Hypocrisy is the mother’s milk of politics, but even bone-fortifying calcium can be toxic if ingested too plentifully. In this vein, it’s too soon to tell whether Republicans will pay an electoral price for their brazenly insincere carping about the national debt, since “they built it.” Yet the GOP surely risks rendering its own brand lethal.
The backstory dates to President Reagan’s embrace of supply-side economics, which promised the equivalent of weight loss through a high-fat diet, or tax cuts that magically would be revenue neutral, i.e., the public kitty wouldn’t be impacted. So much for free lunches; the debt ballooned. No matter, the supply-side faith endured. In the lead-up to the 2000 presidential election, candidate George W. Bush “doubled-down on trickle down” in Bill Clinton’s memorable words by arguing for a trillion dollar-plus tax cut, this time justified because of flush public coffers—It was your money, he said confidently, not the government’s.
Al Gore, Bush’s opponent, took a more conservative line. The vice-president argued that, since much of the real and projected surplus derived from payroll taxes supposedly earmarked for Social Security, and since the millions of baby boomers would soon retire, the monies should be put in a “lockbox” trust fund exclusively for seniors. A handful of votes in Florida and one at the Supreme Court scuttled that plan.
That the anticipated surpluses turned out to be a chimera was not a surprise given that the sorts of long-term budget projections, which in the late-1990s anticipated a 10-year revenue windfall of $5.6 trillion, are notoriously inaccurate. Again, no matter. President Bush stubbornly moved forward with his fiscal plans even as the economy began to sputter with the bursting of the dot-com bubble.
Bush’s reckless tax cutting in 2001 and then again in 2003, which was rapturously supported by his own party (and some Democrats, too) not only eroded the country’s fiscal footing but also transferred wealth up the food chain. How so? Because payroll taxes, which are levied at a rate of 12 percent of all earnings up to about $105,000, are quite regressive (high-earners pay smaller percentage of their overall earnings), while Bush’s cuts were gratuitously skewed towards the rich. According to the Economic Policy Institute, the cuts rewarded people making over $3 million annually, or just .1 percent of taxpayers, an average savings over ten years of $520,000, more than 450 times what the average middle-income family received. What’s more, Dubya would later use the specter of Social Security’s pending insolvency hastened by his own fiscal folly to justify privatizing the program. There’s a term for this: chutzpah.
Bush’s fiscal mismanagement is well trod: there’s the unpaid for “war of necessity” in Iraq whose ultimate cost could exceed $3 trillion; another unpaid for war in Afghanistan; and an expensive new entitlement, Medicare Part D, also put on the tab; etc. All this coupled with the financial crash that bookended his tenure left his successor with an “Inbox from Hell.” Indeed, just weeks before Obama took office, the Congressional Budget Office projected a $1.2 trillion deficit for fiscal year 2009, with shortfalls to follow in perpetuity.
Republicans, including many who enthusiastically supported Bush’s fiscal policies (read: Paul Ryan), now darkly warn about the five trillion-plus dollars of debt accumulated during Obama’s term mostly as a result of his predecessor’s irresponsibility. There’s a term for this: complete fuckin’ bullshit. As Kathy Ruffing and James Horney of the liberal Center for Budget and Priorities observe: “By themselves…the Bush tax cuts and the wars in Iraq and Afghanistan will account for almost half of the $20 trillion in debt that, under current policies, the nation will owe by 2019. The [Obama-supported] stimulus law and financial rescues will account for less than 10 percent of the debt at that time.”
The good news is that simply returning the nation to its historical level of economic growth of roughly three percent, winding down the war in Afghanistan, and jettisoning the Bush tax cuts would almost entirely stem the red ink. David Leonhardt of the New York Times points out that just allowing all tax rates to return to Clinton-era levels—a period when the country experienced its longest economic expansion ever—would eliminate 75 percent of the deficit over the next five years. The long-term deficit is another matter, as much of it stems from ballooning healthcare costs. But even here there is reason for hope, since getting such costs to align with the average of those in OECD countries would go a long way to rectifying our long-term budget woes.
But all hope vanishes if Romney and Ryan win office. The two support making the Bush tax cuts permanent, and adding further cuts still—mostly for the rich, of course. There’s a term for this: national suicide. There’s another term, too: GOP fiscal orthodoxy.