Tuesday, December 04, 2012

Hard Reality: The Republicans Don't Want to Balance the Budget

You would think that our national experience would teach us something: The Republicans are very good at cutting taxes and spending money, but have demonstrated next to no actual interest in balancing the budget. Still, the snake oil sells and a huge percentage of Americans believe that we can easily and painlessly balance the budget by cutting "welfare", funding for the arts and "foreign aid".

Diane Rehm interviewed Grover Norquist and a Republican Congressman-elect, and the incoming Congressman, Ted Yoho, insisted upon taking a principled stand: He was not going to sign Norquist's anti-tax pledge.
I made a pledge and a promise to the people that I'd go up to Washington and do the very best I could for our district and our country. And signing a pledge wasn't going to solve the problems our nation faces fiscally. You know, and I made a pledge to, you know, two things: one is to our country, I pledged allegiance. And I made a pledge to my wife to be the best husband I could be.
But as Yoho explained his philosophy toward taxes and the budget, Norquist had to be smiling. Why would he need Yoho to sign the pledge when Yoho has already internalized Norquist's "drown it in the bathtub" philosophy of government?
You know, we don't have a revenue problem in this country. You know, our debt is going to kill us, and the biggest part of our debt is our spending. We have got to get our spending under control. And if you look back where Canada was back in the 1960s when they had a real liberal congress or parliament and they put in all the entitlement programs and, you know, tax and spend more, you know, it killed their economy. And they're at the brink of disaster.
Yoho seems sincere, but "the biggest part of our debt is our spending" is an odd statement. Canada has a pretty good track record for balancing its budget, strong per capita income and growth, and its people have a good standard of living. He thinks Canada is at the brink of disaster because of its Medicare program? What's actually going on in Canada...
The report's outlook for the world is decidedly bleaker than for Canada, pointing out that after five years of crisis the global economy is again weakening and risks proliferate.

"The risk of a new major contraction cannot be ruled out," said Pier Carlo Padoan, the OECD's chief economist, citing the ongoing recession in the euro area, a below-par economy in the U.S. and a slowdown in many emerging markets.
That is, the biggest threats to Canada's economy are external.
In fact, the OECD anticipates the U.S. economy will speed up faster than Canada's next year at two per cent and in 2014, at 2.8 per cent growth.

Because the U.S. is starting from further behind, Canada will still maintain an advantage in the recovery over its southern neighbour, however. For instance, the organization projects Canada's unemployment rate will fall below seven per cent by 2014, while in the U.S., it is expected to remain close to eight per cent.
Yoho's positions on Canada are, to be blunt, divorced from reality. Yoho continues to present the Republican / Tea Party line:
This has been, you know, over the course of the last 15, 20 years, bad policies and people not dealing with it. It's time for us to stop talking about it and putting another Band-Aid on it. These are going to be some tough decisions that are going to be -- have to be made. And this is the year we need to do it because if we don't make these decisions, we're going to be in the same place where Greece or Spain was.
Except here's the thing: The Republican Party is not interested in making those tough decisions. They claim to have a budgetary genius in Paul Ryan who, after years of careful thought and collaboration with presidential nominee Mitt Romney, was able to specify a desire to cut funding for PBS. They have a leader in budget negotiations in the form of John Boehner who, building on last year's negotiations and Ryan's budgetary proposals, tosses out numbers that are neither supported by specific budgetary proposals nor sufficient to balance the budget. That's not leadership - it's a continuing display of cowardice.

And why are these Republican leaders such cowards? Because they know what Yoho will find out if the budget is balanced through cuts - the people who have been buying that snake oil will howl when they find out that the Republican approach to balancing the budget necessarily involves inflicting serious pain upon them. It's not that Boehner couldn't propose specific cuts to government programs, including Social Security and Medicare, it's that he doesn't want to face the political consequences. He hopes to trick the Democrats into proposing the cuts so he can argue, "I only voted for them because I'm fiscally responsible, but the cuts that hurt you came from the Democratic Party. I had no choice."

Paul Krugman has reproduced a graph I have at times shared, illustrating that it's Republican policies that have created the present "deficit crisis". Here's the thing: If you and your party are unable to actually identify budget cuts, if you and your party are the ones primarily responsible both for revenue shortfalls and for the unfunded expenditures that drive up the deficit, you owe the voters a moment of honesty. You need to either admit that you don't care about balancing the budget, and that the entire debate is a pretext for your long-standing goals of cutting Medicare and Social Security to the bone, or you need to admit that although you would like to see the deficit reduced you would prefer to have out-of-control deficits and spending growth if the alternative is to raise taxes or risk losing the next election.

Perhaps I underestimate Yoho, but if I do, what are the implications of this:
Rehm: But let me just ask, Congressman Yoho, would you be more willing to raise taxes on upper-income Americans, more willing to do that than to allow us to go over the cliff?

Yoho: No, ma'am.
If you care about balancing the budget, you balance the budget. Once you figure out how to balance revenues and expenditures, you can take a deeper look at the numbers, figure out where you can or should cut, where various taxes and tax rates might be adjusted or tweaked, etc., all without throwing the budget out of balance.

If you protect low tax rates for the wealthiest Americans despite budgetary consequences that you insist threaten the health and future of the nation, can't we be honest about it? You might not mind it if somebody else did the hard work and took the political risks necessary to balance the budget, but you have other priorities.

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