RandomGuy
10-26-2017, 02:15 PM
TO BE shocked by the Republicans’ latest enthusiasm for deficit spending, you would have to have taken seriously their former disdain—nay, horror!—for it. Back when Barack Obama was in charge, Mitch McConnell said the deficit was America’s “most serious long-term problem”. The Republican National Committee (RNC) warned darkly that the Democratic president’s profligacy was putting “America’s future in the balance”. But this was a charade, of course. Republican congressmen have long preached the virtues of prudence in opposition, then let borrowing rip in power. This week Mr McConnell duly corralled support among his fellow Republican senators for a budget bill designed to facilitate a tax cut that, if passed, might add over $2trn to America’s $20trn national debt. The RNC has said it considers this an opportunity for hardworking Americans to “get their time and money back”. The deficit is “a great talking point when you have an administration that’s Democrat-led,” Mark Walker, a Republican congressman from North Carolina, conceded to the New York Times, “It’s a little different now that Republicans have both houses and the administration.”
The key to understanding this dismal cycle is that not many Republican voters do take the public finances, or their party’s professed concern for them, seriously. Most want balanced budgets. But they are more concerned about terrorism, security and the economy, all potential reasons to postpone deficit reduction. And that suits Republican politicians well, because the same voters who worry about the national debt also tend to be unwilling to lose access to entitlements—including health care and pensions for seniors—that are primarily responsible for it. Both parties have capitulated to these voters, but the one ostensibly dedicated to fiscal conservatism has been the most profligate. Between 1960 and 2010, according to Nicholas Eberstadt of the American Enterprise Institute, entitlement spending grew 8% faster under Republican presidents than Democrats.
Unlike the Democrats, the Republicans are also beholden to another enemy of fiscal temperance: donors that demand tax cuts in any circumstance. And on the rare occasions, as currently, when Republicans control Congress and the White House, they oblige. The result is a party whose claimed commitment to fiscal restraint is, at least at the national level, incredible. Ronald Reagan promised to balance the budget but, by slashing taxes and splurging on defence, raised the debt from a third of GDP to half. George W. Bush promised to clear the debt but, by the same means, increased it by 22 percentage points. When Donald Trump vowed to eliminate the national debt in eight years, without cutting entitlements, he was respecting his adopted party’s tradition. Yet the risk of becoming inured to this farce constitutes a separate danger.
Most obviously, that is because with each profligate cycle, the debt burden has risen. When George W. Bush’s tax cuts were introduced—despite opposition from more Republican congressmen than have dared speak against Mr Trump’s more spendthrift proposals—it was half its current level. It is also because the Republicans’ capacity for delusion on this issue is also mounting, which is leading to wider institutional damage: including to the credibility of the already dysfunctional budget process and to trust in the independent experts whose advice Republicans increasingly decry.
To appreciate this, consider what became of conservatives’ rage against Mr Obama’s borrowing. The epicentre of the fury was the Tea Party movement, which was founded in 2009 and set the tone for Republicans’ opposition to Mr Obama and their own leadership, thereby preparing the way for Mr Trump’s insurgency. And to what end? A serious bid to deal with the deficit would involve entitlement reform, moderated defence spending or tax rises; probably all three. This would require bipartisan agreement. By contrast, the demands of the Tea Party’s champions, a group of 40-odd congressmen known as the House Freedom Caucus, were trifling and self-defeating. Under Mr Obama, they demanded selective, highly partisan cuts and, in 2013, shut down the federal government after they were unforthcoming. That stunt was estimated to have cost $24bn in lost output.
One reason for this, as became clear when Mr Trump swept Tea Party country, was that its supporters’ hostility to public spending was often a proxy for other things—including antipathy to redistribution and to immigration, which are only obliquely related to the deficit. Most of those disgruntled Republicans, as Mr Trump appreciated, also favoured more defence spending and no cuts to Social Security. This is a set of attitudes inimical to the smaller government they claimed to want.
How to make a debt crisis
The Freedom Caucus is now the profligate Mr Trump’s biggest fan on the Hill. One of its former members, Mick Mulvaney, is employing its brawling tactics as the president’s budget director. He is a proponent of the serially debunked fallacy on which Mr Trump’s case for tax cuts rests—that they will drive compensatory growth to cover for the lost tax revenue. He is also a bullying critic of any independent expert who dares question such guff, including the bipartisan Congressional Budget Office. Thus has Republican fiscal delusion graduated from being merely a threat to America’s long-term economic stability to a broader assault on what were widely respected institutions.
