Congress is about to pass a package that will keep the government operating through next September. And in order to sweeten the deal for conservative Republicans who would rather not spend money to have the government operate, they’ll also be voting on a $680 billion package of tax cuts. These bills contain both things Republicans want (like allowing oil exports, extending a research and development tax break for businesses, and delaying the “Cadillac Tax” in the Affordable Care Act) and things Democrats want (like extending the child tax credit and the Earned Income Tax Credit).
But whether you’re happy with the overall balance of line items in the bill, one thing’s for sure: it will increase the deficit rather substantially.
While there are some Republicans complaining about that, what they’re really mad about is the things they didn’t get, like banning Planned Parenthood from getting Medicaid reimbursements. In short, what mattered for both sides was the substantive details, and to some degree the politics (i.e. Republicans not wanting to suffer the fallout from another shutdown crisis).
Let’s be honest: despite all their talk about what we’re handing to the next generation and how government should balance its books just like a family does, when it comes down to actually making choices, Republicans are no more concerned about deficits than Democrats are. Crying about the deficit is a tool they use to constrain policies they don’t like. When it comes to the policies they do like, how much the government will have to borrow to fund them is barely an afterthought. So can we stop pretending they actually care about deficits?
There’s no denying that Republicans have wielded the fear of deficits and debt with extraordinary effect. They often convince the public that deficits are a serious problem that needs addressing, because most voters have only the vaguest understanding of how the government operates, and words like “debt” become a stand-in for “the economy.” And they have allies among those sometimes referred to as the Very Serious People in Washington, who gravely intone that government can’t do things like mitigate the effects of a recession if doing so will add to the debt. But when Republicans actually have to make choices, there’s a simple calculus at work: the programs they don’t support anyway, like food stamps or Medicaid, should be cut because we just can’t afford them. But the programs they do support, like military spending, not to mention tax cuts that will increase the deficit? Well, we just have to do those things, because they’re necessary.
Consider that the biggest Democratic policy initiative in recent years was the Affordable Care Act, which was completely paid for through taxes and budget cuts within Medicare. The ACA not only didn’t increase the deficit, it decreased it. The biggest Republican policy initiatives in recent years, on the other hand, were the Bush tax cuts and the Iraq War. The former cost somewhere between $2 trillion and $3 trillion (see here and here), while the latter cost around $2 trillion. There was no attempt to pay for either one, meaning the cost was just added to the deficit.
And why wasn’t there an attempt to pay for them? The simple answer is that when Republicans have something they want to do, they do it. Trying to pay for what you want to do just complicates things (as the authors of the ACA could testify). When George W. Bush took office, they wanted to cut taxes, particularly on the wealthy, so they did. They wanted to invade Iraq, so they did. If any Republican said, “It would be nice to do this, but it’s going to increase the deficit, so we shouldn’t,” they would have been laughed out of the room. And all those Republicans who today say that they don’t think Bush was a real conservative because he didn’t curtail spending? If you don’t remember them loudly objecting at the time, that’s because they didn’t.
The main reason Republicans are free to set aside concerns about the deficit right now is that it has dropped so dramatically over Barack Obama’s presidency, so it’s much harder to argue that it’s an urgent problem. The deficit peaked at $1.4 trillion in 2009, Obama’s first year in office, when the country was still in the depths of the Great Recession. By 2014 it had fallen to $484 billion, a decline of two-thirds. It went from 9.8 percent of GDP in 2009 down to 2.8 percent of GDP in 2014.
There are multiple reasons why, including sequestration, the improving economy, and the tax increases Obama negotiated. But if you want to grant presidents credit or blame for what happens with the deficit on their watch, in the last forty years, Presidents Obama and Clinton reduced the deficit as a proportion of GDP, President Carter kept it almost exactly where it was, and Presidents Bush the Younger, Bush the Elder, and Reagan increased the deficit. Notice a pattern?
And all the Republicans running for president have tax plans that would send the deficit into the stratosphere. They wave away the consequences by saying that they’ll come up with some package of (yet unspecified) budget cuts, or even better, that despite all historical evidence, this time cutting taxes will lead to such an explosion of economic growth that the deficit will actually fall (this is known as a belief in the “Tax Fairy”). But the truth is that they just want to cut taxes, and if one of them becomes president, that’s what he’ll do. And nobody on the Republican side will care what it does to the deficit.
By: Paul Waldman, Senior Writer, The American Prospect; Contributor, The Plum Line Blog, The Washington Post, December 17, 2015
Filed under: Deficits, GOP, Gross Demostic Product, Tax Cuts Tagged: Affordable Care Act, Cadillac Tax, Conservatives, Defense Spending, George W. Bush, Iraq War, Planned Parenthood, Recession, Sequestration
