Wednesday, June 10, 2009

Being Fiscally Conservative Means Having to Raise Taxes. Sometimes.

Republicans are upset about all the spending going on under President Obama. In someways, they should be concerned about all this.

But then, if GOP leaders are upset, then they need to look at themselves first before they start accusing the Democrats.

New York Times writer David Leonhardt, does a good job of showing how the rising tide of red ink flowing from Washington will harm the economy. But he is willing to show us that the red ink didn't start with Mr. Obama:

The story of today’s deficits starts in January 2001, as President Bill Clinton was leaving office. The Congressional Budget Office estimated then that the government would run an average annual surplus of more than $800 billion a year from 2009 to 2012. Today, the government is expected to run a $1.2 trillion annual deficit in those years.

So, how did we get here? Leonhardt explains:

The first category — the business cycle — accounts for 37 percent of the $2 trillion swing. It’s a reflection of the fact that both the 2001 recession and the current one reduced tax revenue, required more spending on safety-net programs and changed economists’ assumptions about how much in taxes the government would collect in future years.

About 33 percent of the swing stems from new legislation signed by Mr. Bush. That legislation, like his tax cuts and the Medicare prescription drug benefit, not only continue to cost the government but have also increased interest payments on the national debt.

Mr. Obama’s main contribution to the deficit is his extension of several Bush policies, like the Iraq war and tax cuts for households making less than $250,000. Such policies — together with the Wall Street bailout, which was signed by Mr. Bush and supported by Mr. Obama — account for 20 percent of the swing.

About 7 percent comes from the stimulus bill that Mr. Obama signed in February. And only 3 percent comes from Mr. Obama’s agenda on health care, education, energy and other areas.

If the analysis is extended further into the future, well beyond 2012, the Obama agenda accounts for only a slightly higher share of the projected deficits.

So before we start placing blame on Obama or the Dems, we Republicans need an intervention.

We caused this. We are responsible.

The thing is, after going on a bender for eight years, it's hard to turn around and pretend that we now are serious about keeping the deficit under control. Also, how serious are we if we want to keep the current Bush tax cuts alive?

This isn't to say that the Dems are innocent in this, it's just they've only been in power for five months. In someways, the Democrats are like the teen that finds out that his supposedly tea-totalling Dad is a royal lush- they've decided that if papa ain't gonna live up his words, then why should they?

The Republicans have to get their fiscal conservative mojo back, but not by saying "never again" and then going on a tax cutting and spending bender.

It will mean that the Republicans will have to go cold turkey and get back on the road of real fiscal conservatism and not the faux conservatism they've been on for a while.

Fiscal conservatism means that to keep the budget in line means learning to cut the budget when needed, live within our means, and to get the most of our the taxpayer's dollar.

Oh yeah, and it means that from time to time, we have to raise taxes.

I know that has become an anathema to Republicans over time. No Republican worth their salt likes raising taxes. The very thought kind of makes our stomach turn. But if we are going to regain the mantle of fiscal responsibility, then we need to find the narrow path.

Republicans used to believe in making government efficient and make sure that the feds can meet obligations without incurring more debt.

Bruce Bartlett, one of the minds behind supply-side economics, has become a bit of an apostate for his willingness to depart from what has become conservative dogma on fiscal issues. He believes that Republicans might want to "be like Ike:"

Historically, Republicans have come back from electoral losses by accepting the fact that Americans mostly like government spending. Rather than make a futile effort to take away something most voters want, Republicans have instead worked to make the welfare state function efficiently, target benefits to those that play by society’s rules and finance those benefits without additional debt.

Thus, when Dwight Eisenhower won the presidency in 1952 with solid Republican majorities in both the House and Senate, he explicitly rejected any attempt to repeal the New Deal. Instead, he pushed efficiency and economy in government and emphasized that its bills needed to be paid. Balancing the budget was Eisenhower’s main concern.

Similarly, Richard Nixon made no effort to roll back the Great Society after he was elected in 1968. Like Eisenhower, he emphasized proper ­management of government programs and the necessity of financing them even if it meant raising taxes.

Balancing the budget? Proper management? What odd words.

Okay, but Eisenhower and Nixon are even "real" Republicans, some conservative wags will say. Now Ronald Reagan, there's a man who wouldn't raise taxes to keep big government up and running!

Well, you're wrong:

Even Ronald Reagan accepted the permanence of the welfare state and the need to pay for what has been promised to our senior citizens. This is most apparent with the Social Security rescue in 1983, which left benefits virtually untouched but raised taxes sharply to keep the system solvent.

Of course, none of this is sexy and it doesn't energize the base. Tea parties won't be held in praise of higher taxes. But actually acting like we mean it when we talk about being good stewards of the public purse might attract independents who do care about these things. It worked in Europe this past weekend where conservative parties won in elections the Europarliament.

The current recession has woken the average American up. After years of living off credit cards, judgement day came to millions. It's high time for we Republicans to stop spending the nation's credit card and act like adults.


Mike at The Big Stick said...

I was just reading a book review the other day about Teddy Roosevelt. It actually mentioned the original mugwumps and specifically pointed out that Roosevelt hated them for abandoning the party when Blaine was nominated. By staying in the party, rather than moving to the Democrats with the mugwumps Roosevelt actually ensured his political future.

It made me wonder if neomugwumpry is poised to abandon the GOP as well?

Anyway, I have been working on a long post about the GOP based on a depressing but accurate article by Daniel Larison. He makes a very good case that the reason for the GOP's woes is not fiscal policy (as fiscal conservatives have claimed) or social policies (as moderates/social liberals have claimed) but the GOP's foreign policy i.e. Iraq which just about all Republicans, including myself, have been apologists for.

I'm not saying that fiscal policy isn't important, but Larison maybe we're all ignoring the elephant in the room.

Paul Wartenberg said...

Being fiscally conservative means issuing arrest warrants for the Club for Greed: the current GOP is too far deep into that group's clutches for any possible intervention. Once they're behind bars and unable to blackmail/bully the GOP, then we'll see sanity return to our shores.

blake.seitz said...

Here here, Dennis!
--It's time for Washington to balance the books, and I'm not too picky about who gets it done so long as the country isn't reeling in debt when I'm old enough to pay taxes.