The tax cuts may yet be foiled. There are still one or two real fiscal conservatives in the Senate, including Bob Corker of Tennessee and Jeff Flake of Arizona, both of whom Mr Trump has riled. Yet that would hardly be a triumph. America badly needs a serious centre-right party, committed to fiscal restraint, prudently and without rancour, not just to cutting taxes. The Republicans were at their best an approximation of that party. They are currently nothing of the kind.
https://www.economist.com/news/united-states/21730484-america-needs-party-argues-fiscal-restraint-fiscal-conservatism-rip
The key to understanding this dismal cycle is that not many Republican voters do take the public finances, or their party’s professed concern for them, seriously. Most want balanced budgets. But they are more concerned about terrorism, security and the economy, all potential reasons to postpone deficit reduction. And that suits Republican politicians well, because the same voters who worry about the national debt also tend to be unwilling to lose access to entitlements—including health care and pensions for seniors—that are primarily responsible for it. Both parties have capitulated to these voters, but the one ostensibly dedicated to fiscal conservatism has been the most profligate. Between 1960 and 2010, according to Nicholas Eberstadt of the American Enterprise Institute, entitlement spending grew 8% faster under Republican presidents than Democrats.
Unlike the Democrats, the Republicans are also beholden to another enemy of fiscal temperance: donors that demand tax cuts in any circumstance. And on the rare occasions, as currently, when Republicans control Congress and the White House, they oblige. The result is a party whose claimed commitment to fiscal restraint is, at least at the national level, incredible. Ronald Reagan promised to balance the budget but, by slashing taxes and splurging on defence, raised the debt from a third of GDP to half. George W. Bush promised to clear the debt but, by the same means, increased it by 22 percentage points. When Donald Trump vowed to eliminate the national debt in eight years, without cutting entitlements, he was respecting his adopted party’s tradition. Yet the risk of becoming inured to this farce constitutes a separate danger.
Most obviously, that is because with each profligate cycle, the debt burden has risen. When George W. Bush’s tax cuts were introduced—despite opposition from more Republican congressmen than have dared speak against Mr Trump’s more spendthrift proposals—it was half its current level. It is also because the Republicans’ capacity for delusion on this issue is also mounting, which is leading to wider institutional damage: including to the credibility of the already dysfunctional budget process and to trust in the independent experts whose advice Republicans increasingly decry.
To appreciate this, consider what became of conservatives’ rage against Mr Obama’s borrowing. The epicentre of the fury was the Tea Party movement, which was founded in 2009 and set the tone for Republicans’ opposition to Mr Obama and their own leadership, thereby preparing the way for Mr Trump’s insurgency. And to what end? A serious bid to deal with the deficit would involve entitlement reform, moderated defence spending or tax rises; probably all three. This would require bipartisan agreement. By contrast, the demands of the Tea Party’s champions, a group of 40-odd congressmen known as the House Freedom Caucus, were trifling and self-defeating. Under Mr Obama, they demanded selective, highly partisan cuts and, in 2013, shut down the federal government after they were unforthcoming. That stunt was estimated to have cost $24bn in lost output.
One reason for this, as became clear when Mr Trump swept Tea Party country, was that its supporters’ hostility to public spending was often a proxy for other things—including antipathy to redistribution and to immigration, which are only obliquely related to the deficit. Most of those disgruntled Republicans, as Mr Trump appreciated, also favoured more defence spending and no cuts to Social Security. This is a set of attitudes inimical to the smaller government they claimed to want.
How to make a debt crisis
The Freedom Caucus is now the profligate Mr Trump’s biggest fan on the Hill. One of its former members, Mick Mulvaney, is employing its brawling tactics as the president’s budget director. He is a proponent of the serially debunked fallacy on which Mr Trump’s case for tax cuts rests—that they will drive compensatory growth to cover for the lost tax revenue. He is also a bullying critic of any independent expert who dares question such guff, including the bipartisan Congressional Budget Office. Thus has Republican fiscal delusion graduated from being merely a threat to America’s long-term economic stability to a broader assault on what were widely respected institutions.
The tax cuts may yet be foiled. There are still one or two real fiscal conservatives in the Senate, including Bob Corker of Tennessee and Jeff Flake of Arizona, both of whom Mr Trump has riled. Yet that would hardly be a triumph. America badly needs a serious centre-right party, committed to fiscal restraint, prudently and without rancour, not just to cutting taxes. The Republicans were at their best an approximation of that party. They are currently nothing of the kind.
https://www.economist.com/news/united-states/21730484-america-needs-party-argues-fiscal-restraint-fiscal-conservatism-rip