Entries Tagged as 'Spending Cuts'

Resume the Debt Debate in 2012?

David Frum July 25th, 2011 at 7:45 am 61 Comments

So here’s the new Republican debt-ceiling idea:

Pass a $1 trillion increase in the debt ceiling joined to $1 trillion in spending cuts over the next 10 years, no revenues.

That sounds dramatic. But $1 trillion in spending cuts over a decade is not as big a deal as it sounds, especially if you are allowed to be vague about them. And a $1 trillion debt ceiling increase carries the United States government only into the early part of next year, meaning that this debate will recur in 2012.

House Republicans apparently regard the early renewal of the debt-ceiling debate as a feature, not a bug. It means that they can resume the debate over debt and deficits in the election season.

Except – I thought the 2012 election was supposed to be about the economy? Jobs and the Obama administration’s disappointing record of creating them?

Isn’t that the winning issue?

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GOP Must Use Debt Debate to get Real Cuts

July 12th, 2011 at 1:32 pm 67 Comments

I have been struck by the arguments here at FrumForum that the hard line Republicans against raising the debt limit are “radical.”   I put aside the views expressed (according to press reports) by Michele Bachmann that she will not vote to raise the debt limit under any circumstances. What I wonder is if a vote for a rise in the debt ceiling only with enforceable, verifiable, and real structural spending cuts-passed by Democrats and signed by President Obama-without a rise in tax rates is truly radical or if instead, it is the proper Republican response to the Obama years?  Those years have seen unprecedented spending with no plan to end the deficits and attacks on any Republican proposal to do so.

Mr. Frum is on record that a failure to raise the debt limit will hurt Republicans and the Republic (also here). He, and others worry that a failure of a deal hurts Republicans and would be a disaster.  For purposes of this argument I won’t argue that failing to raise the debt ceiling would be bad for the country, though it is debatable.  My argument is political, I’m not convinced that the Republicans risk much, by opposing a rise in the debt ceiling unless structural and real spending cuts are approved openly by the Democrats and the President.  A rise in tax rates should also be off the table.  We don’t have a taxing problem.  We have a spending problem.  The Republicans don’t want to vote for a rise in the debt ceiling and the Democrats don’t want to reduce spending.  Each voting to do both is compromise.

This is so reasonable that for the first time in a long time Pat Buchanan and Charles Krauthammer agree on something.  Buchanan thinks the whip hand belongs to congressional Republicans on spending and they should use it. Krauthammer, a “governing Republican” if every there was one thinks it is Obama and the Democrats being irresponsible and that the country knows it.

David Brooks has joined the “Republicans are radical” side of the argument but his love of Obama and his well creased pants are legendary. He has accused Republicans of bad faith and lack of honor for not wanting to continue to make promises they know will not and cannot be kept. When he criticizes President Obama and his “tax corporate jets to prosperity plan” in equally vitriolic terms I will take him more seriously.  Also, as Krauthammer notes, his entire piece is based on cuts that have so far only been leaked to the press.  President Obama’s unverifiable, unaudited leaks are given the status of holy writ by Brooks.  This is not punditry but idolatry.

A pretty smart lawyer, John Hindraker weighs in here supporting a hard line of verifiable cuts for a raise in the debt limit. These “Sessions Seven” in the Senate are likely the target of the “responsible Republican” wing of the party but shouldn’t the Democrats have to produce a budget?  I will lay down a marker here for what I think is responsible and reasonable for a Republican.  I reject balanced budget amendments as slow, silly and prone to handing our fiscal future to the Courts and away from Congress where it belongs.  I also think that as long as marginal rates are not increased, eliminating loopholes and subsidy is fine.  In other words, I side with Tom Coburn over Grover Norquist in the debate on what revenue enhancements are legitimate for Republicans.  A reduction of the corporate tax rate to the average for G-7 nations, for instance, coupled with a closure of corporate loopholes, particularly subsidies, strikes me as eminently reasonable.

Barack Obama is the President who will leave unemployment worse than he found it with no reduction to pre-recession levels in sight.  He is the President who has created more debt than any other one term president in history.  He is the President who ended American manned space flight that John F. Kennedy began so memorably.    Does he want to be the first President to see America default on its obligations?  Can he survive it?  I don’t think he can.  Why shouldn’t the Republicans extract all they can get?

What other opportunity will they have to hold the Democrat’s feet to the fire?  To show Americans they will not engage in business as usual?  Republicans insisting on real spending cuts-not the same false promises they have received in the past-that the Democrats have reneged on and then demagogued- are being wise, not truculent.  The President who voted against raising the debt ceiling when he was a Senator can hold out for tax increases.  He can maintain spending and use his power to keep the base line of spending at post-stimulus levels.  Let the default then be on his head.

The Democrats have violated the law by not passing a budget in the Senate for 800 days.  The Democrats have rejected President Obama’s own debt commission suggestions when there was time to do something.  The Democrats and their mouthpieces push the canard that we don’t have a spending problem except for Defense.  Their policies have nearly bankrupted us and done nothing to bring back prosperity.  A new direction is imperative and they are weak.  Their weakness should be exploited to maximum gain.  The House should pass bill after bill raising the debt limit but cutting spending, defunding Obamacare, and defunding the Left.  Let the Senate stop it and Obama veto.  Who then is not raising the debt limit and making America renege on its promises?  Are the spending priorities of liberalism more important than paying America’s bills?  Who is radical now?  Finally, when the debt limit is raised -and Obama and the Democrats have caved and have been seen to cave -the Republicans should make the next debt limit fight take place in September/October of 2012.  The Republic will then have a choice.  It can vote for Obama’s debt path and the Democrats or the Republicans.  What could be fairer and more democratic than that?   What fair-minded argument against running the election on the debt crisis of the West and of the U.S. can there be from good government types?

