Game theory is but one of the many things at which I am no good. But it's all I can think about when I look at something like this:
This graphic from the Washington Post is oversimplified but illustrates the basic dilemma of modern American politics. For an honors class I am teaching this semester, the class project is to balance the budget. While I'll let the class feel their way through the process without any commentary from me, when the President or Congress sits down and looks at the budget the ground rules are pretty clear.
But aside from that, have at it! The only way to "win" this game from the standpoint of a politician who wants to keep his or her job is…to not play. In practice, they nibble at the margins ("Let's freeze discretionary non-military spending and save $100 billion over 4 years!") and print more money. They do the latter because while deficits are unpopular it is the least damaging choice.
The class, to my expectant horror, to a person decided that the first thing we need to do is cut taxes. As I am in Georgia and these are 18 year old freshmen this is hardly a surprise. I assume they have been raised on an ideological diet of supply side economics and Glenn Beck. But more to the point, this is no different than Congress's response to the problem over the last three decades. Start with cutting taxes, say some shit about cutting spending, and borrow once we realize that nobody actually wants anything cut.
Cutting taxes is the knee-jerk reaction to all problems economic because it is the only move that elected officials can make without raising howls of blood-curdling rage from the public. When one realizes that only one course of action is politically expedient, it is not difficult to talk oneself into a bunch of half-assed rationalizations – "Cutting business taxes will spur economic growth!" or "Cutting taxes means people will invest more!" Humans are outstanding at convincing themselves that the easiest and/or only course of action also happens to be the best. So while some elected officials are motivated by ideological fondness for tax cuts or clientelism for their plutocratic backers, the majority of them (especially Democrats) go for tax cut after tax cut because they lack a plausible alternative.
The other alternatives are raising taxes or cutting a meaningful amount of spending (not trimming "earmarks" for show to the delight of teabagging rubes). Both would require a person with considerable political power telling the public to grow the fuck up and make some tough choices. We are a nation of ancestor worshippers in love with our own tales of sacrifice – how we marched through the snow to beat the hated Redcoats, tightened our belts to survive the Depression, or buckled down to arm the world and win WWII on our own. Our bold, self-congratulatory talk belies the fact that we appear completely incapable of actually making decisions that involve anything short of immediate personal gratification. The America we live in demanded tax cuts during a war – and got them. We couldn't tighten our belts if our lives depended on it. If Congress asked the country to make sacrifices we'd stare at them with the bewilderment reserved for watching a speech delivered in Mandarin Chinese.
I'm reminded of the apocryphal tale of Henry Ford promising that consumers could have a car in any color they desired as long as it was black. We elect people with the explicit understanding that we will follow them anywhere as long as it involves cutting our taxes and not touching our cherished military and entitlement programs. And then we wonder why every solution, from a freshman political science class up to the White House and Federal Reserve, sounds remarkably familiar.