published Sunday, February 13th, 2011

No way to fix the budget

House Republicans in Washington are quickly learning that breezy pre-election promises to slash federal spending are far harder to achieve than to pledge. Indeed, internal debate among Republicans themselves over the range and scope of proposed cuts is already splitting the party's ranks. It will be doubly hard when House Republican leaders try to sell whatever compromise they achieve with their tea party faction to their Senate counterparts, who are in the minority in the Senate and must negotiate on a less partisan level with the majority Democrats and the Obama administration.

In any case, it seems evident now that Republicans will have an exceedingly difficult time finding their promised $100 billion in cuts in domestic programs.

Send pain to the poor

So far, they're stuck at the $35 billion level. And even those cuts are far more painful and much less fair to lower-income workers and families and to municipal governments than they should be.

Among cuts across dozens of agencies and departments, for example, are a $407 million cut in food aid to pregnant women and their children; a $600 million (13 percent) reduction in the Community Development Fund; elimination of the $317 million family planning program; and a $900 million cut in the widely used Low-Income Home Energy Assistance Program.

Other proposed cuts would eliminate AmeriCorps, an effective and highly popular volunteer public service program for young adults, to save $373 million, and would terminate police hiring grants (which have helped the Chattanooga police department and other local police departments) to save $298 million. House Republicans would take $1 billion away from the federal high-speed rail program and shut it down, and eliminate aid entirely to the Corporation for Public Broadcasting to save $531 million.

Environment a target

Not surprisingly, House Republicans propose, as well, to slash the Environmental Protection Agency budget by $1.9 billion, or 18 percent; to cut the Legal Aid for the poor program by $60 million, or 14 percent; to whack the vastly under-funded Food and Drug Administration by $61 million, or 3 percent; and to cut $894 million, or 13 percent, from the essential Centers for Disease Control and Prevention.

These and other cuts -- for example, to the IRS, NASA and agricultural research -- would fall overall on some 60 domestic programs. They are bad enough as it is. But the GOP's ardent budget slashers still want to cut more. They still hope to get to the promised $100 billion level and are resisting compromise on a lower level with more veteran House Republican leaders.

The problem is that all the areas they want to cut serve far more valuable purposes to ordinary Americans, yet cost far less, than the tax cuts for the ultra rich that they insisted on passing in December, when they held extension of Bush-era tax cuts for 98 percent of Americans hostage to the hugely disproportional cuts that they demanded for the richest 2 percent.

The budget cuts they already propose, and the deeper cuts they still promise to seek, would cost jobs across a range of federal agencies, from law enforcement to food protection to scientific research, and they would hinder investments and programs that would improve the lives of the majority of Americans. Worse, by forcing a severe retraction in spending and jobs, they will undermine the still fragile economy before it gathers enough momentum to propel growth and to supply the jobs that are still needed by the more than 9 percent of unemployed Americans.

The Big Three next

It's notable that these are supposedly the easy cuts. Republicans haven't begun issuing their proposals to slash Medicaid, Medicare and Social Security. It's even more ominous that Republican right-wingers are also promising to hold an increase in the national debt ceiling to steep spending cuts that could throttle the economy altogether. Blocking an increase in the debt level is untenable; it would cause the dollar to crash in value and put the federal government at risk of a shutdown or default, which would sink the economy in a heartbeat.

No offset for tax-cut costs

But the ultimate kicker is this: Republicans have also dropped pay-as-you-go rules for cutting taxes. That means that they will not count lost tax revenue from a tax cut as a deficit building measure, or require offsetting cuts in other expenditures to make up the lost tax revenue, as they would for the cost of a proposed new program. This imbalance in logic and action -- denying the cost of tax expenditures, which is what tax cuts are-- expands the deficit just as much as an equal cost for a new program or benefit.

So we also will soon see proposals to slash corporate and other business taxes, but without a requirement to find offsetting cuts in expenditures somewhere else. Republicans' fiscal illogic does not end there. Their new rules also ban raising taxes to pay for public obligations, such as Medicare costs for higher numbers of retiring baby boomers; or for improvements, as in, say, closing the doughnut hole on uncovered prescription drug costs. To offset such costs as those, they would require more cuts in other programs.

More Bush-style deficits

The failure to account for tax-cut expenditures is the very same economic insanity that George W. Bush used to more than double the federal debt -- from $5.7 trillion to over $12 trillion, plus another $2 trillion in the future war-cost pipeline -- during his tenure. And look where it got us. His tax cuts cost nearly $4 trillion over their 10-year life. His Iraq and Afghanistan wars, also on the deficit credit-card, cost several trillion more. And his Medicare prescription drug plan added nearly another trillion dollars over a decade.

To make this fiscal-policy insanity even more weird, some Republicans want to deny a pending and necessary increase in the level of national debt unless Congress agrees to further recklessly deep spending cuts in an already weak economy. This nation can't manage much more such fiscal myopia under GOP economics. If Republicans can't see that, ordinary Americans should make sure they hear about it.

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fairmon said...

Therefore your specific recommendations to address the countries economic dilemma would be? Your position that instead of cutting corporate taxes to stimulate growth and hiring would be to?

February 14, 2011 at 7:53 a.m.
holdout said...

How about we just sell everything? Like one of those furniture stores going out of business? The government could just sell the whole country, give us all ten million euros each and we could just close up and hang a , "for lease" sign at the border. We can all just move away and when people say, "you Americans" we can reply, "there is no United States, it went out of business". We can all move to other parts of the world and live as the idle rich.

February 16, 2011 at 10:58 a.m.
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