“Don’t Let The GOP Buy Your Vote, Stupid”: The GOP Has Zero Credibility When It Comes To Fiscal Responsibility
If you want to understand exactly how the Republicans plan to buy the votes needed to win the 2016 presidential election, look no further than “The Economic Growth and Family Fairness Tax Plan.”
Heard of it? The plan, which is being touted with Willy Loman-esque desperation by Sens. Marco Rubio and Mike Lee, seeks to fix our “antiquated and dysfunctional…federal tax system.” And it’s won slow clap after slow clap from Republican-friendly conservatives at Americans for Tax Reform, National Review, and The American Enterprise Institute, whose James Pethokoukis raves, “Lee and Rubio might have cooked up the first great tax cut plan of the 2000s.”
Yeah, not so much. Despite some good features that would likely spur economic growth—such as reducing corporate tax rates by 10 percentage points, switching to a territorial collection system, and capping business-income rates filed on individual Schedule C forms—what the plan does is return us to the early years of the George W. Bush presidency, when budget continence was never allowed to get in the way of shoveling cash to targeted voters.
Recall, for instance, how Bush and a Republican Congress pushed through an unfunded (and unnecessary) Medicare prescription drug plan back in 2003 as a straight-up gift to seniors, who had voted Democratic in 2000. Mission accomplished: Bush went from getting just 47 percent of the senior vote against Al Gore in 2000 to pulling 52 percent of the 65-plus crowd against John Kerry in 2004.
At least Bush was pissing away theoretical budget surpluses that were falsely projected to last far into the future. After years of record-setting deficits and mounting national debt, today’s politicians certainly don’t have that excuse. Yet last year’s Republican budget resolution called for net spending increases every year for the next 10 years, starting at $3.7 trillion and culminating in projected spending of $5 trillion in 2024 (in current dollars). And given the whopping increases in real per-capita spending under a Republican president and Congress during Bush’s first term in office, the GOP has zero credibility when it comes to fiscal responsibility.
There’s no doubt that a spending hawk such as Lee, who has proposed a balanced-budget amendment in the past, knows that. Yet at the heart of his and Marco Rubio’s plan is a massive giveaway to parents in the form of a new $2,500 child tax credit (this would be added to an already existing $1,000 child credit) with no phase-out due to income. However, because it’s “limited to the sum of total income and payroll tax liabilities, including employer-side payroll tax liability,” it means that low-income parents won’t be able to claim the full amount.
The expanded child credit is a big reason why, as AEI’s Pethokoukis grants, the plan would “lose something like $4 trillion in federal tax revenue over a decade, maybe half that if you apply ‘dynamic scoring’ that factors in the effects of economic growth.” (Dynamic scoring attempts to model changes in people’s behavior to changes in the tax code. While the method is easily abused, its core insight—that we change our consumption patterns when costs and benefits vary—is sound.)
But unlike cutting taxes on business activity or trimming top marginal tax rates, expanding the child tax credit has nothing to do with spurring economic growth. This is something that conservatives grant in most contexts. As Curtis S. Dubay of the Heritage Foundation wrote just last year, “Increasing the credit would be a targeted tax cut that would put more money in the pockets of people who qualify for the expansion. However, it would not improve economic growth like rate reductions would because a [child tax credit] increase would not reduce those disincentives on productive activities.”
The free-market Tax Foundation agrees. In fact, in an analysis of the Rubio-Lee plan, it ran both static and dynamic scores of the plan. On its static score for the next 10 years, the Tax Foundation found the Rubio-Lee plan meant serious reductions in annual federal revenue. For instance, switching to just two tax brackets of 15 percent and 35 percent would mean $31 billion less each year compared to current law. The full expensing of business equipment would lead to another annual loss of $78 billion, while the changes to the business taxes would cut $210 billion. And the expanded child tax credit would mean the feds would forgo another $173 billion.
Yet in its dynamic score of the same provisions, something different happens. The consolidation of tax brackets yields an average annual net gain of $5 billion, full expensing yields of $115 billion, and the changes in business taxes pulls in a net of $210 billion a year. But the expanded child tax credit? It still shows an average annual loss of $173 billion.
So the expanded child tax credit has nothing to do with promoting growth. Indeed, as my frequent co-author Veronique de Rugy points out at National Review, the generally accepted best way to promote economic growth via tax policy is by cutting high marginal rates. But because of the size and scope of Rubio and Lee’s expanded child tax credit they can’t reduce the top individual rate below 35 percent without punching an even bigger hole in revenue. “If bolstering the economic status of families is the point of all this,” she writes, “the way to go is lower tax rates, not a tax credit.”
