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Andrew C. McCarthy

Republicans Still Haven’t Learned
No real tax cut, lots of deficit spending: You call that a deal?

‘If we’ve learned anything over the last two years, it’s that we cannot spend our way to prosperity.” That’s what Republican lawmakers proclaimed in their “Pledge to America,” the campaign document spelling out their agenda in the 2010 midterm election. They won a historic electoral victory, an endorsement from Americans who trusted them to act on the message: Stop spending money we don’t have, that we have to borrow from China, and that our children and their children will have to pay back. And before their new House majority has even been sworn in, Republicans have decided to give spending our way back to prosperity one more try.

In the process, they’ve increased the chance that the most free-spending, anti-prosperity president in American history will be reelected come 2012.

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Had I taken the Republican pledge seriously (I didn’t), I’d be crushed. “Crushing,” by the way, is the word the pledge used to describe the national debt. That was before GOP lawmakers voted in overwhelming numbers (37 out of 42 in the Senate, 138 out of 174 in the House) to add about $858 billion to it on Thursday.

So much for the pledge’s inveighing against “trillion-dollar ‘stimulus’ spending.” Republicans have added hundreds of billions of dollars to the national debt — a debt that is already $14 trillion even by Washington math and closer to $130 trillion if we apply the math Washington imposes on everyone else.

Estimates of the exact amount of deficit spending in the tax deal vary: The Senate’s Joint Committee for Taxation officially put it at $858 billion, the figure reported by the Wall Street Journal. Charles Krauthammer contends that the combination of spending increases and tax cuts tops out at $990 billion. And (as Dr. Krauthammer notes) even Rep. Paul Ryan — the GOP’s reputed scourge of Big Government, except when voting for TARP, auto-company bailouts, and the confiscation of executive bonuses — concedes that the tax deal, which he strongly supported, includes a staggering $313 billion in spending add-ons beyond what was necessary to maintain the Bush tax rates.

Estimates all agree on one thing — the bill’s spending cuts to reduce the size and scope of government add up to zero, no matter who does the counting.

Even if you drink the Kool-Aid that says, “Don’t worry about the deficit effects of tax cuts because they invariably stimulate the economy and pay for themselves,” Republicans have just agreed to massive, unfunded spending, much of it unrelated to tax cuts. Not only do we have the familiar waste (ethanol, “renewable” energy, etc.), as Hugh Hewitt points out, “there is at least $75 billion in new spending in the plan, agreed to by the GOP less than five weeks after the country fairly screamed, ‘Stop Spending Our Children’s Money!’”

The GOP pledge blasted President Obama and Democratic leaders for breaking a solemn promise to “put the brakes on Washington’s spending habits,” and for instead “stepp[ing] on the accelerator and demonstrat[ing] unparalleled recklessness with taxpayer dollars.” Right.

The pledgers even patted themselves on the back for their underwhelming promise to roll back spending to 2008 levels and to save us “at least $100 billion in the first year alone.” Now, in a single bill just three months later, they have voted for spending that is more than eight times the amount of this (currently nonexistent) $100 billion in savings, and more than twice the size of the (nevertheless huge) 2008 budget deficit.

“But wait,” you say, “the GOP had to do this. There was no other way to save the Bush tax cuts, and that makes it okay, because tax cuts are stimulative. They actually raise revenue in the long run.” In this case, that is both wrong and irrelevant.

It is wrong because income taxes are not being cut — the deal stops Democrats from raising them — and because the lower rates are only kept in place for two years. After that, the increase that would have happened two weeks from now kicks in. Lower tax rates only spur economic growth in a meaningful way when they are permanent — meaning, when they will persist, absent an act of Congress that changes them. There has been no meaningful growth in the past two years because the specter of tax increases hovered over businesses and entrepreneurs, depressing investment and hiring. Why should the next two years be any different, with the same specter hovering — this time with even more trillions in debt to finance?

