Archive for Saturday, February 11, 2017

Opinion: Will GOP end love affair with deficits?

February 11, 2017

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Republicans were once married to balanced budgets and conservative money management, but now they have run off with something new: the seduction of tax cuts and budget deficits. They try to cover up the truth about their new relationship by cooking the books. Kansas’ own Dwight Eisenhower would be appalled.

Eisenhower presided over the last period when the U.S. ran budget surpluses for several years in a row. To fund this, the top tax rate for some high-earning Americans exceeded 90 percent. When President Kennedy backed legislation to drop that rate to around 70 percent, Eisenhower spoke against it, arguing that it would explode the deficit. A few decades later, President Reagan commissioned the W.R. Grace Commission Report, the first of a long series of warnings, reminding Americans to prepare for the impending (now current) retirement of the Baby Boomer generation, which would create (is creating) a demographic bulge straining Social Security, Medicare, Medicaid — particularly long-term care — and the nation’s overall health care system.

Then, Republicans ditched predictable old deficit-reduction policies for the sexy appeal of tax cuts and deficits: the real priority of Reagan, the second President Bush, and many congressional Republicans from the 1980s onward.

Since Sam Brownback was elected governor in 2010, they have brought their new love to Kansas. Once, moderate Republicans like Robert Bennett, Mike Hayden and Bill Graves proudly presided over conservatively managed, balanced budgets. Today, Kansas’ budget is balanced in name only: Trust funds have been drained, future payments leveraged and highway bonds misused to create the illusion of a balanced budget that may technically pass legal muster but that will spell disaster down the road. Honestly, the thrill is gone.

Now President Trump proposes massive public works projects (including the border wall), plus cuts to top tax rates. Trump’s signature phrase perfectly describes the accompanying deficit increase: It is going to be huge.

Some economists like Arthur Laffer argue that tax cuts stimulate enough economic growth to pay for themselves: lower rates on a broadening base produce more revenue than higher rates on a small base. Alas, this only works when taxes are particularly high beforehand, as with the Kennedy-era cut. When they are not, disaster ensues, as we have learned in Kansas.

Critics counter by stating, “We have a spending problem, not a taxing problem.” Granted, dollar-for-dollar, government spending keeps rising, but this is misleading. Most federal dollars are already committed to entitlement programs like Social Security and Medicare or to interest on the national debt. At the state level resides another pernicious problem: The costs of providing government services increase each year.

Teachers and other government employees are not receiving more generous benefits. Rather, the cost of providing the same benefits goes up substantially each year, mainly due to those increasing health care and retirement costs. This has not been a problem until recently — budget estimates factoring in these rising costs are readily available from the Legislature’s own nonpartisan staff (but legislators may ignore them).

The anti-Brownback Republicans elected in 2016 are sounding some rather Eisenhower-like talk about a return to responsible budgeting. But, can they give up their party’s love affair with deficit spending?

— Michael A. Smith is a professor of political science at Emporia State University.

Comments

Bob Summers 3 months, 2 weeks ago

Michael Smith,

Nice fake news story Michael.

Liberals in government spend too much money Michael.

Or, are you too fettered with the Liberal condition to figure that out Michael?

Dorothy Hoyt-Reed 3 months, 2 weeks ago

The US will end up like Kansas - scrambling for money, trying to rob Peter to pay Paul. Then suddenly deficits and lost jobs will be a positive thing and it's all someone else's fault anyway.

Bob Summers 3 months, 2 weeks ago

Liberal Obama spent fiat currency as fast as he could. I think he set a record in debt creation.

Key players in the world are working hard to eliminate the dollar hegemony. If eliminating the petrodollar comes true, watch out!

Richard Heckler 3 months, 2 weeks ago

First of all the GOP has been reduced to an organization owned and operated by libertarians and Fundamentalists neither of which have demonstrated any strength in fiscal responsible tax dollar money management. Yep they are the big spenders which is evident in their reckless big dollar spending on political campaigns which are laced with misinformation beyond reality.

Secondly both seem to subscribe to Supply Side Economics which largely depends on debt aka big time borrowing to cover the cost of Supply Side Economics. Then again Supply Side Economics has never been more than political rhetoric based on misinformation.

They keep pushing for privatization of Social Security Insurance through Wall Street which will require borrowing $4 trillion dollars. Of course wealthy investors will reap a sweet windfall as trillions in Social Security tax dollars are funneled into Wall Street annually = the primary reason for the reckless privatization effort.

The only time conservatives complain about debt is when they don't control the White House otherwise big debt is simply wonderful.

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