In their explanation of the plan, Rubio and Lee claim that the expanded child tax credit is simply a way of abolishing what they call “the Parent Tax Penalty.” I’m sure I’m not the only one who has trouble following the logic here: “As parents simultaneously pay payroll taxes while also paying to raise the next generation that will pay payroll taxes, parents pay more into the old-age entitlement systems.” Huh? Parents pay to raise their children, yes. When those kids enter the workforce, they (not their parents) will pay taxes on their wages. Forget those “It’s a child, not a choice” bumper stickers. Kids today apparently are to be most valued for their ability to pay into unsustainable old-age retirement plans that need to be scrapped, not propped up.
Questions abound: If the amount of income subject to Social Security taxes is capped, doesn’t it also make sense then to phase out the credit above certain income levels? What about all the tax dollars that flow to children (and their parents) during their first 18 to 21 years? And if the expanded child tax credit is supposed to credit parents for future tax payments made by their children (yes, getting complicated), then why are low-income parents’ credits “limited to the sum of total income and payroll tax liabilities”? Aren’t we crediting parents for their kids’ future tax payments?
I’d argue instead that the “family fairness” portion actually has very little to do with the future past the 2016 election. Expanding the child tax credit, especially in a way that keeps the full amount for middle- and upper-class parents while limiting the amount low-income parents can get, is a pretty obvious (and obnoxious) way to buy votes among likely Republican voters. Especially when we all know that the GOP has no intention of trimming $173 billion out of federal spending to pay for it.
We’re long past the time for a serious conversation about how much government we want to buy and at what price. If the Obama years are any indication, the Democrats are genuinely uninterested in having that conversation. (The president’s latest budget proposal would increase spending over the next decade by more than 50 percent and end the period with bigger annual deficits than we have today.) But the Republicans, who are supposed to know better and be better on fiscal issues, are part of the problem too.
Every bit as much as the tax-and-spend Dems they love to attack, the Party of Reagan ushered in “the Golden Age of Government by Groupon.”
The only question that remains is how much our kids and grandkids will hate us for how much debt—I mean “family fairness”—we’ve amassed in their name.
By: Nick Gillespie, The Daily Beast, March 13, 2015
“Dynamic Scoring Isn’t A Magical Tool”: Here’s How Conservatives Rig The Budget Game In Washington
When Republicans decided not to retain Doug Elmendorf as head of the Congressional Budget Office (CBO), Democrats became concerned that conservatives would try to rig the budget process. When the GOP required the CBO to use dynamic scoring for its legislative scores, Democrats became even more concerned. Those fears have proven overblown. The new CBO chair, whom Republicans announced last week, is Keith Hall, an economist at the Mercatus Center who was the commissioner of the Bureau of Labor Statistics under President Barack Obama. He’s a credible economist, not a partisan hack.
If you still want to see the budget gamed, though, look no further than the Tax Foundation’s score of Senators Marco Rubio and Mike Lee’s tax plan. The Foundation says that under a static scoring model, which doesn’t account for macroeconomic effects of the plan, the plan would cost the federal government $414 billion annually. That’s a huge amount of money. The government collects about $3 trillion a year in tax revenue, meaning the Rubio-Lee plan would be a 12.5 percent cut, a bold but unsurprising figure. Before Lee teamed up with Rubio, he released a first draft of his tax plan that reduced government revenue by an average of $240 billion a year. The new plan has even more tax cuts.
But when the Tax Foundation applies a dynamic scoring model to estimate the revenue effects of Rubio-Lee, the findings get downright wild. The Foundation projects that once the economy adjusts to the changes, it will grow enough to generate $508 billion (in 2015 dollars) in additional revenue each year. That would leave the American taxpayer with a cool $94 billion net annual gain.
To understand why this is so ridiculous, look at the Joint Committee on Taxation’s dynamic scoring estimates for the tax plan former Representative Dave Camp released last year. (The JCT produces revenue estimates for CBO.) The JCT used eight different dynamic scoring models and provided eight different estimates. “The increase in projected economic activity is projected to increase revenues relative to the conventional revenue estimate by $50 to $700 billion, depending on which modeling assumptions are used, over the 10-year budget period,” the report concluded. Now, $700 billion is nothing to sneer at, but that’s over a ten-year period. The Tax Foundation’s dynamic scoring model raised nearly that amount of additional revenue every single year.1
This is a slightly different comparison, because JCT’s numbers come from the 10-year period while the economy adjusted to the tax plan versus the Tax Foundation’s numbers, which are from after the economy full adjusted. The difference is still stark.
