President Obama said yesterday, “The only question is whether politics or ideology are going to get in the way of preventing a government shutdown.” This is indeed the interesting question: Is politics motivating the Republicans, or ideology? I realize that Obama meant to ask whether the government would be shut down. But humor me while I interpret the sentence the other way: Politics versus ideology.
Most of what the Grand Old Party has done in the last two years can much better be explained by politics than ideology. For example, only politics can explain a systematic strategy of opposing whatever the White House favors, even when this requires changing one’s vote — for example on the fiscal commission bill that Senators like John McCain had previously been sponsors of. Only politics can explain the long-time refusal of so-called fiscal conservatives to name the specific spending programs they want to cut.
Most prominent economists and the sensible political middle ground in Washington agree that the federal government must eventually address its long run fiscal problem; but they also know that it is not possible to begin to eliminate the budget deficit if tax increases and entitlements cuts are ruled out. The Bowles-Simpson Commission in December made specific proposals, many of which are the sort that we are going to need — all of them highly unpopular….proposals like raising the retirement age, limiting tax expenditures, and raising the gas tax. Many reasonable-sounding editorialists and commentators have said recently that President Obama ought to be brave enough to lead, by coming out in favor of unpopular measures such as those in the Commission’s report. Supposedly the American public is mature enough to rally around such a candid position.
Arithmetic and history. Two of my favorite subjects in school. I covered some history two posts ago (the Whisky Rebellion). Let’s do some arithmetic now.
Attention is currently focused on threats of a government shut-down, either when a continuing resolution is required from Congress in March in order to keep the government operating, or a few months later, when an increase in the national debt ceiling is required. The common description of this showdown as a high-stakes game of chicken has it right. But some of the Tea Partiers say that their goal is literally to avoid an increase in the debt ceiling – not just as a bargaining ploy nor as an abstract goal, but in the sense that they want to cut spending so sharply that there is no need to borrow any more after this spring. Similarly, Senators Mike Lee (Utah) and John Kyl (Ariz.) have revived the proposal for a constitutional amendment requiring a balanced budget. And of course they all want to do it without raising taxes, and in most cases without cutting defense, Social Security or Medicare. Oh, and don’t cut farm subsidies either.
I never cease to be frustrated that the current public policy debate is described as a contest of ideas: fiscal conservatives versus liberals. It is not just Republicans or Tea Partiers who believe that they are fiscal conservatives, no doubt sincerely. Democrats and liberals seem to accept this characterization at face value, as does most of the media.
The problem is that a heavy majority of the supposed fiscally conservative congressmen, although passionate about cutting government spending in the abstract, are in truth no better able to find specific dollars of budget cuts that they can support or defend to their constituents than are the Democrats. Factoring in their immutable desire to cut taxes, I believe that if the Republicans were in full control, we would have larger budget deficits in the coming years than if the Obama crowd retained power. This is what happened in a big way when Presidents Reagan and GW Bush took office promising to cut the debt while also cutting taxes. Spending, deficits, and debt soared during their terms, relative to their respective Democratic predecessors. There is no reason to think anything has changed.
Evidently the four-word slogan “No Taxation Without Representation” is too complicated to fit on some people’s bumper stickers. They have chopped off the last two words. They don’t want taxation period.
The “Tea Partiers” revere the Constitution. But some might lack the knowledge of early American history that they claim. In honor of George Washington’s birthday, February 22, I would like to recall a bit of that history.
The Boston Tea Party is not in fact the most appropriate historical precedent for the grass roots protests that have received so much attention over the last year. The famous slogan motivating the patriots in Boston Harbor in 1773 was “No Taxation Without Representation.” But democratic representation was achieved with the American Revolution. The Whisky Rebellion of 1794 is a much closer parallel for today’s protestors. Or the earlier Shays’ Rebellion of 1787, the episode of anarchy to which many Americans reacted by seeking a federal constitution. The pitchfork-carriers in these rebellions were protesting against taxation with representation. They did not want to pay the taxes necessary to fund the government services they enjoyed — which at that time meant servicing the debt from the Revolutionary War. (Sound familiar?) President George Washington, not the rebels, was defending the Constitution against its first severe test, when he personally put down the Whiskey Rebellion with force.
Some conservatives are attacking current U.S. monetary policy as being too expansionary, as likely to lead to excessive inflation and debauchment of the currency. The Weekly Standard is promoting a letter to Fed Chairman Ben Bernanke that urges a reversal of its policy of QE2, its new round of monetary easing. The letter is signed by a list of conservatives, most of whom are well-known Republican economists, some associated with political candidates. Apparently the driving force is David Malpass, who was an official in the Reagan Treasury, and he is taking out newspaper ads later this week. This follows similar attacks on the Fed by politicians Sarah Palin, Mike Pence, and Paul Ryan.
During much of the last decade, U.S. fiscal policy has been procyclical, that is, destabilizing. We wasted the opportunity of the 2003-07 expansion by running large budget deficits. As a result, in 2010, Washington now feels constrained by inherited debts to withdraw fiscal stimulus at a time when unemployment is still high. Fiscal policy in the UK and other European countries has been even more destabilizing over the last decade. Governments decide to expand when the economy is strong and then contract when it is weak, thereby exacerbating the business cycle.
As I understand it, the authors of the “Pledge to America” want not just to renew permanently all Bush-era tax cuts, but also to balance the budget while exempting social security, Medicare, and military spending.To ask what would be the effects if the Republicans put this pledge into law is to ask what would be the effects if they repeal the laws of arithmetic. It can’t be done.All the money is in the parts of the budget they are putting off limits. (That is what we all assume they mean by “common sense exceptions for seniors, veterans and troops” when cutting spending. Admittedly, it is hard to tell what they are really proposing, due to the usual lack of specifics in the 21-page document.)
April 1 is Census Day. Evidently Glenn Beck and Michele Bachmann have been encouraging Americans to boycott the census — to refuse to fill out the whole form. This protest follows from their small government ideology.
I am not always sure what they, or Republicans, or Tea Party participants mean by small government. They say they want a government that intervenes less in the economic sphere. Perhaps they don’t like the idea that the census numbers are used, among other things, to determine the allocation of federal spending across states, because they don’t think it is the business of the government to redistribute income. That is “socialism.” Even “Stalinism.”
With regard to the politics, one would have to see whether the phrase “cut tax expenditures” polls more like the phrase “cut expenditures,” which I assume polls well, or like the phrase “raise taxes,” which of course polls horribly. I have no idea. But at least there is a hope of breaking through the mindless artificial “Taxes versus Spending” rhetoric that dominates Washington.