Douthat's column today lashes out at the economy of the Washington metropolitan area. Douthat describes it as an economy of exploitation as highly paid lobbyists thrive on efforts to manipulate government policy to advance their interests. Douthat is 100 percent on the mark here. This is a town chock full of 6 and 7-figure buffoons. People who draw paychecks in the hundreds of thousands or even millions but who have no discernible skills other than an impressive contact list.
What he gets wrong is tying this to government spending or the deficit. Many of the most important issues that lobbyists devote themselves to, such as patent and copyright rules, trade agreements (e.g. the Trans-Pacific Partnership), and rules on bank regulation, involve little or no government spending. However the sums of money are often far larger. For example, patent protection on prescription drugs will be worth more than $3.5 trillion to the pharmaceutical industry over the next decade.
Douthat is also wrong as to the reason we have a budget deficit. We have a budget deficit because the collapse of the housing bubble sank the economy. Most people in Washington didn't see the bubble when it was expanding and apparently still haven't noticed it even after it burst and wrecked the economy. The collapse of the bubble cost the economy $1.2-$1.5 trillion in annual demand. The deficit is helping to fill the gap created by the loss of private sector demand. This is primarily due to the fall in tax collections and the increase in payments like unemployment benefits and food stamps that automatically take place in a downturn.