The budget fights this year began with the "shutdown" battle, followed by the Ryan budget and then the debt limit. These fights have mostly led to uninspiring kiss-your-sister outcomes, which is hardly surprising given divided government.
Now the crowd in DC is squabbling over Obama's latest stimulus/tax-the-rich scheme, though that's really more of a test run by the White House to determine whether class warfare will be an effective theme for the 2012 campaign.
The real budget fight, the one we should be closely monitoring, is what will happen with the so-called Supercommittee.
To refresh your memory, this is the 12-member entity created as part of the debt limit legislation. Split evenly between Democrats and Republicans, the Supercommittee is supposed to recommend $1.2 trillion-$1.5 trillion of deficit reduction over the next 10 years. Assuming, of course, that 7 out of the 12 members can agree on anything.
There are two critical things to understand about the Supercommittee.
- The Democrats have openly stated that their top political goal is to seduce Republicans into capitulating to a tax hike.
- Harry Reid and Nancy Pelosi appointed hard-core leftists to the Supercommittee.
With these points in mind, it doesn't take a genius to realize that the Supercommittee is designed -- at least from the perspective of the left -- to seduce gullible Republicans into going along with a tax hike.
In other words, the likelihood that the Supercommittee will produce a good plan is about the same as seeing me in the outfield during the World Series (the real World Series, not this one).
Fortunately, there is a way to win this fight. All Republicans have to do is...(drum roll, please)...nothing.
To be more specific, if the Supercommittee can't get a majority for a plan, then automatic budget cuts (a process known as sequestration) will go into effect. But don't get too excited. We're mostly talking about the DC version of spending cuts, which simply means that spending won't rise as fast as previously planned.
But compared to an inside-the-beltway tax-hike deal, a sequester would be a great result.
You're probably wondering if there's a catch. After all, if Republicans can win a huge victory for taxpayers by simply rejecting the siren song of higher taxes, then isn't victory a foregone conclusion?
It should be, but Republicans didn't get the reputation of being the "Stupid Party" for nothing, and they are perfectly capable of snatching defeat from the jaws of victory.
There are three reasons why Republicans may fumble away victory, even though they have a first down on the opponent's one-yard line.
- Republicans are gullible fools -- as demonstrated by the cartoon in this post -- and they will be tricked by Democrats.
- Republicans haven't expunged the philosophical corruption of the Bush years and they still think big government is good even though they are telling voters they learned their lesson.
- Republicans are worried that a sequester will mean too little money for the defense budget.
If GOPers sell out for either of the first two reasons, then there's really no hope. America will become Greece and we may as well stock up on canned goods, bottled water, and ammo.
The defense issue, though, is more challenging. Republicans instinctively want more defense spending, so Democrats are trying to exploit this vulnerability. They are saying -- for all intents and purposes -- that the defense budget will be cut unless GOPers agree to a tax hike.
Republicans should not give in to this budgetary blackmail.
I could make a conservative case for less defense spending, by arguing that the GOP should take a more skeptical view of nation building (the approach they had in the 1990s) and that they should reconsider the value of spending huge sums of money on an outdated NATO alliance.
But I'm going to make two other points instead, in hopes of demonstrating that a sequester is acceptable from the perspective of those who favor a strong national defense.
- First, the sequester does not take place until January 2013, so defense hawks will have ample opportunity to undo the defense cuts - either through supplemental spending bills or because the political situation changes after the 2012 elections.
- Second, the sequester is based on dishonest Washington budget math, so the defense budget would still grow, but not as fast as previously planned.
This chart shows what will happen to the defense budget over the next 10 years, based on Congressional Budget Office data comparing "baseline" outlays to spending under a sequester.
As you can see, even with a sequester, the defense budget climbs over the 10-year period by about $100 billion. And, as noted above, that doesn't even factor in supplemental spending bills.
In other words, America's national defense will not be eviscerated if there is a sequester.
Here's the bottom line. The Supercommittee battle should be a no-brainer for the GOP.
