Paul
Krugman in today’s New
York Times:
In the ongoing
battle of the budget, President Obama has done something very cruel. Declaring
that this time he won’t negotiate with himself, he has refused to lay out a
proposal reflecting what he thinks Republicans want. Instead, he has demanded
that Republicans themselves say, explicitly, what they want. And guess what:
They can’t or won’t do it…
So while the fiscal
cliff — still a bad name for the looming austerity bomb, but I guess we’re stuck
with it — is a bad thing from an economic point of view, it has had at least
one salutary political effect. For it has finally laid bare the con that has always
been at the core of the G.O.P.’s political strategy.
(Emphasis by the Wrongologist)
While the
details of the President’s $4 trillion, 10-year budget balance plan must be
vetted, the general contour appears sound:
- $1.6
trillion in tax increases on the top 2% of earners
- $1.6
trillion in domestic spending cuts, including Medicare savings
- $800
billion in defense spending cuts
If the
Republican Party has a better approach, it is their turn to
suggest it.
Last
year during the “Grand Bargain”, the Administration put 10 to 1 – cuts to
revenues on the table, yet Republicans rejected it. They wanted more and were
unwilling to compromise. Did the Democrats whine, pout and act like teenagers?
No, they campaigned on protecting Medicare and Social Security, while raising
taxes on the top 2% of earners, won the presidency and gained seats in the
House and Senate.
When Mr.
Romney campaigned on increasing defense spending by $2 trillion, even though
the Defense Department was not seeking those increases and did not need them, not a peep was heard from Republicans
about deficits.
We’ve
got two political parties in the US: The Democratic Party wants to balance the
books by raising taxes in a progressive manner, while protecting the social
safety net (Social Security, Medicare and to a lesser extent, Medicaid). The Republican Party wants to scale back the
social safety net while keeping taxes as flat and low as possible.
In an ideal world, both parties would
lay out their proposals and the voters would choose which one they like best.
However, in the presidential election, Mr. Romney ran a
campaign about nothing: No specifics about revenues,
expense cuts, just defense spending increases. Their math never added up during
the campaign, but that didn’t stop them from not offering specifics.
Seinfeld
would have been proud.
Michael
Grunwald in Time Magazine:
It’s really amazing to see political reporters
dutifully passing along Republican complaints that President Obama’s opening
offer in the fiscal cliff
talks is just a recycled version of his old plan, when those same reporters
spent the last year dutifully passing along Republican complaints that Obama
had no plan. It’s even more amazing to see them pass along Republican outrage
that Obama isn’t cutting Medicare enough, in the same matter-of-fact tone they
used during the campaign to pass along Republican outrage that Obama was
cutting Medicare.
Reporters
know the Republicans are aware that their voter base generally favors the
social safety net and favors progressive taxation.
Reporters also know that voters
will punish a party that seeks to scale back the social safety net, which
is why Republicans have spent the past 30+ years working to undermine it while
claiming that they are trying to “save it.”
So how can Republicans present a
proposal that includes big cuts to SS and Medicare, while keeping upper rate
taxes low without being punished for it by the voters?
By
keeping silent on their plans while insisting that they will not negotiate until the other side presents a
plan that makes massive cuts to the social safety net and keeps upper income
taxes low.
As Krugman said, the GOP has
been playing this deficit con game for
years, yet the chattering class in DC continues to portray the GOP as
the “serious” party when it comes to tackling deficits.
Ronald Reagan’s tax giveaways and
military spending created large deficits, yet in the eyes of the main stream
media, the GOP remained the “fiscally responsible” party. G. W. Bush
wasted his inherited budget surpluses on two wars, tax cuts for the wealthy,
and a prescription drug plan that wasn’t paid for.
The GOP was still was portrayed as
fiscally responsible.
In the Obama era, the Democrats have
ensured that the programs they enacted, like health care reform, are either budget
neutral or actually reduce the deficit and they have enacted policies to reduce
the cost of Medicare without cutting benefits.
Yet Democrats are still portrayed by
the press as less than fiscally responsible.
The headline is that the GOP was backed into a corner that they
can’t easily get out of, when last week, the Democrats finally called the GOP’s
bluff. In response, Messrs. Boehner, Kantor and McConnell have been all bluster
and no bacon, still trying to hew to their strategy. It doesn’t look like Mr.
Obama will play the same game with them as last time.
Late today Republicans
sent the White House a
counter-proposal, offering $800 billion in revenue gains from
closing loopholes and a total of $2.2 trillion of overall deficit reduction. We’ll
see over the next few days if is truly worthy of consideration.
In England, their right wing equivalent
of the Republican Party has made good on its promises of spending cuts and
lower taxes. They have created the
policy nirvana that the US Republican Party seeks for us:
- Spending
has been cut viciously, and taxes have been lowered for the rich - Was
the deficit reduced? No, it has increased - Has
business boomed now that they are brimming with confidence at the Government’s
good sense? It has not
Their right wing has torpedoed the British economy with the very policies America’s Republican
Party wants us to embrace.
Time for the people to tell the
Republicans we have had enough of their con. There is no evidence to support their contention that lower taxes will
grow the economy or reduce income inequality.
From what I read, the Republican plans seeks to produce lower tax revenues (so don’t increase taxes too much) and to reduce Social Security benefits by playing with the cost of living. While this may be a not terrible idea, it sounds like an accounting gimmick – compared to simply raising the tax rates at the top. It is at best mediocre and at worst a ploy.
just want to add – if Republicans want to convince folks that they are not the “party of the rich” they will not do it by suggesting that we don’t need to raise top tax rates, but we do need to raise the age when folks can get Medicare.
just want to add – if Republicans want to convince folks that they are not the “party of the rich” they will not do it by suggesting that we don’t need to raise top tax rates, but we do need to raise the age when folks can get Medicare.