Tuesday, April 12, 2011

The Republican Media: No. 28

Sometimes you have to read something two or three times before you're sure you read it right the first time. Then you realize that you did. Digby caught this exchange, adding her comment beneath it, between CNN's Jessica Yellin and Senators Saxby Chambliss (R-Ga) and Mark Warner (D-Va.).

Jessica Yellin: Here are two members of the so-called Gang of Six a bipartisan group of Senators who are trying to negotiate deficit reduction. Saxby Chambliss is a Georgia Republican and Senator Mark Warner is a Virginia Democrat. Gentlemen thanks for being here.

First to you Senator Chambliss. You have been working together on this proposal for months. When will you reveal it and do you really think you can get 4 trillion dollars in savings?

Chambliss: Well there's not question but that we're working on a plan will achieve 4 trillion dollars in savings over the next ten years.As to when we're going to complete the details, that's still up in the air, but out group of six has been working very diligently over the last several months and we're going to continue to work until we can get this done and get it done the right way.That's a lot more important than the time frame in which to get it done.

Yellin: Well let me press you on that Senator Warner. House Republican budget Chairman Paul Ryan has revealed the initial Republican deficit reduction proposal, president Obama will reveal one on Wednesday, don't you both need to unveil it now, within days to be relevant in this debate.

Warner: I think one of the things we saw in last week's debate, if we start in our partisan corner you wind up with an 11th hour brinksmanship. We've been working for months on a serious plan and we're very close. We want to make sure it's right. And I do think in the coming short period of time that we need to get this into the debate and I think there are members in both parties who are willing to step up and say we are starting from a bipartisan basis and there's a much better chance of getting something done.

Yellin: let's start with bipartisanship because we saw an awful lot of acrimony over the last month over just a tiny sliver of the budget, the continuing resolution. How in the world Senator Chambliss, are you going to get Democrats and Republicans to agree for a long term spending plan in this partisan environment?

Chambliss: Well, that's why it's important that we work together as a bipartisan group to develop a bipartisan product. If we do start from one side or the other side and hope that we can meet in the middle, my guess is that never gets done. But the fact that we have three Republicans and three Democrats in a room discussing in a very serious way the most significant national security interest that the United States is facing today I think says an awful lot number one about the fact that we think we can get it done. And secondly that this group is committed to make sure that in a bipartisan was we address the issue will in itself give us a better opportunity than if we started at opposite ends and hope that we could meet in the middle.

Yellin: Senator Chamblis do you believe that Senate Republicans will agree to a package that includes any sort of tax changes?

Chambliss: Well, the fact of the matter is that you can't solve this debt problem just with reductions in discretionary spending. You can't solve it just by attacking and reforming entitlements. You've got to look at the revenue side also.

What we are looking at proposing is actually a reduction in corporate rates and personal individual income tax rates, which will put more money in people's pockets and we're going to do that with the reduction in tax expenditures. Every time we've done that in years past whether it was under President Reagan or president Bush we have seen revenues increase. And we've got to have an increase in revenues if we are going to retire this debt... revenues have to be on the table if we're serious about attacking that debt.

Yellin:Senator Warner, that's a big concession by Republicans. For Democrats, you've acknowledged that they have to come along and tweak entitlements. Over the week-end one of the president's advisers said this should potentially include social security. So what changes to social security would be part of your budget proposal?

Warner replied that they don't plan to take money from social security to pay down the debt but just feel they should make SS "secure" for the next 75 years anyway. (Apparently this epic deficit battle is such a breeze that they can squeeze in this unnecessary issue right along with it.) He finished up with this:

Warner: I think we've got the makings of a Grand Bargain if we start with a bipartisan basis, I think we can get it done and surprise a lot of the pundits.

Let's rewind this. We have Jessica Yellin summarizing "Senator Warner, that's a big concession by Republicans."

And what is this "big concession?" Obviously, Democrats would rather not cut spending, much; Republicans are adamantly opposed to any tax increase. So while Mark Warner, boldly representing Democrats, assures Yellin that Democrats need to be bipartisan and cut spending and Social Security, Chambliss says

What we are looking at proposing is actually a reduction in corporate rates and personal individual income tax rates, which will put more money in people's pockets and we're going to do that with the reduction in tax expenditures. Every time we've done that in years past whether it was under President Reagan or president Bush we have seen revenues increase.

He adds the obligatory "we're serious about attacking that debt" because inside the Beltway, no one is serious about deficit/debt reduction unless he or she proclaims himself "serious." And nothing- nothing- is more important than being SERIOUS.

Warner, determined to prove he is serious about the debt, has agreed to spending cuts. Chambliss, determined to prove he is serious about the debt, advocates "a reduction in corporate rates and personal individual income tax rates." That's right- reduce revenue to increase revenue.

Albeit counter-intuitively, spending generally increases with a cut in taxes. There may be less money to spend, but Congress is playing with house money- really, it's no one's money, having flown off the money tree GOP presidents always detect. The Atlantic's Jonathan Rauch explains "the way to limit the growth of government is to force politicians, and therefore voters, to pay for all the government they use—not to give them a discount.... Voters will not shrink Big Government until they feel the pinch of its true cost." As Rauch notes, William Niskanen of the CATO Institute (the CATO Institute!) reluctantly came to a similar conclusion.

But, additionally, revenues in the mid-term tends to decrease, rather than increase, revenue. Former Reagan advisor Bruce Bartlett quotes Alan D. Viard, a Bush 43 economist who moved on to the American Enterprise Institute, noted in 2006 "Federal revenue is lower today than it would have been without the tax cuts. There's really no dispute among economists about that." Robert Carroll, then deputy assistant secretary for tax analysis at the U.S. Treasury Department, conceded during that period "as a matter of principle, we do not think tax cuts pay for themselves."

He quotes also Edward Lazear, chairman of the Council of Economic Advisers in Bush’s second term, testifying to the Senate Budget Committee, September 28, 2006,

Will the tax cuts pay for themselves? As a general rule, we do not think tax cuts pay for themselves. Certainly, the data presented above do not support this claim. Tax revenues in 2006 appear to have recovered to the level seen at this point in previous business cycles, but this does not make up for the lost revenue during 2003, 2004, and 2005. The tax cuts were a positive step and have contributed to the enhanced economic growth, additional jobs, higher real disposable income, and the low unemployment rates that we currently see today.

Revenues obviously increased substantially during the Clinton Administration. But as the chart from the Office of Management and Budget presented by Bartlett indicates, they generally decreased during the administration of the great tax-cutter, George W. Bush.

The assumption, when talk turns to "the revenue side," is that the Republican is admitting the necessity of at least considering a tax increase. Paul Ryan writes in the Wall Street Journal of "tax reform" in his 2010 Roadmap to America's Future; he means cutting taxes, especially for the wealthy. He advocates "pro-growth tax reforms" in his recently-released Path to Prosperity; it turns out he wants billionaires to be taxed at the rate of 25%.

Fortunately, Chambliss clarified that the GOP's "revenue enhancements" to cut the deficit are euphemism for tax cuts. But that wouldn't stop Jessica Yellin, working at the supposedly moderate and reasonable CNN, ideologically ensconced between cable's pro-Obama network and the network serving as the press agent for the Republican Party. After all, if Democrats are willing to entertain cuts in women's health, Medicare, Medicaid, and Social Security programs, shouldn't Republicans be willing to swallow tax cuts?

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