Once the Foundation releases the full report Monday, Rubio and Lee will surely cite the numbers ad nauseam to gin up favorable coverage and analyses of the proposal. The Tax Foundation is giving Rubio and Lee a major political boost by producing such a friendly score.
I’m sure the Foundation’s economists would disagree that they are doing the two senators a huge favor. They would say that the Rubio-Lee plan is far friendlier to economic growth than Camp’s plan was. Maybe they’re right. But it’s not that much friendlier. These numbers are far beyond any realistic estimate of Rubio-Lee’s macroeconomic effects. And it’s basically impossible to produce realistic estimates to start. “Theoretically dynamic scoring is the right thing to do,” Peter Orszag, who was director of CBO under President Barack Obama from 2007 to 2008, told me in January. “Just practically, it’s problematic. When you’re forced to pick one model, you’re pushing scientific knowledge beyond reality. You’re forcing the organization to pick one ‘true’ model when the economic science hasn’t produced a single model that works.”
Many conservative economists agree. Douglas Holtz-Eakin, a former CBO director, has frequently said that dynamic scoring isn’t a magical tool to make huge tax cuts look fiscally responsible. Greg Mankiw, who was the top economist for President George W. Bush from 2003 to 2005, recently wrote in the New York Times that while dynamic scoring is theoretically correct, “there are also good reasons to be wary of the endeavor.”
If Republicans had required that the CBO and the JCT use the Tax Foundation’s dynamic scoring model, it would have been a major problem. At least now the two parties accept the CBO’s score as legitimate. If they demand a bill to be deficit-neutral, the CBO is the final arbiter. That would all change if the Tax Foundation’s models were used. Of course, the actual likelihood of that happening was never clear. But if Republicans had required such changes, Democrats would never have trusted any score on any legislation—and rightfully so.
The two sides have enough trouble agreeing to pass anything today. It would be that much harder if they couldn’t even agree on the scores of legislation. You can understand why Democrats were so nervous as Republicans debated how to change the agencies.
1This is a slightly different comparison, because JCT’s numbers come from the 10-year period while the economy adjusted to the tax plan versus the Tax Foundation’s numbers, which are from after the economy full adjusted. The difference is still stark.
By: Danny Vinik, The New Republic, March 5, 2015
“Hint: Sarah Palin Has Lost Her Mind”: GOP Summit—The Good, The Bad And The Absolutely Crazy
You’re going to read a lot of analysis of this weekend’s Freedom Summit as the unofficial beginning of the Iowa caucus.
Whether that’s true depends entirely on how many of those who attended are still standing one long year from now—and how many of those who didn’t attend (Jeb Bush, Rand Paul) have campaigns that are still alive and well.
The event does serve as a gauge for a candidate’s willingness to pander, and it is the beginning of serious media scrutiny for all the candidates as 2016 candidates, not as quaint spectacles (Donald Trump, Ted Cruz) or interesting anomalies (Ben Carson, Carly Fiorina)…. or familiar former presidential candidates, who made up a non-shocking majority of the featured speakers (Rick Perry, Rick Santorum, Newt Gingrich, Sarah Palin).
What did we learn?
Palin is past her sell-by date.
It’s the unofficial policy of many serious political reporters (myself included) to not cover Palin speeches. So it’s entirely possible I missed a key stretch of her decline that would help make sense of, or have prepared me for, the word-salad-with-a-cup-of-moose-stew that she presented.
Sample passage: “Things must change for our government! It isn’t too big to fail, it’s too big to succeed! It’s too big to succeed, so we can afford no retreads or nothing will change, with the same people and same policies that got us into the status quo! Another Latin word, status quo, and it stands for, ‘Man, the middle class and everyday Americans are really gettin’ taken for a ride.’”
The speech (perhaps a generous description) went on 15 minutes past the 20 minutes allotted other speakers. And even as she ended it, one sensed less a crescendo than the specter of a gong, a hook to pull her off, or—a sincere thought I had—an ambulance to take her… somewhere.
No one else embarrassed themselves out of the race.
The event was organized by immigration hawk Rep. Steve “Cantaloupes” King (with the help of Citizens United) and many pundits fretted (or eagerly anticipated) 47-percent-style gaffes in the service of speakers trying to out-xenophobe each other. I may have missed something, but the anti-immigration rhetoric stayed on the “self-deport” side of offensive. Santorum did some under-the-breath dog whistling in reference to legal immigration, positing that the U.S. is home to more non-native citizens than ever before. He contrasted those non-native-born workers to, ahem, “American workers.” As far as I know, if you work in America, you are an “American worker.” Unless Santorum is thinking of something else.