They can capitulate on taxes, causing themselves political damage, undermining the economy, and enabling bigger government.
Or they can stick to their no-tax promise, generating significant budgetary savings with a sequester, and boosting economic performance by restraining the burden of government.
A couple of days ago I blasted President Obama for, in repugnant tradition, using "education" as a political weapon, invoking it to scare Americans into demanding increased taxes for "the rich." House Speaker John Boehner, thankfully, did not abuse education similarly in his rebuttal. But his proposal for raising the debt ceiling illustrates just how weak the GOP's commitment is to returning the federal government to its constitutional -- and affordable -- size. And I say this not because of the relative puniness of his proposed cuts, but what the proposal would do in education, the only area it specifically targets: increase funding for Pell Grants.
Now, I know what many people will say to this: Pell is a de facto entitlement; it has a big shortfall; and Boehner's bill would offset the Pell increase by eliminating federal student loan repayment incentives and grad student interest subsidies. And do you just hate education, McCluskey, or poor people?
On the first points, yes to all of those, and the CBO even projects that over ten years Boehner's bill would achieve some savings from his student-aid moves. But ten years is a long time, during which a lot of things -- especially spending increases -- could happen. And the seemingly forgotten fact of the matter is that we have a $14.3 trillion debt and are sooner or later going to need big, tough cuts. And though Pell Grants sound so nice -- they give poor kids money to go to college! -- they should be eliminated for several reasons well beyond frightening fiscal reality:
- They are unconstitutional: None of the Federal government's enumerated -- and only -- powers say anything about paying for college.
- They are inflationary: Maybe Pell Grants, because they target low-income students better than federal loans and tax-based aid, aren't the biggest drivers of tuition inflation, but research suggests they are a driver, especially at private institutions. There is also good reason to believe that schools target their own aid dollars to other, better-off students when they can use taxpayer dough for low-income ones.
- They take money from real human beings -- taxpayers -- to make others rich: Okay, maybe not rich, but as higher ed advocates will quickly tell you, on average a person with a college degree will make roughly $1 million more over her lifetime than someone without one. There's a lot of play in that number, but the point is generally correct: A degree helps to significantly increase earnings. How, then -- even absent a mind-blowingly colossal debt -- can we justify taking money from taxpayers, many of whom did not go to college, and just giving it away to others so that they can get a lot wealthier? At the very least Pell should be made into a federally backed loan program -- recipients should at least have to return taxpayers' "investment" -- which Boehner could have put into his bill.
Republicans might not be as quick as Democrats to rattle education-tipped missiles, but they're fully committed to keeping them in their arsenal.
House Speaker John Boehner is scrambling to revise his budget plan after the CBO found that it would only cut spending by $850 billion, not the $1.2 trillion promised.
However, the Boehner plan doesn't actually cut spending at all. The chart shows the discretionary spending caps in the Boehner plan. Spending increases every year—from $1.043 trillion in 2012 to $1.234 trillion in 2021. (This category of spending excludes the costs of wars in Iraq and Afghanistan).
The “cuts” in the Boehner plan are only cuts from the CBO baseline, which is an imaginary path of future spending designed as a planning tool for Congress. Boehner can propose to spend any amount in any future year he wants, and in this plan he choose to have a steadily rising spending path.
The Boehner plan also doesn’t cut spending in a more fundamental way. It doesn’t lay out any particular programs or agencies to terminate. I’m in favor of spending caps as a secondary enforcement mechanism, but actual cuts have to come first. A caps-only plan like Boehner’s just kicks the can down the road. At best, it simply nudges future legislators to actually cut something specific.
Why doesn’t the House leadership propose real cuts? They’ve certainly got the resources and expertise to do the job. A single senator -- Tom Coburn -- produced a 620-page report last week detailing hundreds of programs to cut and terminate. Coburn and his staff read through thousands of articles and reports on the real-world performance of federal programs, and they made a good case for each particular cut they proposed.
Republican leaders can’t hide behind baselines forever. If they really want a smaller government as they keep claiming, they’ve got to target particular programs and agencies and begin a national debate about terminating them.
