Mike Lofgren is a retired Republican House and Senate staffer.
It is an irony of our current national malaise that Republican politicians consider themselves, and tend to be uncritically regarded by the media, as “strong” on issues like national security and fiscal responsibility. But reality is otherwise; on closer examination, their strength on national security boils down to knee-jerk belligerence and profligate spending combined with invincible ignorance of the intractable complexity of the world. One sometimes wonders, on hearing the latest fusillade from a Republican politician about which country we should bomb or invade, if he or she could accurately identify those countries on an unlabeled world map.
This ignorance extends to fiscal policy and the issues of deficit and debt – those supposedly cardinal strengths that Republicans will try to exploit in order to capture the White House and the Senate; that is, when they are not too busy making fools of themselves over culture wars issues. It is a pity the media concentrate so much on the salacious details of what Rush Limbaugh said about President Obama's policy on insurance coverage for birth control pills, and on Republicans' reactions to the outbursts of a radio entertainer. One would hope the media might give sustained attention to the GOP presidential candidates' budget plans. They would find their proposals riddled with such fantastic assumptions that no neutral observer could come away with any reaction other than that Republicans are so math challenged that they could not manage a lemonade stand, let alone the finances of a nation of 310 million people whose government spends $3.5 trillion a year.
Let us take as an analytical starting point the nonpartisan Congressional Budget Office's (CBO) Budget and Economic Outlook: Fiscal Years 2012 to 2022, published in January 2012. Over the next ten years, the CBO projects a baseline deficit that totals $3.1 trillion. To simplify, “baseline” in CBO's parlance means a mechanical projection of today's trends if no laws were changed. In other words, if for the next decade the president signed no bills affecting revenues or entitlements, and discretionary spending bills were enacted according to present trends, we would still add $3.1 trillion to our current gross federal debt of $15 trillion.
There are obvious flaws in such a straight-line projection. Because the CBO assumes a continuation of current law, it flouts the fact that some policies are certainly going to change. For instance, its projection posits that the 2001 and 2003 Bush tax cuts will expire on schedule (the 2001 cuts have already been extended once), that the alternative minimum tax (AMT) will not receive its usual one-year legislative fix to avoid hitting middle-class taxpayers and that Medicare reimbursements to doctors will be cut according to schedule. But both Republicans and Democrats support preventing the AMT hit to taxpayers and stopping the Medicare reimbursement cuts. And Republicans unanimously support extending all the Bush tax cuts, while Democrats support their extension to everyone who isn't a millionaire. So, the politicians we elect will almost certainly add to the CBO's projected baseline deficit by a substantial amount.
That is why President Obama seems like such a mediocre fiscal manager. Last year, the CBO analyzed his budget proposal and concluded it would add $2.7 trillion to its baseline deficit projection over ten years (CBO's projection for this year's budget has not yet been published; one expects the fiscal gap between CBO's baseline projection and Obama's new budget proposal to be of a similar size as last year's). His apparent extravagance is because the bulk of his suggested measures that would expand the deficit over the next ten years are precisely those proposals, like extension of most of the Bush tax cuts, the AMT repeal and no reduction in Medicare reimbursements, all of which garner bipartisan support. That fact is what makes Republican tantrums over Obama's fiscal policies so psychologically interesting: the Kenyan Muslim socialist usurper has largely proposed what they themselves advocate. But it gets worse when GOP candidates lay their own plans on the table.
The Republican hopefuls who want to relieve Obama of his job would not simply add two or three trillion dollars of deficits over the next decade, as the president has proposed to do. Mitt Romney, who touts his business acumen as a prime qualification to be president, makes Obama appear as tight-fisted as Grover Cleveland by comparison. Romney's initial tax plan was as follows: those making more than $1 million a year would receive an average federal income tax cut of $145,000 by 2015. This scheme would increase deficits by about $180 billion annually by 2015, according to the Tax Policy Center. But apparently that was not enough to satisfy his contributors, so at the end of February 2012, Romney added a 20 percent cut in all income tax rates and a repeal of the AMT. The Center estimated that the 20 percent rate cut would add an additional $150 billion to the deficit in 2015 alone. The policy group did not calculate a ten-year estimate, but it is safe to say that Romney's new and improved boondoggle would add about $3 trillion over ten years on top of Obama's pre-existing plan to increase the deficit by $2.7 trillion.
But as the old Veg-O-Matic ads would say, “Wait! – there's more!” In order to pander to the militarism in the GOP base (and potential contributors in the military-industrial complex), Romney advocates increasing military spending to 4 percent of gross domestic product (GDP). Over the next decade, that would add another $2.6 trillion to the deficit.
To summarize: Romney would accept most of Obama's additions to the deficit (say, $2 trillion), add $3.0 trillion in additional tax cuts, and then top it off with $2.6 trillion of increased military spending. Therefore, he would add well over $7 trillion to a ten-year future baseline deficit that is already $3.1 trillion. So, how would Romney cut over $10 trillion (about two-thirds of our annual GDP) to achieve his campaign's goal of a balanced budget within the next decade?
Here Romney turns to the deep and abiding religious faith of GOP voters – in this case, not their faith in the Rapture, but their faith that tax cuts not only “pay for themselves,” but somehow increase revenue. Thirty years of empirical testing have demonstrated that thesis to be false: if you cut taxes, you cut tax revenue. Nevertheless, Romney's plan implies his tax cuts will spur economic growth and increase revenue in some mysterious manner and by some unspecified but gargantuan amount. He will also cut government spending, but most of his proposals, such as “enacting long-term Social Security and Medicare reform,” and “capping Federal spending at 20 percent of GDP,” are more rhetorical fluff than detailed plans and are, hence, unscorable. Therefore, Romney's budget would increase deficits and debts rather than reduce them.
Rick Santorum, the other GOP candidate who has a fighting chance at getting nominated, has made his political chops harping about more supernatural concerns than the humdrum business of public finance. Nevertheless, his tax plan would sharply lower income taxes and rates on capital gains and dividends, cut corporate income taxes in half and eliminate the inheritance tax which falls overwhelmingly on the rich. According to the Committee for a Responsible Federal Budget, Santorum's tax cuts would add $6 trillion to the deficit over the next ten years. The $2.3 trillion in spending cuts that he does specify would still leave him far short of making up for the revenue loss his tax cuts would cause. As for his supplementary claim that he would balance the budget in five years by cutting an additional $5 trillion in spending, the Committee considers this proposal unscorable, since it is nothing more than an assertion without a plan. Since the entire sum of domestic discretionary spending (including law enforcement, homeland security, food and drug safety and air traffic control) over the next five years totals only $2.9 trillion, he could abolish all domestic government activity and still not balance the budget.
This is deeply unserious stuff that Republican candidates for the highest office in the land are advocating at the same time they are wailing about deficits, but the public hears next to nothing about it. Such dangerously unserious policy results from an ideology confected of a blind faith in budgetary unicorns along with a cynical disregard for the intelligence of the voter. The Republican candidates are also making a calculated – and probably safe – bet that the news media will not call them on it.
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