The soft bigotry of low expectation works!
Scott Walker continues to clear the “not Tim Pawlenty” bar, but no one seems to realize how weak of a standard that is. National journalists cooed over Walker’s relatively energetic speech, apparently forgetting they were comparing it to other Walker speeches. In a similar vein, Chris Christie did not intentionally piss anyone off or bully the audience. Christie gave what seemed a lot like a national-audience speech—probably the only speaker that played it so safe.
Sen. Mike Lee gave some sensible, serious suggestions.
I may be engaging in more expectation management, but I was pleasantly surprised by Lee’s earnest and non-applause-line-ridden speech. He beseeched the audience to look for a candidate that was “positive, principled, and proven”—all while explicitly taking himself out of the running. In what could have been a direct jab at his fellow guests, he quipped, “The principled candidate is not necessarily the guy who yells ‘Freedom!’ the loudest.” He could have been quoting Elizabeth Warren when he softened typical GOP bootstrap rhetoric: “Freedom doesn’t mean ‘You’re all on your own,’” he said, “It means, ‘We’re all in it together.’” Elizabeth Warren would approve.
The GOP is going to need to figure out how to run against someone who is not Obama.
Even Lee, who gave what might be the most forward-looking speech, hung many of his arguments on the framework of undoing what Obama has done. Every other speaker followed suit, and some of the night’s biggest applause lines had to do with the same “fake scandals” that already proved insufficiently interesting to the American people: Benghazi, with a dash of IRS. They speak of repealing Obamacare with the zest of people who think of the House’s own fifty-plus attempts as mere warm-ups. Even their foreign policy script has Obama and the specter of American decline as its primary villains—foes that have defeated them twice before.
By: Ana Marie Cox, The Daily Beast, January 25, 2015
“While The Rest Of The Country Suffers”: The Republican Congress Has Done Nothing But Help Big Business
On Thursday and Friday this week, House and Senate Republicans are at a joint retreat in Hershey, Pennsylvania, to listen to an array of speakers on different policy and political issues. This brief respite offers an opportunity to examine what the Republican priorities have been in the first 10 days of the 114th Congress, and it shows one clear winner: Big Business.
House Republicans began 2015 by immediately trying to roll back or delay a number of regulations in the Dodd-Frank regulatory reform law. Just a day into the new Congress, the House voted on a fast-track bill that would have watered down and rolled back a number of important regulations. In fact, the legislation, officially titled the Promoting Job Creation and Reducing Small Business Burdens Act, was the combination of 11 bills that would, among other things, delay the Volcker Act for years and weaken derivative regulations. The bill was brought up under suspension of the rules and thus required a two-thirds majority to pass. It fell short of that goal, with 276 legislators voting for it and 146 against. It was an unexpected victory for progressives after 44 Democrats changed their votes, after voting for a similar bill in the 113th Congress.
But Republicans were not to be denied. They brought up the bill under the normal rules where a two-thirds majority was not required. On Wednesday, it passed, 271-154. It’s not clear if the Senate would take it up, or if Democrats would have enough votes to filibuster it. But Wall Street received another gift in the Terrorism Risk Insurance Act, which expired at the end of 2014 and allows the federal government to backstop commercial insurance companies in the case of a terrorist attack. Even if you think terrorism risk insurance should be the government’s prerogative, it undoubtedly benefits large corporations, insurers, and real estate companies. Wall Street’s real victory, though, was the inclusion of a provision to roll back another, albeit smaller, component of Dodd-Frank. President Barack Obama signed it on Monday.
In other words, Wall Street is a fan of the new Republican Congress. Other industries are, too. Republicans have also focused on energy regulations, most notably approving the Keystone XL pipeline. Last Friday, the House passed a bill to approve the pipeline. The Senate voted to allow debate on the bill and will likely take a final vote on it next week, when it is expected to receive more than the 60 votes necessary to overcome a filibuster. The question is whether Congress has the two-thirds votes necessary to overturn Obama’s veto.
The House also took a whack at Obamacare by passing a bill that would change the definition of a full-time worker from 30 hours to 40 hours for purposes of the employer mandate. The Congressional Budget Office estimated that the bill would increase the deficit by $53.2 billion over the next decade, much of it from employers no longer having to pay a penalty for not offering health insurance for employees who work between 30-40 hours. The Senate is also readying a bill to repeal the medical device tax, which a new report this week estimated would cost 47-1,200 jobs, in total.
