A Frothing Projo Editorial and a Much Needed Policy Reversal
“House GOP vs. America” — that’s quite a headline for an unsigned editorial about the debt ceiling battle. The text below it is the sort of summary of economic assumptions and narrow conclusions about specific issues that is therefore impossible to address without revisiting every particular issue and arguing line by line.
For example, writes the editorial board:
That House Republicans, dominated by Tea Party zealots, still refuse to support raising the debt ceiling after having been offered a deal to cut $3 of spending for every $1 of new tax revenues shows a frightening willingness to wreak havoc with the American economy.
For that one, Jerry Pournelle has already provided the points that I would make:
… What’s called a cut is in fact merely a small decrease in the rate of increase, so that “cut” means spending more money. There will be a $1.1 Trillion cut spread over ten years, with a Commission of 12, 6 Republicans and 6 Democrats, to propose more cuts. If 7 of them can agree on a “cut” — which may be an actual cut but is more likely to be a reduction in the rate of increase — then both Houses of Congress have to approve the “cut”. This may amount to $2 Trillion spread over ten years, or $200 billion a year.
The government will continue to borrow $100 billion a month. That amount will go up as the deficit rises. We will then be told that gollies, we did everything we could, but it’s not working, we have to have more revenue or we are in default, give us more money. When we point out that they promised cuts and didn’t deliver, we will be told that, well, yeah, but look at that guy with the private jet over there! Tax him, tax him! Look, that company made obscene profits last year! Tax them, tax them!
But so it goes, with the Projo’s style mirroring a mouth-breathing lefty blogger rather than a respectable publication. From the above-quoted title and the term “Tea Party zealots” to putting “conservatives” in quotation marks to a declaration that it is “nonsensical” to say that letting tax cuts expire, thus increasing the amount that people pay in taxes, is… umm… raising taxes. You know, because the average American family, when plotting out its budget projections for the next decade, has already taken into account the expected increase. Right?
You do account for projected tax policy when you budget for the next decade, don’t you?
The key paragraph of the editorial is this one (emphasis in original):
[The Bush years were] years of the partly unfunded Iraq and Afghanistan wars, TARP and other bailouts and the (totally unfunded) Medicare drug benefit, among other things. New policies during Bush years, including the above-mentioned tax cuts, cost $5 trillion. New costs in the Obama administration, including the economic stimulus, totaled only $1.4 trillion.
Although the editors don’t bother citing a source for their data, it appears to come from this New York Times chart, which derives from the left-wing Center on Budget and Policy Priorities. Having sifted through CBPP data reports in the past, I’d suggest that we’re not looking at an objective fact, but (again) at a series of assumptions and narrow conclusions that are eminently arguable. In other words, by the time you get to a chart that broad, use of the numbers ought to be heavily qualified.
Even this idea of “new costs” illustrates the point. As the Iraq war wound down, President Obama ramped up activities in Afghanistan, yet the chart does not include any such costs. The Projo insists that letting tax cuts expire is not a “new” policy, but the chart does not appear to treat the extension of those cuts in 2010 to be an Obama-era cost.
Next consider that the Bush total is entirely actual results, while most of the Obama total entails projections. How is it possible that “health reform and entitlement changes” can possibly represent an increase of only $152 billion from 2009 to 2017? Be sure to check back on that one in 2020. And be sure to note that roughly $2 trillion of the total “new policies” derives from the failed stimulus spending of which liberals, including at least some of the Projo editors, wanted more. These are the people making righteous declarations about others’ hypocrisy?
Another choice bit of the editorial has to do with taxation in general:
Meanwhile, the Republican refusal to let some of the Bush tax cuts expire or to close tax loopholes is nothing short of delusional. Federal tax collections as a percentage of the economy are the lowest they’ve been in over six decades!
While that’s pretty much true, collections and percentage of GDP aren’t as clearly relevant as the editors imply. As the first chart here shows, since 1960, the federal tax percentage of GDP has consistently been between 15% and 20% — despite changes in tax policy and despite economic booms and recessions. Those of us who’ve been in the working world for at least 10 years will likely recognize that the two big recent dips in this data point corresponded with two economic contractions.
Indeed, it’s interesting to note that tax collections as a percentage of GDP actually increased after the maligned Bush tax cuts. (The Reagan tax cuts show a similar, though more gradual, trend.)
In the context of the debt ceiling two additional points ought to be remembered. First, government expenditures as a percentage of GDP have never been higher. Second, the “tax cuts for the rich” that President Obama insists be part of any debt ceiling deal (which gives him at least as much blame for the Projo’s “budget Armageddon” as Republicans) amount to about 15% of the Bush tax cut total — which is a point that the CBPP and Projo alike are not particularly careful about making.
I’ll agree with the Projo editors on one thing: “It’s time for Republicans to take ownership of their failed policies of the last 10 years and reverse them.” Government spending is out of control and must be reined in. Whether it results from policies implemented during the presidency of Obama, Bush, or FDR the size of government must be reduced. If anything, the House Republicans are not being stringent enough.