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COMMENTS   33

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MAFV

12/20/10 13:36

The Repubs have learned nothing...the state of affairs will only get worse as Obama and the current Dems are the just the tip of the iceberg...

 American

12/20/10 11:32

" It would NOT have been better to let the Bush tax cuts expire, watch the economy collapse and try to blame it on the Democrats."

Mr. Adams, why would this have been a mistake?

The GOP has always had a problem defining their political enemies; being defined by them, and putting together a coherent unified message about how they are going to govern.

If they can't stand before the American people, and say, "The tax deal failed, and now, we will return to the tax rates the Democrats and Clinton voted for in the early '90's, and do so in a convincing and grand manner, then they have no hope of governing on their agenda at all.

Sooner or later, a different set of politicians are going to have to stand up to the socialists and punch them in the teeth. If the GOP can't do that, then it is seriously time to either start a different party, or go with independents who won't cave.

JonathanSwift

12/20/10 09:28

Thank you Frank Wolf, Va 10th for having the wisdom to see through this massive spending bill with no clothes.

And for having the cojones to buck your party and vote NO on this jagged little pill the GOP colluded in formulating.

Why didn't more GOP'ers get the message last election?

Wheel out the guiotine. We may soon find we need to cull the GOP herd...

SJLong

12/19/10 20:37

We don't need a tax increase to pay off the deficit - that's the game the leftists want to play. What we needed was to not do this stupid deal and let the tax rates rise - explain how it was the Democrats/leftists who wanted it and did it...and destroy them. Instead we've given them a Christmas gift. I think most GOP politicians are stupid as hell -- or they just want to get elected but are no different in belief than the Democrats/leftists. Of course if they are no different then a lot of stuff makes more sense.

A pox on them all.

Jacobite

12/19/10 20:09

This deficit spending is bad, but if the GOP can't get 34 votes to defeat the START treaty, then there is no reason to support them again. Third-party time!!!!

 Tom

12/19/10 19:19

The largest part of the 'increase in the deficit' from this deal is keeping the tax rates at their current levels. By this logic even if this agreement had no new spending it would have increased the deficit.

cab

12/19/10 17:27

Far be it from me to line up on the other side of any issue from Krauthammer and McCarthy, but I perceive the difference to be strategy vs tactics. We all agree on the strategy of cutting taxes and cutting spending; it's the awkward bridge from the current difficult times to a healthier operating basis that underlie the current dispute. Yes, Republicans have become too comfy with the Washington way of taxing and spending, but I think they did the right thing in extending those tax cuts. Things are fragile out here in the workaday world of small/medium-sized businesses.

greg adams

12/19/10 16:33

This compromise isn't very satisfying, but what do you expect when the other side owns the presidency and both houses of congress. It would NOT have been better to let the Bush tax cuts expire, watch the economy collapse and try to blame it on the Democrats.

John Keida www.U24Debate.com

12/19/10 13:53

Republicans are politicians; and, politicians have spent a tremendous amount of money to get elected. My guess is that the average politician is seeking aggrandizement and reelection. Your article implicitly argues that the system is good; but, the participants are bad. To quote Ronald Reagan, "Government IS THE PROBELM." Insanity is repeating the same thing expecting different results. The solution is to strip government of power. Join the Debate at U24Debate.com

Tim Corrigan

12/19/10 13:15

I agree this was a bad bill. Why many republicans are patting themselves on the back for burdening us with even more debt is a mystery to me.

If republicans really want to do something useful, they will make the current tax rates permanent now instead of in two years when it plays into the one's hand.

disraeligears

12/19/10 12:51

I think this comes under the category of "the perfect is the enemy of the good". I see two bright spots in the tax provisions that while temporary, should have a beneficial effect on jump starting this economy.

The first is the one year reduction in the social security tax for individuals. Many who are still employed have not had any pay raises since the fall of the market in 2008. This will provide some small relief over the next year at least.

