The wisdom of crowds

THE WISDOM OF CROWDS…. A few months back, the New York Times‘ David Leonhardt put together an interesting online feature, allowing readers to balance the federal budget however they see fit. (Participants wouldn’t balance the budget all at once, but rather, over the course of several years.)

Bill Keller noted the results of the online exercise in his column today, and seemed pretty impressed at what people, collectively, came up with.

Nearly 9,000 readers worked the puzzle. Individually, they were all over the map. But as a group, they accomplished the goal by splitting the difference: almost exactly half the savings came from tax increases, half from spending cuts. Collectively, readers seemed to realize that the hole we’re in is too deep to be filled by tax increases alone or spending cuts alone.

The result is broadly consistent with polls, which show that a majority of American voters hate most tax increases and a majority hate cutting entitlements, but — confronted with a choice of one, the other or some of each — they’ll go for the hybrid. The hive mind, it seems, is open to compromise.

So far, so good. The “hybrid” approach — or as Democrats are calling it, the “balanced” approach — has the benefit of being a popular and responsible approach to deficit reduction (though I feel compelled to note that deficit reduction shouldn’t be policymakers principal goal). That the wisdom-of-crowds answer is the right one is heartening. That congressional Republicans consider this answer so unacceptable that they won’t even consider the possibility is discouraging.

But Keller added a more problematic observation.

On the question of the national debt, all the forces of stagnation are at their worst: we’re like Israel, where there is something very close to a grudging consensus about a two-state peace, but every attempt to enact it is hogtied by democracy. Thus the formal budget debate is currently framed as an ugly standoff between Representative Paul Ryan, whose plan uses the debt as a pretext to radically shrivel the government, and President Obama, whose response is essentially “Over my dead body.”

That’s why I’m rooting for the Gang of Six — the three Republican and three Democratic senators who have set out to negotiate a credible deficit plan that can move Congress past paralysis and toward compromise.

I think this is wrong in some important ways. The first is characterizing President Obama’s budget approach as an inflexible bookend to Paul Ryan’s radicalism. That’s simply not true — the president’s long-term debt reduction plan includes extensive cuts in spending, raises taxes responsibly, and does so with numbers that add up. Dismissing it as “Over my dead body” isn’t fair.

The second and more important problem is that the Gang of Six vision is likely to disappoint Keller quite a bit. While Keller praises the public for backing a 50-50 approach — half the savings in taxes, half the saving in cuts — the Gang is almost certainly going to present a plan that’s skewed heavily towards cutting public investments and entitlements.

I say “likely” because neither Keller nor I have actually seen the plan, but Gang members have offered plenty of hints about where they’re headed. As Jon Chait noted, it looks like it’ll be a 75-25 split, with three dollars in spending cuts for every dollar in tax increases.

That is, of course, what happens with a Gang consisting of three conservatives, two moderates, and one liberal — it lacks a certain balance.

Making matters slightly worse, the Gang of Six is already interested in imposing unnecessary and dangerous structural changes — including possible spending caps — that add insult to injury.

Want to focus on debt reduction? Fine. Like the idea of a “hybrid” solution? Fine. Consider the Gang of Six an ally in this endeavor? Not fine.