“The Great Pretenders”: GOP Deficit Hypocrisy
Republicans love to harp on deficit reduction when a Democratic president releases a budget. But when they’re in power themselves, they couldn’t care less.
Now we are treated to the semiannual spectacle of watching Republicans pretend they care about the deficit. They will hammer at this repeatedly as discussion progresses on the president’s budget budget, which projects a deficit of more than $1 trillion for this year and $901 billion for next. Obama and the Democrats generally have a history of quaking when this deficit talk starts up. But the best thing they can do now is stick to their guns and quote Dick Cheney: “Deficits don’t matter.” Growth matters. And for growth, we need investment.
First, the Republican hypocrisy. I hope you are aware by now that they don’t actually care about deficits. They just care about money being spent on things they don’t like, which outside of overpriced ships the Navy probably doesn’t need and more reinforced steel for the border fence includes pretty much everything. If, say, instead of seeking to spend more money for transportation, Barack Obama had proposed cutting the top marginal tax rate down to 8 percent, well, that would have had a completely disastrous impact on future deficits. But you wouldn’t have seen Republicans complaining about that, because the rich deserve more of their money back.
You also didn’t see Republicans complaining about deficits when George W. Bush was running them up. Oh, a few did. But the protests were infrequent and mousy. By and large, Republicans shuffled along. It is astonishing, isn’t it, to think back on the prescription-drug benefit from 2003. An unfunded, roughly $500 billion expansion of socialized medicine (Medicare), and Tom DeLay kept the floor open for three extra hours so that the small number of Republicans who tried to take the Republican position on this could be browbeaten into voting with the White House. That episode, engineered by DeLay, was as close as we’ve come to legislative fascism in this country in a long, long time, both in the sense of the strong-arm tactics used and in the way it posited that day is night and black is white.
Of course, in 2003 the deficit was “just” $374 billion. This, remember, was only two years after Bush took office, met by a surplus of $237 billion. So he added $611 billion to the deficit in two short years, by diddling around with indefensible tax cuts for the wealthy (remember how they goosed the economy? Didn’t think so) and passing the aforementioned Medicare expansion to shore up the senior vote. Admittedly, Obama outpaced Bush. He added $1 trillion in a year. But we all know why. Well, some of us know why. The economy was going to die, and it needed money. Wall Street and the banks didn’t have it, so the government had to supply it.
The only problem with this was that it didn’t supply enough. I’ve started reading Noam Scheiber’s The Escape Arti$ts, his new book about the Obama economic team’s successes and failures. Scheiber writes that Christina Romer, the administration’s first chief economist, got all the numbers on the economy from the Fed and other reputable sources and set out to determine how much federal intervention, free of political considerations, would be appropriate to prop up the collapsing economy. The number she and her staff settled on—$1.8 trillion—was so high that she didn’t even dare mention it at meetings. Obama, of course, did less than half that, which was the maximum that was politically possible.
After the heavy artillery fire he took for that, Obama decided he had to placate the deficit hawks, at least rhetorically, and so he did that for a while. But that collapsed, partly because the Republicans wouldn’t consider tax increases as part of the mix, and partly because he and the White House eventually figured out that trying to be moderate on these issues was both bad substance and lousy politics. It’s bad substance because, as much as it infuriates some people, government spending helps keep us afloat in hard times. And cutting that spending causes harm. For example, we are down about 610,000 government employees from the day Obama took office. Most of those are at the state and local level, and while it’s hard to say how many are a result of the drastic cuts in federal aid to states, certainly many layoffs stem from budget cuts. Those cuts reduce the deficit, but they add directly to the jobless rolls. Is that what we’ve needed for these past two years? Obviously not.
And it’s bad politics because, as the White House now seems to grasp, it’s time to draw contrasts, and the public is largely on Obama’s side. People kinda-sorta say they care about the deficit, but they don’t, really, in large numbers. And to the extent that they do care, they’d rather raise taxes on the wealthy than cut programs.
When the economy gets better, the deficit will start to heal itself. If the economy is truly picking up in the way the January jobs numbers suggest—and if unemployment goes down to around 8 percent by the end of the year—we’ll be poised for a recovery that will add jobs and tax revenue. At least, that is, until the next Republican president comes along and slashes taxes on multimillionaires, blowing another huge hole in the deficit (Mitt Romney’s hole, for example, would be $600 billion in 2015 alone). If Romney is actually elected, the same Republicans who are going to spend the next few months nattering about Obama’s irresponsibility will be marveling at President Romney’s courage.
But Obama standing firm against the deficit hypocrites will render a Romney presidency even more unlikely than it already is. Republicans use deficit politics to scare Democrats, and Democrats often respond exactly as Republicans hope. It’s time they stopped being afraid.
