Friday, November 04, 2011

Not A Bright Outlook

There are less than three weeks before the Joint Select Committee on Deficit Reduction is to make to Congress its proposals for debt reduction over the next decade. The Center for Budget and Policy Priorities has details, expressed in billions of dollars, of both the Democratic and Republican plans

The GOP is advancing a standard ultra-conservative plan with extensive cuts to the social safety net, including Medicare and Medicaid. There are no tax increases, yet an increase in revenue of $40, due entirely to characterizing proposed increases in Medicare premiums and various fees as "revenues." CBPP notes that this defies standard budget accounting and the practice of the federal budget, which treats these not as increases in taxes but as reduction in outlays. By contrast, there are $1300 of "revenue increases" in the Democratic proposal.

There are savings of $685 in the GOP plan, $475 in the Democratic plan; $685 reduction in other mandatory programs from the GOP, $385 from the Democrats; $1150 in discretionary spending cuts in the Repub plan, $1300 in the Democratic offer. These total $2,520 in spending cuts from the GOP, $2,160 from the Democrats (in billions of dollars, as noted). This results in $495 in debt service savings under the Repub proposal and $664 in the Democratic proposal with total deficit reduction of $2,085 proposed by the GOP and $4,124 by the Democrats.

So the plan expected to be proposed by the Grand Old Party contains $685 billion in cuts to Medicare and Medicaid, taking a huge chunk out of the middle class and the poor. And the Democrats, party of Franklin Roosevelt, John F. Kennedy, and Hubert Humphrey, are countering with.... slashing $475 billion.

Once again, Democratic politicians are counting on being seen as the responsible party, the grown-ups prescribing needed medicine to the sick patient. Independent voters are to be comforted while the mainstream media swoons over this "compromise."

But of course there is little compromise when Democratic members propose a conservative plan and Republican members propose a more conservative plan. The Democratic members of the supercommittee, as well as President Obama, would be delighted to have the GOP members sign on to some sort of tax increase, even a minimal one, which they then can trumpet as a "victory."

That victory, however, as David Atkins explains, would come with a huge price. He explains that for Grover Norquist and for many Republican lawmakers, the vast majority of whom have signed Norquist's "Taxpayer Protection Pledge" (promising to oppose any tax increase, anytime)

Tax cuts are simply a means of "starving the beast," which forces cuts to government programs, which theoretically leads to Objectivist self-sufficient nirvana without the need for statist evils like FDA or public schools.

Meanwhile, Atkins recognizes that if the differences were split (perhaps with a nominal tax increase) or the Democratic plan were adopted, "conservatives would bellow about how unfair it was that taxes were 'raised' even an inch and portray the austerity sandwich as a victory for Democrats."

And we know how popular austerity is proving in Greece, Italy, and elsewhere in Europe.

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