Republicans Don't Give a Damn about the Deficit

Published on Thursday, July 15, 2010 by The Guardian/UK

The GOP's blocking of jobless benefits in the US Senate, while supporting huge tax cuts for the rich, shows its stance is political 

by Sahil Kapur

As the US national unemployment rate remains high at 9.5%, Senate Republicans are persistently blocking the extension of expiring benefits for jobless Americans. Their primary concern is, apparently, that it'll increase the deficit.

"The only reason the unemployment extension hasn't passed is because Democrats simply refuse to pass a bill that doesn't add to the debt," claimed Mitch McConnell, the Senate's Republican leader.

But are Republicans really concerned with the deficit, or is this just a political ruse?

On Fox News Sunday, Jon Kyl, the second highest-ranking Republican in the Senate, was quizzed about his party's commitment to reducing the deficit.

How, wondered the show's host, Chris Wallace, can the GOP support extending the 10-year, $678bn (£445bn) tax cuts for the richest few while they continually block unemployment benefits by invoking the nefarious consequences of a growing budget deficit?

"You do need to offset the cost of increased spending, and that's what Republicans object to," Kyl said.

"But you should never have to offset cost of a deliberate decision to reduce tax rates on Americans." In short, he claimed budget shortfalls resulting from tax cuts don't need to be offset, but spending provisions do.

If you thought this was a slip-up or a lone viewpoint you'd be wrong. "That's been the majority Republican view for some time," McConnell told Talking Points Memo's Brian Beutler, trotting out the verifiably false claim that the 2001 Bush tax cuts didn't decrease tax revenues. "I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

(As well as Democrat Ben Nelson.)

Ponder that for a minute. The official Republican stance is that taxes aren't relevant to budget problems, but spending is. In this case, $35bn for the jobless (during the worst economic crisis since the great depression) is unacceptable to them because it would bust the budget, but $678bn in breaks for the wealthiest is fine.

This is the party that has been viciously hammering President Obama and Democrats on the deficit over the last year and a half, and has invoked it to filibuster legislation after legislation on all sorts of issues (even on bills that the nonpartisan Congressional Budget Office says will cut the deficit, such as healthcare reform).

But the contrast between opposing relatively minor spending to shield the suffering of the unemployed while backing tax cuts for the rich takes this double standard to new levels. Especially when the tax breaks are projected to massively decrease government revenues.

What this suggests is that for Republicans, the deficit isn't a real concern – it's simply a political weapon.

A cynical, clever tool that serves to weaken Obama's credibility as well as obstruct the Democrats' legislative ambitions. Whatever Republicans believe in their hearts, they know it's politically beneficial to prolong the suffering of the unemployed ahead of November's midterm elections – because, perverse as it may be in this situation, it'll wind up being a referendum on Democratic governance.

Textbook economics say it's prudent to boost domestic spending while running a deficit during major recessions – it shields the fall in consumer spending, which otherwise leads to a downward spiral of reduced investment, income, and ultimately jobs. Unemployment benefits are ground zero in this cycle, because they cushion the free-fall in demand while jobs are scarce.

Extending these benefits would do more to augment short-term business confidence than pinching pennies to reduce the deficit during a downturn.

Either way, Republican tactics are working like a charm. Democrats have given up on further stimulus due to the harsh political climate and the sharp rise in deficit fears among the elite class (though certainly not among the public, which deems jobs far more important). For this, they'll pay a heavy price.

And the GOP will probably get away with it because, despite the amazing lack of evidence, it's simply a truism in the US media that Republicans care about the deficit while Democrats are fiscally reckless.

Those who believe this may want to compare, for instance, the budget surpluses of the Clinton years (after he increased taxes), with the exploding deficits of the Bush years (after he cut taxes).

It's fine and fair for Republicans to stand on large tax cuts for the rich as a principle. But they can't do so while claiming to care a whit about the deficit.

The budget is a result of money coming in (tax revenues) and money going out (spending). They can't disregard 50% of this equation and claim to be concerned with the outcome. Or at least be taken seriously while they're at it.

 

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