It wasn’t hard to predict that the new Republican Senate’s top priority would be helping Big Business. Partially, that’s because enough Democrats have been eager to support these bills and overcome filibusters in the Senate (such as on the Keystone pipeline or medical device tax). Utah Senator Mike Lee explained this in November in The Federalist:
[T]he easiest bipartisan measures to pass are almost always bills that directly benefit Big Business, and thus appeal to the corporatist establishments of both parties. In 2015, this “low-hanging fruit” we’ll hear about will be items like corporate tax reform, Obamacare’s medical device tax, patent reform, and perhaps the Keystone XL pipeline approval.
As it happens, these are all good ideas that I support. But if that’s as far as Republicans go, we will regret it. The GOP’s biggest branding problem is that Americans think we’re the party of Big Business and The Rich. If our “Show-We-Can-Govern” agenda can be fairly attacked as giving Big Business what it wants—while the rest of the country suffers—we will only reinforce that unpopular image.
Lee’s worries were prescient. The 114th Congress has only just begun, of course, so Republicans have plenty of time to put forward an agenda focused on the middle class. Senate Majority Leader Mitch McConnell could support other moderate Republicans in crafting a compromise to increase the minimum wage. The GOP could make an expansion of the Earned Income Tax Credit a priority. Lee and Florida Senator Marco Rubio have proposed a number of other policies that are focused on the middle class.
But right now, there are few signs that Republicans are going to do anything like that.
By: Danny Vinik, The New Republic, January 15, 2015
“Cruz’s ‘Tragic And Indefensible’ Reasoning”: Leave It To Ted Cruz To Render The Phrase ‘Judicial Activism’ Utterly Meaningless
By mid-day yesterday, hours after the Supreme Court had tacitly expanded marriage equality to several states, only one Republican U.S. senator, Utah’s Mike Lee, had issued a press statement. In the midst of an extraordinary societal shift on civil rights, Republicans – from Capitol Hill to the RNC – had effectively decided to take a pass on saying much of anything.
But it wasn’t long after that Sen. Ted Cruz (R-Texas) decided to weigh in. The fact that the far-right senator wasn’t pleased didn’t come as a surprise, but take a moment to soak in the Texas Republican’s incredible reasoning.
“The Supreme Court’s decision to let rulings by lower court judges stand that redefine marriage is both tragic and indefensible,” said Sen. Cruz. “By refusing to rule if the States can define marriage, the Supreme Court is abdicating its duty to uphold the Constitution. The fact that the Supreme Court Justices, without providing any explanation whatsoever, have permitted lower courts to strike down so many state marriage laws is astonishing.
“This is judicial activism at its worst.”
It wasn’t too long ago that “judicial activism” was a phrase that actually meant something. Folks on the left and right who were outraged when judges made up new legal rationales to justify controversial decisions could credibly use the words as part of a reasonable complaint.
In time, the phrase became diluted. Soon, every judge a partisan disagreed with became a “judicial activist,” whether the label made sense or not. Every ruling a partisan objected to became an example of “judicial activism,” even if it wasn’t.
But leave it to Ted Cruz to render the phrase utterly meaningless in a new and creative way: the Supreme Court, the senator now believes, can be guilty of “judicial activism” even when the justices literally haven’t done anything. Yesterday’s news was a breakthrough moment for equal-marriage rights, but in a practical sense, all the justices did was announce they wouldn’t hear some cases – something they do all the time, on all kinds of issues and areas of the law.
But that’s not all: Cruz then told everyone what he intends to do about this outrage.
The senator’s statement went on to say: “Marriage is a question for the States. That is why I have introduced legislation, S. 2024, to protect the authority of state legislatures to define marriage. And that is why, when Congress returns to session, I will be introducing a constitutional amendment to prevent the federal government or the courts from attacking or striking down state marriage laws.”
And what is S. 2024? It’s a proposal to empower states to discriminate against same-sex couples and ignore marriages performed in other states. Luke Brinker explained, “Gay rights advocates have dubbed the bill the ‘You’re Not Married Anymore’ Bill,’ noting that it would sanction a patchwork of state laws pertaining to same-sex marriage and jeopardize couples’ rights as they travel from state to state.”
Cruz, of course, is also reportedly eyeing a national campaign in the near future. The right-wing Texan may very well be taking early steps to lock up the anti-gay vote now.
By: Steve Benen, The Maddow Blog, October 7, 2014
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