The Unflappable, The Intransigent And The Ugly: Republican Economic Policy Unfazed By Election Results
We are told elections have consequences; it seems to be a memo the GOP has yet to receive. After an election has taken place where the Republican economic platform — protecting tax cuts for the rich, draconian cuts to Medicare and Medicaid, changing the eligibility age for Social Security etc. — was rejected by the electorate, their answer has been to propose more of the same.
House Republican leaders on Monday made a counteroffer to President Obama in the “fiscal cliff” negotiations that would cut $2.2 trillion from the deficit with a combination of spending cuts, social safety net reforms and $800 billion in new tax revenue.
The White House had outlined a much different plan last week which called for $1.6 trillion in tax increases, $400 billion in entitlement program savings and $50 billion in new stimulus spending, among other provisions. The president is also seeking to permanently limit the ability of Congress to block an increase in the debt ceiling.
How does this most recent incarnation of the GOP’s offer differ from the others of the past two years or so? Not by much, actually.
The Republican Party is at least consistent in its intransigent belief that poor people have too much money and the rich don’t have enough. Where their walk hasn’t matched their talk is in actual deficit reduction.
Cut, cap and balance draconian debacle
Let’s rewind a bit to 2011 and the cut, cap and balance proposed amendment. Yes, it was political theater; and yes, the bill — as popular as it might have been with the tea party faction of House Republicans — had absolutely no chance of passing in the Senate. Yet, it behooves us to take a look at the details of the plan that was thrust into the national spotlight. These were the major points the bill:
- The plan locked in cuts over 10 years at least as severe as those in the Ryan budget plan.
- It required a two-thirds vote in the House and Senate to raise 2011’s debt ceiling.
- The measure cited three constitutional balanced-budget amendments (H.J. Res 1, S.J. Res 10 and H.J. Res 56) and stated that Congress must approve one of them or a similar measure before the debt limit would have been raised.
- The bill required cuts totaling $111 billion immediately.
- It also required that federal spending be kept at 18 percent of GDP.
Now that we outlined the various points of the bill, let’s deconstruct the various points:
- By not adding anything in terms of new revenue, deep cuts to crucial programs become the only alternative left for lawmakers.
- By requiring an impossible-to-reach supermajority in both houses of Congress to raise the debt ceiling, the ultra-conservatives in the House said, in effect, economic implosion doesn’t faze us in the least.
- All three of the cited proposals would have required cuts deeper than those in the Ryan budget. All three measures would have established a constitutional requirement that total federal expenditures may not exceed 18 percent of GDP, and all three would have essentially required that the budget be balanced within the coming decade.
- Although $111 billion represents less than 1 percent of the economy, the timing of the cuts might have further weakened the recovery. Congressional Budget Office Director Douglas Elmendorf told the House Budget committee in June of 2011 that a $100 billion cut next year is “enough [to] affect our projections for GDP growth over the next few years.”
Their bill was designed to keep spending at 18 percent of GDP, while President Obama forwarded that spending be 23 percent of GDP. It might appear, to some, that those numbers weren’t that far apart, percentage-wise, but that 5 percent represents $700 billion in spending.
Let’s put that in greater perspective: Former CBO Director Rudolph Penner stated that by 2035, spending on Medicare, Social Security and interest on the debt is likely to account for 14 percent of GDP. Under an 18 percent spending cap, that would leave 4 percent to pay for everything else … the United States today spends 4.7 percent of its GDP on defense alone.
Ryan’s hopeless … budget
Ryan’s plan would increase eligibility age for Medicare from 65 to 67 and destroy Medicaid as we know it. It would cut food stamps and set a deadline for the recipients to find work and get off the subsistence, and while it does that, it increases the defense budget allocation.
How much do we really spend on food stamps? The social safety-net programs, as of 2010, were 11 percent of the U.S. budget. Food stamps were just a part of that expense under the broad umbrella of social insurance, whereas military budget accounts for 54 percent of the federal funds. All the while this money is used primarily outside the country while domestic cities are crumbling and infrastructures are falling apart.
Spending on Pell grants was reduced, re-targeting the students from low-income families who need the assistance most. The Ryan proposal slashed federal spending by about $3.3 trillion more compared to Obama’s budget plan.
Essentially, Ryan proposed three big things: drastically cutting Medicaid, cutting taxes on corporations and the top two-percenters and replacing Medicare with a dramatically less well funded voucher system. According to the CBO, the Ryan plan actually increases the deficit for the first decade and beyond that.
These are the ideas that pass as a budget proposal from the Republican Party. So the pessimism in regards to avoiding the sequestration cuts that will take place if a deal isn’t struck seems to be warranted.
We are constantly being told that raising taxes on the top 2 percent would hamper and stunt the growth of the economy, but once again, that appears to be rooted more in baseless ideology rather than fact. Last month, a new study from the Congressional Budget Office said Obama’s call for ending the Bush-era tax cuts for the wealthiest Americans while maintaining the cuts for lower-income brackets will not hinder economic growth.
The notion that if the wealthy and Big Business were just taxed less then jobs would suddenly appear is betrayed when corporations and CEOs are making more money than they ever had and yet unemployment remains too high.
FCINO: Fiscally Conservative In Name Only
We hear the howls and yelps regarding President Obama and how he has taken a bad fiscal economic situation and made it worse. Yes, federal government spending has risen under President Obama, mostly because of the $800 billion stimulus designed to offset the massive recession he inherited from President Bush. Nevertheless, compared to the explosion in federal spending under George W. Bush, Obama is a miser.
From 2000 to 2008, under President Bush, federal spending rose by $1.3 trillion, from $1.9 trillion a year to $3.2 trillion a year.
Meanwhile, from 2009 to 2011 under President Obama, federal spending has risen by $600 billion, from $3.2 trillion a year to $3.8 trillion a year. As a matter of fact, it has even begun to decline.
Mind you, the vast majority of the federal spending that took place during the Bush years occurred with the support of a Republican majority in Congress.
The fairy tale of fiscally conservative presidential administrations has received a great deal of traction over the past 70 years — due in large part to the beltway media and lazy historians. Yet this characterization belies reality.
The majority of the national debt ($7.46 trillion of the $12.7 trillion national debt, or 59 percent) came under Republican administrations. The cruel irony is that up until President Obama’s administration, all increases in the national debt as a percentage of GDP since WWII came under Republican administrations.
The GOP economic platform is abundantly clear and tragically consistent, what has proven to be less predictable, however, is the Democratic response to their agenda.
Yes, we’ve just had an election where every exit poll, survey and study has shown that the vast majority of the electorate supports the raising of taxes on the wealthy and not making drastic cuts to our social insurance programs. And yet we find ourselves here again where Republicans believe that it is they who have received a mandate form the nation to ram through their agenda.
This cognitive dissonance is bewildering and strangely fascinating. Imagine if no matter what happened to, apparently, disprove your ideology or point of view (you know like facts, election losses and actual math) and, as if by magic, you were still vindicated; you were right and everyone who saw otherwise were wrong.
This ladies and gentlemen is the GOP mindset. It is very much a heads I win, tails you lose mentality. Elections should have consequences, but one of the consequences should not be that those who lose them and whose policies have been rejected get to dictate the terms in regard to how this country moves forward. The GOP has a role to play — and should have — it just can’t be the leading role. The people have spoken.
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