The GOP’s Big Deficit Lie
The Article: The Big Deficit Lie: Every GOP Debt Plan Leaves Us With More Debt by Derek Thompson in the Atlantic.
The Text: The four remaining GOP candidates have a simple and straightforward plan for the direction of our federal debt. Up. Way up.
That’s the conclusion from a new report comparing the tax-and-spending plans from Newt Gingrich, Mitt Romney, Ron Paul, and Rick Santorum, from the Committee for a Responsible Federal Budget.
Today, public debt is equal to about 70% of our economy. If Congress allowed current law to play itself out, the Bush tax cuts would expire and that number would fall to about 60%, according to various estimates. That’s pretty stable. But nobody wants the “current law” scenario to play out. Not Congress, not the Senate, not the White House, and certainly not the Republican field. So we need another plan. Problem is, most of the other plans don’t get us anywhere near stability. In fact, the GOP plans would raise our debt burden to anywhere between 67% and a whopping 126% of the economy by 2021, according to CRFB.
This graph compares the moderate estimates for each candidates’ debt plan against the president’s. This is all smart guesswork, mind you, but it offers a nonpartisan view of the sort of “deficit reduction” we’re really getting under these proposals. This Y-axis starts at 60, which is the target debt/GDP ratio for CRFB.
Okay, so beating 60% is too hard. Let’s move the limbo bar up a notch. CRFB also calculates its own “realistic baseline.” This sounds complicated, but it’s the deficit reducer’s equivalent of Beginner’s Level. This baseline assumes that the Bush tax cuts are extended, some scheduled spending cuts are ignored, and Congress upholds its proud tradition of pushing off hard decisions while it pushes up our debt burden. Sounds reasonable and easy to beat with a few smart cuts and tax changes. But even playing the game on Beginner, every GOP candidate that has ever led a national poll loses the game. Only Ron Paul wins, with a whopping $7.5 trillion in spending cuts.
According to White House projections, the president’s budget (red in the graph below) wins the deficit reduction game (on Beginner’s Level, at least). The reason is all in the taxes. Each of the GOP candidates cut taxes dramatically and can’t find adequate savings, while the president proposes $1.5 trillion in tax increases concentrated on the richest 2%.
Let me anticipate some of your objections. First, the White House relies on optimistic growth numbers that might not play out. Slower growth would lead to higher deficits, because tax revenue wouldn’t keep up with mandatory spending. Second, this is all guess work, and there’s more than one way to guess. Conservative economists who support tax cuts might want to sell you on “dynamic scoring,” which presumes that tax cuts lead to growth, which makes us richer, which increases tax revenue. This is the “tax cuts pay for themselves” argument, and it might be true in the future, but it has a spotty record in the past. Effective and marginal tax rates have fallen for the last 30 years, and growth since 2000 hasn’t been so hot.
These plans don’t accidentally raise the deficit. They just don’t care about the deficit. Deficit reduction isn’t hard to do, arithmetically. You raise taxes over time. You control discretionary spending. You clear the way for health care cost innovation while introducing policies that will limit health care in the future. It’s not rocket science, it’s math. The hard stuff is getting Congress to agree to your math. But how is that supposed to happen if pols refuse to do even the basic addition and subtraction when it’s just them and a blank sheet of paper? What does it say about a party that believes “deficit reduction” is a worthy phrase, but not a worthy goal? And what does it say about our political system, and the GOP candidates in particular, that we’re normalized to the idea that politicians offer debt-reduction plans that can’t even live up to their name?