I'm a few days behind on this, but over at The Corner Yuval Levin has written an important post about how health care entitlements are the real cause of the debt crisis facing the federal government. Using Congressional Budget Office projections, Levin creates this magnificent chart, which I plan to steal over and over again:
If Republicans want to conquer the federal debt, they need to embrace health policy like they embrace tax cuts.
House Speaker John Boehner has promised to tie substantial spending cuts to upcoming debt-limit legislation. He said spending cuts will have to be at least as large as the dollar value of the allowed debt increase. Thus, if the legislation increased the legal debt limit by $2 trillion, then Congress would have to cut spending over time by at least $2 trillion.
How can we be sure that spending cuts are real?
There are only two types of solid and tough-to-reverse spending cuts—legislated changes to reduce entitlement benefit levels and complete termination of discretionary programs. Republicans will have to define what time period they are talking about, but let’s assume it’s the standard 10-year budget window.
- Entitlements: The legislation, for example, could change the indexing formula for initial Social Security benefits from wages to prices. The Congressional Budget Office says that change would reduce spending by $137 billion over 10 years (2012-2021). Other options include raising the retirement age for Social Security and raising deductibles for Medicare.
- Discretionary: Each session of Congress decides the following year’s discretionary spending. Promises of discretionary spending cuts beyond one year are meaningless. Thus, the various promises in Republican and Democratic budget plans to freeze various parts of discretionary spending through 2021 or reduce spending to 2008 levels over the long term have no weight. Those are not real cuts.
The only way to get real cuts in discretionary spending—cuts that would be tough to reverse out in later years—is complete program termination and repeal of the program's authorization. That way, policymakers in future years would generally need at least 60 votes in the Senate to reinstate the spending.
Thus, if the GOP promises to save $50 billion over 10 years by reducing the levels of Title 1 grants to the states for K-12 schools, that is not a real and solid cut. However, if they pass a law to repeal Title 1 spending altogether, that cut may well be sustained over the long term.
To make spending cuts even more secure, the GOP should also insist on a statutory cap on overall outlays with a supermajority requirement to break, as I’ve outlined here. For program termination ideas, see www.DownsizingGovernment.org.
In sum, the GOP needs to ensure that spending cuts tied to the debt-limit vote are either:
- Changes to entitlement laws to reduce benefit levels, or
- Discretionary program terminations.
Promises to hold down future discretionary spending levels and partial program trims are not real spending cuts.
Today POLITICO Arena asks:
Given President Obama's speech today in El Paso, Texas, is immigration a winning issue for Democrats?
Immigration will be a winning issue for Democrats only if Republicans allow it, which they're quite capable of doing. Where's the anti-immigrant part of the Republican base going to go — to the Democrats? Hardly. With so much else at stake, will they sit out the 2012 elections, over this one issue? Please.
If Republicans play it right, this can be a winner. No one seriously believes that the estimated 10 to 12 million illegal immigrants in the country, most working, can or should be sent back to their countries of origin. So the main issues are paving the way to legalization, better securing the borders, and providing for a rational guest worker program. If Republicans got behind a package like that, immigration would cease to be a Democratic issue. This isn't rocket science.
- One thing is clear after President Obama's speech yesterday: He envisions a smaller national debt, but a much bigger government.
- One percent is better than nothing, but it's still pretty close to nothing.
- One thing is clear about climate change: it's causing a rising tide of red ink in Washington. See the forthcoming book Climate Coup: Global Warming's Invasion of Our Government and Our Lives and join us for the accompanying book forum, featuring MIT meteorologist Richard Lindzen and American Meteorological Society fellow Bob Ryan, on Wednesday, May 4 at 4:00 p.m. Eastern. Complimentary registration is required of all attendees by 12:00 p.m. Eastern on Tuesday, May 3. If you cannot join us in person, we hope you'll watch live online.
- One cannot be serious about reining in reckless spending without putting the Pentagon on the chopping block.
- One need not look very far to see how similar Republicans and Democrats are: