The Republican negotiators who on Thursday walked out of budget negotiations over how to limit the federal debt — and the conditions they are demanding for raising the current debt ceiling to protect America’s credit rating and economy — seem to be in denial about how the nation came to be stuck with a $14 trillion-plus federal debt.
In fact, the Republican Party is directly responsible for the lion’s share of the $14.3 trillion budget deficit that they now pretend to be so vexed about. But if the debt problem is going to be solved, there will have to be a bipartisan solution. And such a solution must necessarily recognize, and remedy, the consequence of their deep high-end tax cuts and corporate tax expenditures (the budget term for tax breaks) that are responsible for at least half of the deficit problem.
The negotiations, led by Vice President Joe Biden, had been making progress. Democrats had agreed to negotiated cuts of some $2 trillion in projected spending for social programs and entitlements over the 10-year time frame under discussion — the target point of the discussion over whether to raise the nation’s current debt ceiling before the early August deadline. But to keep some of burden for deficit reduction off working families and ordinary wage-earners, the Democrats rightly had to seek some revenue measures and cutbacks in tax expenditures. That’s when Rep. Eric Cantor, the House majority leader, threw a fit and walked out. His colleague, Sen. John Kyl, the second-ranking Republican in the Senate, obligingly followed him.
Cantor’s tantrum scene was a set piece of political calculation. He knows the hard-right Tea Party types in the House who are wagging the Republicans’ tail have become fixed in their notion that there must be no compromise toward the idea of mixing revenue-raising measures with the spending cuts they are demanding.
This is so unrealistic as to be mind-boggling, however. The $1.3 trillion cost of the Bush II wars in Iraq and Afghanistan were always funded “off-budget” as “emergency” costs to camouflage the deficit spending, but they were put on the taxpayers’ credit card nonetheless, as was the war cost in the pipeline left to President Obama.
Also added to the federal debt by Bush was the $4 trillion, 10-year cost of his tax cuts, which gave the lion’s share to the richest 2 percent of America’s taxpayers — and more narrowly to the top one-tenth of 1 percent, the nation’s multimillionaires and billionaires who reaped an obscene share of the capital gains tax breaks. Bush also added to the federal debt the cost of the prescription drug benefit for Medicare recipients, along with the deficit-building subsidies to private for-profit insurers to lure seniors out of Medicare-proper through Medicare “advantage” policies.
These deficit costs from the Bush administration went on top of the accumulated debt left by the Bush I and Reagan administrations, which formed the bulk of the $5.5 trillion debt that greeted Bush II, who ultimately ran up the federal debt to over $12 trillion before he left office.
This mountain of debt cannot be magically worked off with cuts in Medicare, Medicaid and Social Security — and a raft of other essential federal agencies like the EPA and the National Park Service — as Republicans are now demanding. That would be grossly unfair and enormously burdensome to the 90-plus percent of Americans who could not begin to replace the benefits of the programs for which they have paid tax deductions for decades.
Republicans held benefits to America’s middle class hostage last year to secure an extension of the high-end Bush tax cuts for the super-wealthy. Now they are trying to hold the nation’s credit rating hostage — the stakes in debt ceiling negotiations — to a larger longer-term package of tax benefits for rich citizens and corporations.
Democrats must call their hand. If Republicans are allowed to win the debt ceiling talks on their terms, tax equity and the safety net for middle-class Americans will be irreparably destroyed.