By: Michael Tomasky, The Daily Beast, February 14, 2012
Heads-up: Deficit Reduction Won’t Create Jobs
It’s budget time, and that means that we can expect to hear the Washington elite wailing about the budget deficit for the next several weeks. When hearing the cries about out-of-control deficits, people would be best advised to turn off their television sets, put down their newspaper, and smash their computers. (Okay, don’t smash your computer.)
The economy has one major problem right now and that is a serious lack of jobs. We still have more than 25 million people unemployed, underemployed, or who have given up looking for work altogether because there are no jobs. This should be the issue that everyone in Washington is talking about.
Instead, many politicians and pundits want to distract people’s attention from unemployment by complaining about the deficit. They have deceived many people into thinking that the economy would somehow be stronger and there would be more jobs if the deficit was reduced, either due to spending cuts or increased taxes.
This view makes no sense. There are no businesses that are going to hire additional workers because the government laid off school teachers or firefighters and we cut back spending on food stamps. Businesses hire more workers when they see more demand for their product. All of these actions that reduce the deficit, either on the spending or tax side, translate into less demand and therefore less employment. In short, those who want to cut the deficit now are lobbying for fewer jobs and higher unemployment.
This is only part of the story that they got wrong. The other part is the cause of the deficit. There are thousands of people running around Washington blaming the deficit on out-of-control spending or irresponsible tax cuts. Both sides are way off the mark.
It is easy show from the data that the huge deficits of the last three years are the direct result of the economic plunge caused by the collapse of the housing bubble. The budget deficit was actually quite modest in 2007, and it was projected to remain low in 2008-2010, even before the Bush era tax cuts expired.
However, the deficits came in much higher than projected because the collapse of the economy sent unemployment soaring and tax revenues plummeting. There is an irony in this situation. Back in the years 2002-2007 some of us were warning about the housing bubble, but our voices were largely drowned out by the big deficit hawks.
Of course now that the bubble has collapsed and the deficit has exploded we are still hearing the same complaints from the deficit hawks. If the country had paid less attention to the deficit hawks back in the bubble years, and more attention to the bubble, then we would not have had such a horrible recession and the deficit hawks would not have a large budget deficit to complain about today.
By: Dean Baker, U. S.ews and World Report, February 10, 2012
“A Model Of Deception”: For House Republicans, A Game Of Debt Charades
Lawmakers went home for the holidays and got an earful from constituents about their juvenile behavior in Washington.
So, in their first major act of 2012, House Republicans picked up exactly where they left off: They staged a duplicitous debate in which they pretended that they were going to deny President Obama permission to increase the government’s borrowing limit.
The pretense had been clear since last summer, when 174 House Republicans voted for a budget deal that guaranteed that the debt limit would continue to increase this year unless two-thirds of the House and Senate voted otherwise — a practical impossibility.
But that didn’t stop many of those same 174 Republicans from marching to the floor Wednesday afternoon to vote for a resolution “disapproving” of the very same debt-limit increase they had already blessed. It was a model of deception: claiming to oppose something they had guaranteed would take effect.
“My resolution that is before this chamber will send a message that the constant borrowing from our children, our grandchildren, must come to an end,” declared Rep. Tom Reed (N.Y.), one of the 174 Republicans who voted to allow the borrowing last summer.
“During my time in Congress, I voted nine times against raising the debt limit because it was not tied to spending controls. This is another time to say no,” argued Rep. Don Manzullo (R-Ill.), who said yes last year to the increase he voted against on Wednesday.
“If we do nothing, American prosperity will drown in debt,” said Rep. Michael Fitzpatrick (Pa.), another of the 174 Republicans who had authorized the drowning.
“The culture of Washington must be reformed from the ground up,” Rep. Adam Kinzinger (R-Ill.) thundered in opposition to the debt-limit increase to which he consented last summer. “The future of our nation depends on it.”
Actually, if the culture of Washington is to be reformed, a good place to start would be for Kinzinger and his colleagues to be more honest about their shenanigans.
The role of calling out Republicans for their two-faced behavior fell on Wednesday to one of their own, conservative Rep. Jeff Flake (Ariz.), who, unlike most of his colleagues, was perfectly consistent: He opposed increasing the limit last year, and he continued to oppose it on Wednesday.
“This vote has been called a charade,” Flake said on the floor. “That is true. It is. Let’s face it.”
Flake, one of the few grownups in the chamber, was not done with his fellow Republicans. “I think we have to admit that even if the Senate had passed the House-passed budget, the so-called Ryan budget, we would still have to raise the debt ceiling,” he reminded them. “I don’t think anybody really disputes that. We are going to have to raise the debt ceiling again and again.”
Then Flake did something truly heretical: He reminded Republicans that “we were headed toward this cliff long before the president took control of the wheel.”
What Flake said was demonstrably true: Both parties created the debt mess, and to fix the problem both would have to be honest. Instead of being honest, however, House Republicans were staging a show so that they could tell voters they opposed the very debt limit hike they had authorized.
Rep. Gerald Connolly (D-Va.) accused the Republicans of donning “flip-flops.”