Number two is the immediate 100% write-off on business investments, which should prompt businesses to commit badly needed capital expenditures that otherwise might have been foregone.

I think this next year will be critical in terms of overcoming this recession. We can't go on like this. If the market collapses again, we could be in for another 10 years of stagnation. This recession could yet turn into a depression.

greg adams

12/19/10 12:46

This was apparently the best deal they could make with Obama.

Letting the economy crash and burn and hoping the Dems get the blame really wasn't an option.

My kids need their jobs.

 American

12/19/10 12:40

There is only one thing that is going to stop all this lying by politicians, and cause Americans to angrily confront these people whenever they pull something like this bill: a tax increase on all Americans.

Our government is not unlike many corporations in that the management no longer has a personal stake in the success of the company and little financial risk at failure.

Until Americans are more deeply invested and these tricks become more acute to their fortunes politicians will continue to act as they do. The rest is just faux outrage.

TimisKim

12/19/10 09:21

Not raising tax rates does not add to the deficit. The government doesn't own the money of the American people. Otherwise, I do agree that the Republicans agreed to too much spending in this deal.

Kim Hunt

12/19/10 09:19

Keeping the tax rates the same is not increasing the deficit. The income tax rates were not cut with this deal, they were prevented from going up. Please do not refer to any part of the supposed increase in the deficit due to tax cuts on income tax rates. There were no such cuts. It is true that the Democrats would love to have a 100% tax rate and anything that the people are allowed to keep is a cost of government but I don't buy that and you shouldn't either.
Now, if you want to object to other parts of the bill, I am sympathetic to your objections.

BrandingIron5

12/18/10 20:58

Nearly a century of compromise against the Constitution has brought us to the point in our history where the electorate is foolish enough to employ an outright Marxist as president. 20 elections will be required to return the nation to a mindset capable of embracing the principles of self governance embodied in the Founding Documents. Those documents hinged on an implied morality as a footing in the basic structure of the Republic. Much has been done to diminish that vital component in the past millenium.

Chesapean

12/18/10 20:10

It's worse than that! Taking tax rates off the table for the next two years leaves the Republicans with few options between now and 2012 beyond proposing spending cuts of piddling magnitude. Yet every piddling and pristinely packaged spending cut that makes it to the president's desk for signature will boost Obama's image as a fiscally responsible bipartisan pragmatist.

Republicans will have to do more than piddle the next two years in order to prevent the fundamental transformation of America an Obama second term is now set up to create.

collinsdad

12/18/10 16:50

There will be a revolution in this country. These guys and gals who go to DC have no backbone. There isnt a Reagan mentality in the truest sense in the bunch with the possible exception of DeMint. To double speak and be so easily allured to the DC establishment is pathetic. Reagan would have called their bluff and went straight to the American people. In this day and age when getting your message out is so easy its a pathetic joke no one had the guts to do it.

TER

12/18/10 16:19

I completely agree with Mr. McCarthy. But Congressional discussions of "cost" make MEGO. Only in Congress would letting citizens keep more of their hard-earned money qualify as adding a "cost" to government. I wish I could use accounting like that in my business.

Do not the Democrats have a super-majority in the House? Do they not have a large majority in the Senate? Republicans should have said NO to anything but a permanent freeze of current rates - all of them. And NO to any more spending - I mean actual spending, you know, like you or I going to the grocery. If the Dems refused to do the right thing, let the incoming House fix it retroactively - and dare the President to veto it! And let them reap the consequences of their actions.

This compromise is the result of the "World's Greatest Deliberative Body" in action. And I DO NOT mean that as a compliment.

johntmcdonald

12/18/10 15:15

I have a theory: There is, in the vicinity of DC, a rare atmospheric gas. Call it Stupidity Gas. It is, unfortunately, not toxic, it simply causes the brain cells of susceptible individuals to mis-fire. Susceptible individuals can be identified by their love of applause and campaign contributions from crooks. The only cure for Stupidity Gas Fever is to leave DC forever. Let's effect lots of cures in 2012!

