Raising Taxes… in Return for What?
It’s not like we haven’t been through this recently. In fact, we’ve seen this rodeo less than 18 months ago. When will Republicans learn their lesson?
Republicans came to power in 2011 promising to put a stop to Obama’s addiction to spending and growing government. They pledged to cut $100 billion immediately. They had a number of opportunities to leverage their control over the budget to extract transformational change. Most notably, the Democrats were forced to come before Congress and ask for a renewal of their credit card in the form of a debt ceiling increase. Instead of ensuring that this would be the last dose of crack handed out to the spending addicts, Republicans gave Obama a free $2.1 trillion debt limit increase, which effectively saved him from the embarrassment of another debt limit plea before his reelection.
Amidst the copious pages of commentary and punditry written on the fiscal cliff fisticuffs, the growth of our debt – the most important component of the fiscal cliff – has been lost in the pandemonium. Have the Republicans forgotten the grand bargain of the Budget [Out of] Control Act? The very deal that was supposed to lead to our fiscal solvency has engendered a higher rate of spending than the previous year! According to the CBO’s monthly budget report, our deficit for the first two months of FY 2013 is higher than it was at this time in FY 2012, despite the increase in revenue. Spending has actually increased by $22 billion from last year.
So while Obama and his minions are demanding a new increase in the debt limit, has anyone bothered to inform the American people that the reason we are confronting the new debt ceiling is because the previous grand bargain failed. In fact, we have consumed the entirety of the $2.1 trillion charge card in just 16 months! Congress raised the debt limit from $14.294 trillion on August 1. The debt now stands at $16.338 trillion.
Hence, even though revenue has actually increased since the nadir of the recession, we are still racking up more debt because spending on entitlements has increased. When will we learn the lesson?
Oh, and by the way, conservatives who voted against the debt limit increase got booted off committees.
The entire narrative surrounding the negotiations is focused on the tax side. The only question is whether Boehner will agree to increase taxes through eliminating deductions or through raising the top marginal rates to 50-75% the amount Obama is demanding. Either way, it’s clear that Boehner has no problems with the spending side of the deal. After they work out the minor difference on the degree of tax increases, the deal will be finalized.
Where are the spending cuts?
Remember that Obama has increased the debt by $5.72 trillion over the past 4 years. It took from the founding of the Republic until the turn of the millennium to rack up that much debt. So when both sides offer plans to cut spending off the CBO baseline, they are offering plans that will permanently lock in 97% of Obama’s unprecedented growth of government. Michael Tanner explains it like this in an article at National Review:
On the spending side, once all the gimmicks are stripped away, Republicans suggest spending $1.4 trillion less than the current baseline over ten years. Federal spending would thus total $5.27 trillion in 2022, about $900 billion more than if it had simply grown at the rate of inflation plus population. This would add an additional $5.14 trillion in debt by 2022, and the deficit in that year would be $540 billion.
We are literally debating a distinction of spending $46.5 trillion over 10 years vs. $45.5 trillion. Furthermore, Republicans are congratulating themselves for their farm bill, which raises spending from $605 billion to $959 billion instead of $992 billion. And don’t even begin to mention Obamacare.
Esau abdicated his birthright for a bowl of lentil soup. Republicans are willing to sell their birthright for nothing.
Cross-posted from The Madison Project