The stupidity of the GOP

· April 9, 2018  
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Circus elephant on ball
Oktay Ortakcioglu | Getty Images

Imagine a teenager goes on a shopping spree with his dad’s credit card one month and unalterably charges the card with hundreds of thousands in expenditures. Then, the next day at the supper table, he passes his dad a note saying he is willing to help balance the family’s budget. You are as foolish as that dad if you are taken in by the GOP’s vote this week on a balanced budget amendment.

Act righteous when the outcome is already determined

Republicans have already given away the farm. They have already opted, when the issue was still under debate and in contention, to spend more money than in any year of Obama’s presidency. Now that the spending is already locked in, they are ceremonially voting on a constitutional amendment to balance the budget, which requires two-thirds majorities in both houses of Congress before moving on to the states for ratification. The thing is that it doesn’t take a two-thirds majority to balance the budget if they actually wanted to. It takes a simple majority to actually stand up for their prerogatives on the budget bills. Look at how Democrats were able to secure all of their priorities with just a minority in the Senate. Yet now Republicans will say, “We tried to be fiscally conservative, but don’t you see that we don’t have 290 votes in the House and 67 in the Senate to pass the amendment? Vote for more Republicans in November!”

Lest we overlook the extent of the budget betrayals of the past year, Republicans didn’t only pass worse budget bills with full control over government than when Obama was president. They also snuck a debt ceiling increase into the budget caps bill in February. That was our last point of leverage to actually force a balanced budget by simply refusing to extend the credit card absent major reforms. Ironically, the last time we ever implemented some fiscal sanity was by fighting the debt ceiling increase in 2011. That led to the Budget Control Act (BCA), which was countermanded in the same February bill that suspended the debt ceiling law! And remember, Republicans accomplished the BCA in 2011 with control of just the House – no need for the two-thirds majority they will need now in their posturing.

Thus, suspending the debt ceiling but then attempting to pass a balanced budget amendment is like missing a layup but then promising to hit a half-court shot with three seconds left on the clock.

With both inflation and GDP growing by a modest 2.5 percent, Republicans increased federal spending by 13 percent across the board for just the remaining six months of the fiscal year. All of the budget watchdogs are now predicting official budget deficits of $1-$2 trillion a year, as “net operating costs” of the federal government have already topped $1.2 trillion. Even in fiscal year 2017, spending increased $130 billion with the GOP in charge. With interest rates soaring, interest payments on the debt will double in two years and surpass all defense spending before the end of the decade. And guess which country stands to benefit most from our growing dependency and interest payments? China. That is the true trade deficit nobody wants to discuss.

What we really need is a spending limit

Some might say it’s better to have a good messaging bill than to do nothing. Sure, Republicans gave away their leverage and have no way of passing spending cuts, but let’s at least put Democrats on record and make them vote against a balanced budget amendment. The problem here is that Republicans are giving Democrats a platform to attack the tax cuts as part of the deficit problem rather than focusing exclusively on spending. If we are going to pursue policies that will never pass, let’s at least debate a spending limit amendment, not a balanced budget amendment, which opens the door for mandatory tax increases in order to achieve balance.

We are now seeing conclusively, from the first three months of tax revenue data, that we have a spending problem, not a revenue problem, and to the extent that the tax cuts slightly reduced some revenues, the job creation they spawned compensated for much of the relatively small loss.

Several weeks ago, we reported that revenues were essentially unchanged in January and February, but that we needed more time to fully assess the results of the tax cuts. However, with March data now posted by the Congressional Budget Office (CBO), the picture is beginning to become clearer. Almost all the increased debt is coming from more spending, and despite the large tax cut, revenues are essentially unchanged. According to the CBO, revenues declined by 1.6 percent compared to March 2017, but much of that was because there was one fewer business day this March than in 2017. What was the culprit for the $207 billion deficit in March? Outlays in March increased by 6.8 percent compared to this time last year.

The two most notable increases in spending this March were Medicaid (10 percent) and interest on the debt (9 percent). There was also a recent bailout of Fannie Mae and Freddie Mac that has gone underreported in the media. In other words, we are mortgaging our future in order to give interest payments to China and empower the insurance cartel so that big health care administrators can create a monopoly and hurt consumers. We’d be better off if we took that money and flushed it down the toilet.

Overall, for the first six months of the fiscal year, revenues increased by $26 billion, but spending increased by $97 billion, resulting in an almost $600 billion deficit.

Thus, it’s disingenuous to talk about an abstract balanced budget problem, which connotes a  challenge with both revenues and expenditures. We should be debating a spending limit. None other than Vice President Mike Pence, when he was in the House, sponsored a Spending Limit Amendment, which would automatically have limited spending to no more than 20 percent of GDP, except when there is a declaration of war. At present, outlays correspond to 20.7 percent of GDP, so this is a very pragmatic request of Congress. The problem is that if we fail to get our fiscal house in order, outlays are expected to skyrocket to 28 percent of our economy in 20 years.

What Republicans are doing, a broad balanced budget amendment, requires just a simple majority to raise taxes, which means that if the amendment were ever ratified, we’d essentially codify perpetual tax increases into law.

Republicans look like fools in the eyes of the voters. Every opportunity they have to actually pass a bill cutting spending, they increase spending. Then, when they know a bill won’t pass, they will dress it up as a budget-cutter.


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Author: Daniel Horowitz

Daniel Horowitz is a senior editor of Conservative Review. Follow him on Twitter @RMConservative.