Thursday, November 4, 2010

Lowering the Deficit with Less Revenue - The Republican Plan for Governance

If you've been watching any of the cable news networks over the past couple of days, you've certainly heard a lot of hyperbole about what the 2010 election means. 

John Boehner and Mitch McConnell would like you to think that the election was a referendum on the president's policies - particularly health care reform and deficit spending.

Actually, Tuesday's voters are split on health care - 46% support it, 47% oppose it. Both Boehner and McConnell have expressed their intention to pass legislation repealing health care reform (a move that will undoubtedly be vetoed by President Obama if it ever reaches his desk). 

Playing one of the typical "Washington games" that Republicans so frequently complain about, the GOP-led House will still certainly try to pass that legislation in an attempt to pander to their base and drum up support prior to the 2012 presidential election.

Ignoring that inevitable exercise in legislative futility, the real attention turns to correcting the sluggish economy and balancing the federal budget.

In an interview on Meet the Press on Aug. 8, John Boehner recited the typical Republican party talking points to attack Democrats for their unwillingness to extend the Bush tax cuts:

"It's all the spending, it's all the debt, it's [the Democrats'] national energy tax, more mandates, higher costs, the healthcare bill. And if all that isn't bad enough, they want to raise the taxes on the American people."

The Former Chairman of the Federal Reserve, Alan Greenspan, cites the federal budget deficit as the key obstacle in the economy's recovery, saying in a recent FoxBusiness interview that "for the first time in my life I am in favor of raising taxes."

Citing Allan Greenspan's disillusion with borrowing money to pay for tax cuts, David Gregory repeatedly asked Boehner how the budget can be balanced while extending the cuts.  The next Speaker of the House continually dodged the question:

"Listen, what you're trying to do is get into this Washington game and their funny accounting over there.  You cannot get the economy going again by raising taxes."

Funny accounting, Mr. Boehner?  The man who guided the economy through the booms of the Reagan and Clinton administrations disagrees.

The point that Greenspan and Gregory were making is that the first step to fixing the broken economy is to balance the federal budget.  Rather than running deficits, the country needs to exercise fiscal responsibility and constraint (two major planks of the Republican platform).

There are only two approaches that can be taken to eliminate the federal budget deficit - raising taxes or cutting spending.

Since Boehner, as the new Speaker of the House and the leader of the Republican Party, ideologically opposes an increase in taxes, it will be interesting to see which programs Boehner proposes to cut in order to balance the budget. 

Does he intend to cut money from education?  From social welfare programs?  From the military?

By cutting funding in any of these areas, Republicans are likely to isolate a key constituency that they will need in the 2012 election - the elderly, members of the military, college students.

This is the issue that both parties face over the next 2 years.

But for Republicans, these issues are most pertinent.  After all, they're the group that just won an election by spouting off for the past 2 years about the need to decrease spending and balance the budget (even though they're the group that created the deficit in the first place).

This leaves them with a choice to make:

Republicans can opt to work with Democrats in a bi-partisan way to balance the budget.   This would probably mean a combination of tax increases and program cuts - ya know, that whole 'fiscal responsibility' thing they're always talking about but never delivering on.

They can either do that, and deliver on their campaign promises, or they can continue to be combative and blame the Democrats when Congress fails to deliver on a balanced budget over the next 2 years.

I'll bet they choose the latter.