Mr. Krauthammer (and others) have laid out a plan for raising the debt ceiling and reducing spending.  The House has passed a budget.  The Right has risked political loss with Congressman’s Ryan’s Medicare program.  We have been responsible.  Your turn Mr. President.

Pawlenty Can’t Afford His Foreign Policy

July 2nd, 2011 at 12:39 am 26 Comments

GOP presidential candidate Tim Pawlenty recently called for $2 trillion in tax cuts for individuals and businesses in the next decade, view as well as two to three times less federal spending – cutting a total of $8 trillion.

But on Tuesday, illness Pawlenty expressed his foreign policy plans to remain involved in the Middle East – to “seize” the opportunity “amid the turmoil of the Arab Spring” and to “help promote freedom and democracy.”

The GOP candidate said America should stop “leading from behind” and be more active in regions like Libya, Egypt and even Saudi Arabia.

However, the cost of the U.S. campaign in Libya is expected to exceed the $750 million Pentagon estimate set out in March. Taxpayers are spending $2 million a day to support the African nation – and all this while “leading from behind.” At the current expenditure, the U.S. will spend almost $1 billion on its Libya mission.

Pawlenty’s campaign spokesperson refused to comment on how the candidate plans to fund even more overseas missions while also cutting government spending.

Economics columnist Bruce Bartlett said his foreign policy corresponding to his economic policy is “possible – but it’s also possible that pigs will grow wings.”

A president has limited power in controlling the budget. Pawlenty would require Congressional approval to make such drastic cuts in both taxation and spending, which Bartlett said is “absurdly unrealistic.”

Taking stands that separate him from other candidates may appeal to some portion of the Republican electorate, which could give him the much-needed popularity he is lacking – even if it’s from Tea Partiers, Bartlett said.

However, Peter Feaver, a former National Security Council advisor to Clinton and Bush, said that ignoring problems abroad will just bring them home, so Pawlenty has the right idea by addressing the importance of U.S. involvement in the Middle East.

“I wouldn’t say that he is focusing so much on the Middle East as the Middle East is focusing on us,” said Feaver, who is now a professor at Duke University. “I would say in the long run the Republicans are not going to win in the general election by running on the left of Obama on foreign policy.”

Feaver said he did not know enough about economics to analyze if Pawlenty’s plan is feasible, but he did say “a crucial part ofPawlenty’s stance is that you have to rebuild the economy and get it growing again and his plans and ambition on the foreign policy side is predicated on [that].”

Feaver said the perceived mood of the Republican party is war-weariness and a desire to retreat from the Middle East, but even though “being strong on national security doesn’t capture the way the mood seems to be recorded,” the last century of history shows that few international problems have been solved without help from the United States.

“The lesson since World War II is that American leadership is important,” he told FrumForum, “There are few problems that got better with America ignoring them, and few that got solved by others stepping up and letting America ‘lead from behind.’”

But looking at the numbers, Pawlenty’s foreign and economic policies do not seem compatible.

Federal Budget Analyst Andrew Fieldhouse said that Pawlenty’s tax plan does not compute with his spending plan because the GOP candidate has endorsed a federal balance budget amendment towards capital expenditures of 18 percent GDP. Currently, federal spending is close to 24 percent. His revenue plan would lose 7.6 trillion dollars of revenue. According to his plan, revenue would only be 14 percent of GDP, and after subtracting the three percent interest rate, there would only be 11 percent of GDP for actual government spending.

“At that point you could theoretically continue large military presence overseas and his extensive foreign policy, but it would crowd out huge areas of the federal budget,” said Fieldhouse.

The government would have to reduce the Congressional budget, eliminate Social Security, federal retirement, foreign subsidies, federal health expenditure, non-interest government spending and 10 percent of the economy over the next decade.

“It doesn’t seem feasible to me,” he told FrumForum. “He has a delusional approach to budgeting. I don’t think he’s thought any of this through.”

Budgeting 18 percent of the economy (which the Ryan plan proposes) is always difficult, but possible. However, budgeting 11 percent of the economy for federal spending, while having a large military presence overseas – is near impossible, said Fieldhouse.

A recent Gallup poll shows that Pawlenty’s name recognition among Republicans has risen to 57 percent, but his Positive Intensity Score is 8 – his lowest to date. To prevent his popularity from decreasing, he needs to increase his appeal to voters.

When asked if he thinks Pawlenty is using his foreign policy stance to stand out from other candidates, Feaver said that Tuesday’s speech truly reflects his views.

“I think this doesn’t reflect a tactical positioning of himself to appeal to the primary voters so much as this is what he actually believes is good for American national interests,” he said. “And that’s an important distinction – some candidates will take a stand because they’re trying to triangulate some primary voting blocker.”

“Since the [Tea Partiers] make no demands on their ideological leaders to be logically consistent or have numbers that add up, he doesn’t feel like he has to conform to that requirement either – so he just says whatever he thinks will be popular,” said Bartlett.