate.

Senate Budget Committee Chairman Patty Murray showed how this works Tuesday when she scheduled a hearing called "The Fiscal and Economic Effects of Austerity."

During her opening statement, Murray used the term "austerity" more than a dozen times, all in the context of warning policymakers not to overdo short-term deficit reduction and, especially, spending cuts.

"I have long believed that the case for austerity during times of economic weakness has been fundamentally flawed," Murray said.

"We've made significant progress recently when it comes to our short and medium-term deficits. And now the focus should be on creating jobs, preserving our fragile economic recovery, long-term deficit reduction and setting the conditions for economic growth built from the middle out," she said.

During her hearing, Murray did not define precisely what she meant by austerity. She did say that during recent negotiations policymakers have agreed to $2.4 trillion in deficit reduction, "disproportionately through spending cuts." She added that an additional $1.2 trillion in spending cuts is set to take place through across-the-board spending cuts mandated by the sequestration process.

Murray said Democrats are determined to replace sequestration with a "balanced mix of responsible spending cuts and revenue from those who can afford it most."

During the Senate Budget Committee hearing, several Republicans asked the witnesses if additional tax increases would also constitute austerity.

According to Merriam-Webster's Collegiate Dictionary, one of the definitions of austerity is "enforced or extreme economy."

During his prepared remarks last week before the Joint Economic Committee, Federal Reserve Board Chairman Ben Bernanke urged policymakers to think carefully how deficit reduction is phased in but did not use the term austerity.

Bernanke said "the Congress and the Administration should consider replacing some of the near-term fiscal restraint now in law with policies that reduce the federal deficit more gradually in the near term but more substantially in the longer run."

Bill Frenzel, a former Republican congressman and now a guest scholar at the Brookings Institution, said Murray's use of a term such as austerity and the Republicans use of phrases such as "runaway Washington spending" should be seen in the context of the coming fiscal fight this fall.

"Both sides are trying to position themselves for the battle over the debt ceiling and the 2014 fiscal year appropriations process," Frenzel said.

"Democrats will warn against austerity and Republicans will warn against bloated government. Neither will be very precise. Both are trying to win public support for their basic positions," he said.

Bob Bixby, the executive director of the Concord Coalition, agrees with Frenzel that both parties are now trying to prepare the ground for the fall fiscal debate.

"I think there is a genuine debate about how much deficit reduction we need and how it should be phased-in. Looked at from the perspective of the overall $3 plus trillion federal budget, it would be hard to define it as austere. But you could look at portions of the budget - the domestic discretionary portion - and argue with some justification that cuts so far have been severe," Bixby said.