Republican congressional candidates across the country are running on promises to give the country less of everything -- less government spending, less regulation, lower taxes, lower deficits and less debt. Unfortunately, they never really explain how to bring about such a miraculous combination.
Regardless of whether their party wins control of the House and the Senate, Republicans show no sign they will compromise on any issue with the large number of Democrats who will still be in Congress, or with President Obama. Most of their campaigns have been devoted to demonizing the president’s liberal -- or in their rhetoric socialist -- proposals.
"I think it's wrong to compromise your values to fit in with the social climate in Washington, D.C.,” Ken Buck, the Republican senatorial candidate in Colorado, declared in a Washington Post interview last week. "When it comes to spending, I'm not compromising. I don't care who, what, when or where, I'm not compromising."
Since Obama took office, the congressional Republican stance has been nothing short of a massive resistance. That was most evident in the Senate, where the constant threat of a filibuster, and the need for 60 votes to break one, hamstrung Democrats, despite their substantial majority.
After opposing the much-needed economic stimulus that helped end the severe recession, Republicans have denied that it did any good, on the grounds that the unemployment rate increased -- ignoring the conclusion of the Congressional Budget Office and many economists that the spending and tax cuts in the stimulus package saved millions of jobs.
Rep. Eric Cantor of Virginia, the GOP whip in the House, said recently, “On the stimulus and health care bills, the two defining votes of the current Congress, our caucus yielded zero and one yes vote, respectively. It was a clear indication that we were prepared to turn the page on our party’s failures during our previous stint in the majority.”
That’s one of the few hints anywhere of a candidate acknowledging that spending control was never really a goal during the presidency of George W. Bush -- much less raising taxes to help pay the cost of the two longest wars in U.S. history. High and rising government debt? It almost doubled, to $10.7 trillion, while Bush was in office. It’s now $13.6 trillion, pushed up by the worst recession since the Great Depression.
For fiscal 2010, which ended Sept. 30, the government’s budget deficit was $1.29 trillion. What would the Republicans do to reduce it? Well, they would cut spending and taxes.
On the spending side, about all that has been offered is to roll back discretionary domestic spending -- that is, spending that’s not mandatory, unlike Social Security benefits and interest on the debt -- which would save about $100 billion. Oh, some candidates want to cut federal payrolls by 10 percent, excluding, of course, the military, veterans programs and security personnel. That would save a few billion more.
Meanwhile, the GOP continues to insist that the Bush tax cuts for higher income earners be permanently extended at a cost of about $700 billion over the next 10 years. Both the GOP and Obama would extend the cuts for those with lower incomes at a cost of about $2.9 trillion.
Actually, House Republicans want to go farther. The “Pledge to America” they offered recently also promised, “We will allow small business owners to take a tax deduction equal to 20 percent of their business income. This will provide entrepreneurs with a much-needed infusion of capital for investment and new hiring.”
Let’s see. They would keep the expiring tax cuts for small business owners filing joint tax returns with taxable income higher than $250,000. That would mean their top tax rate would stay at the current 35 percent. The new deduction would lower that tax rate by 7 percentage points, to just 28 percent on their business income -- even if they were making $1 million or more.
For folks not lucky enough to have small business income, the 28 percent tax bracket kicks in this year on a joint return with taxable income of just $137,300. No wonder small business owners are donating millions to GOP campaigns.
That would be a terrifically inefficient, expensive way to try to stimulate investment and hiring. And, of course, it would reduce federal revenue and require still larger spending cuts to achieve a given amount of deficit reduction. After all, tax cuts don’t pay for themselves, even conservative economists agree.
The “Pledge to America” promises to reduce spending while making “common sense exceptions for seniors, veterans and our troops” -- which rules out cuts in Medicare, Social Security, defense, interest on the debt, and probably Homeland Security. In fiscal 2010, spending in those areas came to $2.52 trillion of the total $3.46 trillion. Of the $1 trillion difference, some other spending is also mandatory and some is related to national security.
So what would fall beyond reducing discretionary domestic spending to FY 2008 levels? No one is saying.
When conservative icon Ronald N. Reagan ran for president he promised to cut taxes big time, raise defense spending significantly and balance the budget. The first two happened. The budget not only didn’t get balanced, the deficit soared.
As Reagan’s budget director David Stockman recently recalled, the president didn’t refuse to compromise. He agreed to some tax increases. And with Social Security in deep financial trouble, in 1983 Reagan agreed to both benefit cuts and tax increases.
The budget outlook now is far worse than 30 years ago and the Republican approach of more tax cuts and no compromise -- and their refusal to publicly identify what serious spending cuts they have in mind -- make the prospects of putting federal finances on a sustainable course look dim indeed.
