Republicans Feign Deficit Angst, Tout Policies Sure to Increase It
President Barack Obama took to the Rose Garden July 19 to urge Congress to pass legislation extending unemployment benefits. Obama had some harsh words for Republicans regarding their filibuster of the measure, and the minority’s curious advocacy for the failed economic policies of the Bush administration.
I have to say, after years of championing policies that turned a record surplus into a massive deficit, the same people who didn’t have any problem spending hundreds of billions of dollars on tax breaks for the wealthiest Americans are now saying we shouldn’t offer relief to middle-class Americans like Jim or Leslie or Denise, who really need help.
Thankfully, the Senate cleared the Republican’s procedural bloc the following day, and jobless benefits will soon be restored for 2.5 million jobless Americans.
It’s a win for the Democrats and for the administration, but a temporary one, and if they’re smart, they will continue to feature the tone and content of Obama’s Rose Garden speech. They should keep the spotlight on Republicans and what has emerged as their economic platform: Extend the Bush tax cuts of 2001 & 2003 — an initiative which would deprive the government’s balance sheet of $678 billion over the next ten years — while simultaneously screaming about the perils of the budget deficit.
The hypocrisy is apparent; but, more importantly, when Republican lawmakers publicly defend these policies they put their insincerity on display along with their flippant disregard for the facts. Read on for examples of both.
Falsehood #1 – Republican Politicians Are Worried About the Deficit
Keep in mind that the budget deficit ranks as a top concern for both Democrats and Republicans when either finds themselves in the minority. However, the present field of GOP officeholders and hopefuls has brought an unprecedented level of disingenuousness to this time honored political tradition.
Matt Yglesias made it plain within his fourth installment of “Conservatives Don’t Care About The Deficit.“
…there are zero historical examples of conservatives mobilizing to make the deficit smaller. What is true is that most conservatives oppose increases in non-military spending when those increases are proposed by Democratic presidents. A minority of conservatives are more consistent opponents of increases in non-military spending. But the key element of conservative fiscal policy is that tax revenue as a percent of GDP should be made as low as possible. This isn’t a goal they pursue that stands in some kind of balance with concern about the deficit, it’s the only goal they pursue…
Barry Ritholtz offered some particularly stinging commentary regarding “these new deficit chickenhawks” within his July 13 post. Ritholtz raises an important question: would those preaching austerity to the Obama administration have said the same to Reagan?
The current president, who obviously has very different priorities than RR, is in many ways following his path: Huge deficits, tax cuts targeted to his electoral base, allowing policies of his predecessor to expire.
I find it terribly amusing that some conservatives have latched onto the deficit as their key issue, when they took the idea of deficit spending to great new heights! Whether you are looking at the economic policies of Ronald Reagan or George W. Bush, reining in the deficit was clearly of no concern. (Forget speechifying, I refer to actual policies).
Having already weighed in on conservatives’ misplaced reverence for Reaganomics, I won’t bother with it here.
Bush’s economic policies, however, were largely emulative of Reagan’s, and are doubly relevant. First, the Bush tax cuts of 2001 and 2003 have contributed greatly to America’s budgetary woes. Second, “the new deficit chickenhawks” have flatly misrepresented the economic impact Bush tax cuts in order to rail against Obama, whose administration is tasked with cleaning up Bush’s mess.
Falsehood #2 – Bush Tax Cuts Increased Revenue, Paid For Themselves:
This particular falsehood is exhibited in various forms. Perhaps the most vivid of these comes from Fox Business Channel; the Republican propaganda outfit’s “Largest Tax Hike Ever” countdown clock is representative of the GOP’s argument that the Bush tax cuts should be extended. But this is generally in line with the rest of Fox’s “news” products: Flashy, yet fictional. More significant are the claims which have recently spewed from the politicians, themselves.
Senate Minority Whip Jon Kyl (R-AZ) articulated the argument June 11, claiming that unemployment benefits are a “necessary evil” which must be paid for by cutting spending or raising taxes. When asked the following day how an extension of the Bush tax cuts should be paid for, Kyl responded, “My view, and I think most of the people in my party don’t believe that you should ever have to offset a tax cut …”
That this is a commonly held belief among Republicans was confirmed by Minority Leader Mitch McConnell during a July 13 press conference (via TPMDC, emphasis added):
“That’s been the majority Republican view for some time,” Minority Leader Mitch McConnell told TPMDC this afternoon after the weekly GOP press conference. “That there’s no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue, because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject.”
Not so, says economist and Times columnist Paul Krugman. Justifiably dismayed by McConnell’s assertions, Krugman published a couple of relevant blog posts – “Invincible Ignorance,” July 13 and “Carter, Reagan, Revenue,” July 15 — dispelling the ‘tax cuts increase revenue’ claim.
Following the Bush tax cuts, Krugman explains, there was a predictable drop in government revenue which regained its ascent as the economy grew. After bottoming out, revenue never caught up to what had been the projections had the tax cuts not been enacted.
Krugman’s blog posts culminated in his Friday Times column, “Redo that Voodoo,” invoking the phrase coined by George H.W. Bush while campaigning against Reagan for the 1980 Republican presidential nomination:
Ronald Reagan said that his tax cuts would reduce deficits, then presided over a near-tripling of federal debt. When Bill Clinton raised taxes on top incomes, conservatives predicted economic disaster; what actually followed was an economic boom and a remarkable swing from budget deficit to surplus. Then the Bush tax cuts came along, helping turn that surplus into a persistent deficit, even before the [housing] crash.
But we’re talking about voodoo economics here, so perhaps it’s not surprising that belief in the magical powers of tax cuts is a zombie doctrine: no matter how many times you kill it with facts, it just keeps coming back. And despite repeated failure in practice, it is more than ever, the official view of the G.O.P.
Krugman stresses that our present economic predicament, while serious, is not yet a crisis, thanks, in part, to “the perception that the deficit is manageable has helped keep U.S. borrowing costs low.” Should Republicans make significant electoral gains in 2010, and should they attempt to put their talking points into practice, Krugman warns, a fiscal crisis is exactly what we’ll have.
I’ve included a relevant clip from the Rachel Maddow Show below, but if you’re interested in reading more about the history of voodoo, supply side, trickle down, or whatever you want to call it, economics, here are a few solid links:
- Hale “Bonddad” Stewart, “The Stupidity and Hypocrisy of the Austerity Movement,” fivethirtyeight.com, 18 July 2010. - Stewart provides a brief history of both, the deficit and the austerity movement, and concludes, among other things, that the GOP’s deficit alarmism is purely political.
- Mike Kimmel, “Presidents, the Tax Burden, and Economic Growth,” presimetrics.com, 13 June 2010 – Kimmel provides a dispassionate, data driven analysis of how the tax policies of Democrats and Republicans have impacted economic growth. Kimmel’s results may surprise you.
- Thom Hartmann, “Two Santa Clauses or How The Republican Party Has Conned America for Thirty Years,” CommonDreams.org, 26 January 2009 - When Paul Krugman mentioned, “flirting with crisis was arguably part of the [Republican] plan,” this is what he was talking about. Hartmann traces the history of the supply-side, “starve the beast” Republican strategy to just after Barry Goldwater’s failed 1964 presidential run. As I noted in a relevant post from last year:
“Two Santa Clause” theory, Hartmann explains, was constructed as a means to consolidate Republican power. Briefly stated, its adherents reasoned that Republicans could cut taxes, increase spending, and increase government revenue in the process. If successful, the only way Democrats could counter would be to argue for higher taxes, effectively ‘shooting a Santa Clause.’