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Wednesday, December 29, 2010

GOP Deficit Dishonesty

Man throws money
The deficit, the deficit, the deficit! By all accounts, the Republican Party is about to get tough on deficits. They're going to force Washington to get real and live within its means. If Republicans have their way, wasteful deficit spending will become a thing of the past.

There's only one problem with this widely accepted narrative -- it's not even remotely true. A couple of stories yesterday paint a picture of a party making a big show of deficit hawkery, while returning to their traditional borrow-and-spend ways. The GOP talked a lot about deficits, because they realized deficit panic could get them elected, but they aren't serious about the issue. They love deficit spending the way an alcoholic loves happy hour and they have no interest in giving it up.

Exhibit A is a gimmicky new house rule called "cutgo." Where Democrats used a rule called "pay as you go" or "paygo," which required all but emergency spending to be paid for somehow, Republicans are requiring that all new spending be offset by cuts. Or at least, that's what they'd like you to believe. But it isn't true at all.

Center on Budget and Policy Priorities:

House Republican leaders yesterday unveiled major changes to House procedural rules that are clearly designed to pave the way for more deficit-increasing tax cuts in the next two years. These rules stand in sharp contrast to the strong anti-deficit rhetoric that many Republicans used on the campaign trail this fall. While changes in congressional rules rarely get much public attention, these new rules -- which are expected to be adopted by party-line vote when the 112th Congress convenes on January 5 -- could have a substantial impact and risk making the nation's fiscal problems significantly worse.

Current House rules include a pay-as-you-go requirement that any tax cut or spending increase for a mandatory (i.e., entitlement) program must be offset by cuts in other mandatory spending or increases in other taxes, in order to avoid increasing the deficit. [1] Current rules also bar the House from using budget "reconciliation" procedures -- special rules that facilitate speedy action on specified budget legislation -- to pass bills that would increase the deficit.

The problem, we're told, is that "increases in mandatory spending could be offset only by reductions in other mandatory spending, not by any measure to raise revenues such as by closing unproductive special-interest tax loopholes. For example, the House would be barred from paying for continuation of a provision enacted in 2009 (and extended in the just-enacted tax compromise) that enables many minimum-wage families to receive a full, rather than a partial, Child Tax Credit by closing wasteful tax breaks for multinational corporations that shelter profits overseas. Use of such an offset would violate the new House rules because the provision expanding the Child Tax Credit for working-poor families counts as spending and hence could not be paid for by closing a tax loophole. Yet the same new rules would enable the House to expand tax loopholes for multinational corporations and wealthy investors without paying for those tax breaks at all, because any tax cut, no matter how costly or ill-advised, could now be deficit financed."

In short, spending that helps you is now waste, while spending that helps corporations move jobs overseas is untouchable. And all the while inflating the deficit. Republicans will argue that tax cuts pay for themselves, but that's what we were told about the Bush tax cuts at the outset -- that we'd "grow our way out of deficits." This argument hasn't paid off yet and it never will.

"I hear that a lot of journalistic insiders were annoyed when I began calling out self-styled deficit hawks like Paul Ryan as flim-flammers," writes Paul Krugman. "But they are; nobody, and I mean nobody, in a position of influence within the GOP cares about deficits when tax cuts for the affluent are on the line. Deficit hawkery is just a stick with which to beat down social programs." Krugman calls Republicans "frauds" for their deficit grandstanding.

Exhibit B is the GOP's phony self-imposed ban on earmarks. Earmarks were never a problem, since they don't spend money, but rather allocate money. Spending bills without earmarks just give whatever federal agency the funding is made through the discretion to spend the money as they see fit. Put another way, if you get rid of earmarks, then unelected bureaucrats make spending decisions, not your elected representatives. This would seem to be contrary to GOP philosophy, but freaking out over the non-problem of earmarks makes great political theater, so let the freaking out begin. Meanwhile, behind the scenes, it's business as (nearly) usual.

New York Times:

No one was more critical than Representative Mark Steven Kirk when President Obama and the Democratic majority in the Congress sought passage last year of a $787 billion spending bill intended to stimulate the economy. And during his campaign for the Illinois Senate seat once held by Mr. Obama, Mr. Kirk, a Republican, boasted of his vote against "Speaker Pelosi's trillion-dollar stimulus plan."

Though Mr. Kirk and other Republicans thundered against pork-barrel spending and lawmakers' practice of designating money for special projects through earmarks, they have not shied from using a less-well-known process called lettermarking to try to direct money to projects in their home districts.

Mr. Kirk, for example, sent a letter to the Department of Education dated Sept. 10, 2009, asking it to release money "needed to support students and educational programs" in a local school district. The letter was obtained under the Freedom of Information Act by the group Citizens Against Government Waste, which shared it with The New York Times.

If Kirk wants to use stimulus money -- $1.1 million in all -- to help kids in his state, then good for him. It's what it's there for. But railing against the stimulus and earmarks, while using a backdoor earmark to get stimulus money, is not so good. It's hypocritical and demagogic. And, obviously, it does nothing to reduce the deficit. Kirk's not the only one, he's just the example. The Times tells us that the use of "lettermarking" and it's sibling "phonemarking" is widespread. Republicans are making a big show of changing Washington, while making sure they change it as little as possible.

So there you go. As Krugman points out, they're all deficit frauds. Writes Steve Benen, "To disagree is to deny reality."

Then again, we all know how Republicans feel about reality. They're pretty much against it.


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