“I do prefer Crocs, if anybody cares,” Rep. Sam Graves (R-Mo.) retorted.
Apparently, most of the 174 Republicans who blessed the debt-limit increase last year were embarrassed about going to the floor to argue against it, because most of those who spoke were from that GOP minority who voted against the debt-limit increase last year, too.
“We should never have passed that Budget Control Act the way we did,” said Rep. Dan Burton (R-Ind.), who voted no last summer. As a result, he said, Obama is “raising the debt ceiling without us being able to do a thing about it. We made a big mistake.”
Maybe they made a big mistake. Or maybe they did the right thing last year in reaching an agreement that kept the federal government from defaulting.
Reed, the floor leader for Republicans on Wednesday, wanted to have it both ways. “It’s so important, in my opinion, for the future of this nation, the future of the world,” he pleaded, with an urgency that he apparently lacked last summer. “The national debt is a serious threat to our very existence as an American nation.”
Reed and 232 fellow Republicans then voted to “disapprove” of the debt-limit increase — well short of the two-thirds majority needed to overcome a presidential veto. The House’s first legislative act of 2012 had been utterly pointless — which was just the point.
By: Dana Milbank, Opinion Writer, The Washington Post, January 18, 2012
Blame Budget Shortfall On Tax Cuts For The Rich
Let’s leave aside the question of fairness, for now. The paramount question is whether the United States is generating the revenue it needs to fund the public structures that are essential for business and individual prosperity—things like transportation networks, schools, healthcare, college, and many other important functions of government in a capitalistic society. By any indicator the answer is that the United States is falling short in providing both the revenue to fund these services as well as providing for their ongoing maintenance and modernization.
Federal tax revenue is lower than it has been in half a century. The federal government’s revenues from income taxes on households make up 6.4 percent of GDP; which is 1.1 percentage points lower than half a century ago, and 3.8 percentage points lower than the peak in the boom year of 2000. Our current tax revenues are not only low relative to historical levels, but they rank low internationally as well. Our total tax revenues, including federal, state, and local taxes, comprise 27 percent of GDP, a level far lower than most of our peers in the developed world. In fact, among the 33 nations of the Organisation for Economic Co-operation and Development, only three (Korea, Turkey, and Mexico) take in proportionately less tax revenue than we do.
And so we come to the question of whether the richest in America are paying their fair share. The reality is that the steep fall in federal tax revenue was caused largely by cuts in the tax rates for the very wealthiest households. The current marginal tax rate for the highest income bracket—in other words, the tax rate on income above a threshold for the wealthiest taxpayers—of 35 percent is among the lowest since WWII, far lower than the 80 percent rate during the high-growth 1960s and the 39.6 percent rate of much of the 1990s. Of course, most rich households do not pay the published rate—after taking into account deductions and other big tax benefits, the actual percentage of a rich household’s entire income paid in taxes has also fallen precipitously, dropping from 31.3 percent for millionaires in 1993 to 22 percent today.
So, no, the rich are not paying their fair share of taxes—neither as defined by historical American norms or by international standards. And, the result of that shirking of responsibility is sluggish growth, diminished social mobility, declining educational attainment, and lost business efficiencies due to our insufficient and often outdated transportation and information networks.
By: Tamara Draut, U. S. News and World Report, December 16, 2011
We Are Living In The Conservative Recovery, And It’s Pretty Terrible
In talking about the economy, the Republican presidential candidates are quick to blame government spending for our current woes. “On my first day in office, I will send five bills to Congress and issue five executive orders that will get government out of the way and restore America to the path of robust economic growth that we need to create jobs,” said former Massachusetts Governor Mitt Romney when he unveiled his jobs plan in September. Likewise, in his plan, Texas Governor Rick Perry touts spending cuts as part of the road toward renewed economic growth: “The cut, balance, and grow plan paves the way for the job creation, balanced budgets, and fiscal responsibility that we need to get America working again.”
The problem, as Neil Irwin reports for The Washington Post, is that sharp cuts to government have been terrible for the recovery. Thanks to lower revenue, limited federal aid, and budget-cutting state legislators, the public sector has cut 455,000 jobs since the beginning of 2010, sending the proportion of government jobs to 16.7 percent, the lowest level in three years. These cuts have been a huge drag on the recovery -– to wit, October saw private-sector job growth of 104,000, which was offset by the loss of 24,000 public-sector jobs, for a net increase of 80,000 jobs. This dynamic has been true of every month since the recovery officially began.
Far from unleashing the power of the private sector, cuts to government have prolonged the economic pain, as demand is removed from the economy without an adequate replacement. Despite this, conservatives continue to press for further and greater cuts to government spending –- the Pentagon notwithstanding. What conservatives refuse to acknowledge is that we are living through the recovery they say they want, and it’s been disastrous.
By: Jamelle Bouie, The American Prospect, November 7, 2011
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