Ed Fern

12/18/10 14:52

It's time for the tea party to gut the republican party and take it over. As a voter I will be directing my resources and energy to make this happen. This election time period was critical for reigning in the size of gov't and pushing for long lasting tax cuts to help ensure our place in the world as the #1 economy. I feel betrayed and lied to, and I'll never trust the republican party again. To miss this opportunity during this critical moment in our nation's history is hard to take. A very difficult task has just been made even harder by the party that is supposed to be the party of limited government, the promoter of individual liberty, and self-initiative.

JRM

12/18/10 14:35

The tax choice wasn't between tepid and robust growth, it was between tepid growth and a double-dip recession.

The goals that I support for our country are a return to a higher level of sustainable economic growth with a reduction of the national debt, and a return to the constitutional division of power between the states and the U.S. government.

If those are the goals of Tea Party, they are going have commit to an effort measured by decades. If the movement is dependent on amount of oxygen in the room, or the 2012 election, then we have already lost.

I will reserve judgment until I see what the 112th congress does.

 tcmcelroy

12/18/10 13:48

This year establishment Republicans ran as third party candidates against elected conservative Republican candidates (Miller- Murkowski, Rubio-Crist). Only when the election was clearly in favor of the upstart (Rubio) and never in the case of Miller, did these establishment guys follow the will of the voters. No surprise they voted for this. Spineless or opportunistic, take your pick.

 tcmcelroy

12/18/10 13:48

This year establishment Republicans ran as third party candidates against elected conservative Republican candidates (Miller- Murkowski, Rubio-Crist). Only when the election was clearly in favor of the upstart (Rubio) and never in the case of Miller, did these establishment guys follow the will of the voters. No surprise they voted for this. Spineless or opportunistic, take your pick.

RedInBlueState

12/18/10 13:24

Why, oh why, are the Republicans so afraid to be grown-ups? They have to stop being reactive and start being proactive. Man up!

krtobin13

12/18/10 13:01

What specious reasoning! It makes one despair about the political common sense of much of the Right. Remember the old adage--"a bird in the hand is worth two in the bush (no pun intended)." There is absolutely no guarantee that Obama and the Democratic controlled Senate would go for a better tax bill next year. Coupled with the defeat of the omnibus spending bill, passage of the tax bill maintains the tax and spending status quo in large measure, until the new Congress can begin to really attack spending and our outdated tax system. To expect this lame duck Congress to have done any better is just plain crazy. To risk the public's ire over paralysis and intransigence is just plain stupid.

Greg Buls

12/18/10 12:57

The CBO long term outlook finds $202 trillion in fiscal debt. External Link 
There's no real-life analogy for this kind of debt. No family could find themselves in a comparable predicament, no matter how careless they were with their money - it would be akin to having debts equal to almost 15 years of income.
We know that no one in Washington is taking this seriously because we're not yet talking about triage. The plane is going down and we're sitting on a giant pile of scrap metal that's just begging to be pushed out the door.

John Duresky

12/18/10 12:50

It was a nice country while it lasted. What would be the corollary to "The Founding Fathers?" Maybe "The Finishing Parents?"

stonycrk

12/18/10 12:41

I disagree with Mr. McCarthy's pessimism regarding this compromise tax package. The Republicans can take full credit for the extension of the tax rates now, and once the Tea Party members are seated, Congress will have at least a year to revise the tax code, establish permanent lower rates, and cut spending. They still have a chance to prove that they will walk the walk.

stonycrk

12/18/10 12:40

I disagree with Mr. McCarthy's pessimism regarding this compromise tax package. The Republicans can take full credit for the extension of the tax rates now, and once the Tea Party members are seated, Congress will have at least a year to revise the tax code, establish permanent lower rates, and cut spending. They still have a chance to prove that they will walk the walk.

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