Column: Deficit Reduction Without Smaller Government Won’t Fly With Conservatives
Perhaps the oddest of the conservative rationalizations for refusing any kind of budget compromise is the insistence that budget deals are pointless — and maybe even counterproductive — because Democrats rig them such that the taxes are real and the spending cuts are illusory.
As Americans for Tax Reform, Grover Norquist’s outfit, puts it, “tax hikes are real in these deals, but the spending cut promises are a fraud, plain and simple.”
It’s a trick so dastardly that today’s conservatives think even Ronald Reagan got snookered! “We know that President Reagan fell into the trap and President George H.W. Bush fell in the trap of ‘Here, just raise taxes on somebody, and we’ll come along with the cuts later,’ ” Rep. Louie Gohmert, R-Texas, said on Fox News.
It’s an odd argument because it would seem, on its face, to invalidate everything the GOP wants and has been working toward.
If no spending cut agreed to today can be counted on tomorrow, then what’s the point of the Paul Ryan budget, which includes $897 billion in unidentified spending cuts that future Congresses would have to decide? Or of the Budget Control Act of 2011, which included more than a trillion dollars of spending cuts and that Republicans were sufficiently confident in to agree to raise the debt ceiling?
It’s also an odd argument because it’s manifestly, provably untrue. Plenty of budget packages have included both spending cuts and tax increases and have been implemented without incident. In fact, some of them are still being implemented without incident. Here’s Alan Viard, a scholar at the conservative American Enterprise Institute, pushing back on this nonsense:
“In 1983, Ronald Reagan signed a Social Security compromise that included both payroll tax increases and benefit cuts. One of the benefit cuts, a six-month delay in the cost-of-living adjustment, took effect as scheduled in the year of enactment. The largest benefit cut, an increase in the normal retirement age, may have initially seemed more vulnerable to backsliding because it wasn’t slated to take effect until decades down the road. Yet, the first stage of that increase, with the age rising from 65 to 66, has now taken effect. The second stage, with the age rising from 66 to 67, is still on track to take effect in upcoming years, with nary a proposal from either party to block it.”
If anything, Viard understates his argument: There’s no talk in Washington about how to undo the 1983 compromise. There’s only talk about how to further cut Social Security benefits, perhaps through a “chained” consumer price index.
The best case that could be made for Gohmert’s fear is that promises to cut discretionary spending — which is most of the spending outside Medicare, Medicaid and Social Security — can be unstable because Congress has to vote on that spending anew each year, and future Congresses often ignore the promises of past Congresses. Conservatives say that happened in the 1990s, and it’s at the root of the Republican narrative of betrayal today.
The truth is more complicated. In 2004, the Congressional Budget Office looked back on the 1990 budget deal. It found that the deal stuck perfectly from 1991 to 1997. After 1997, spending rose. But by then, the economy was roaring, and within a few years, we were at surpluses. So why shouldn’t Congress have been a bit looser with the purse?
Nor were discretionary spending caps the only casualty of the booming economy. In 1990 and in 1993, taxes were raised to help reduce the deficits. Those deals contributed to the surpluses that greeted President George W. Bush. He promptly took those surpluses — and then some — and sunk them into giant tax cuts. It was, for Democrats, an infuriating betrayal: They’d done the hard, unpopular work of deficit reduction only to see the dividend handed out in a tax cut that led us back to deficits!
As such, a Democratic version of Gohmert’s argument would go like this: Why agree to austerity now if Republicans will just waste the dividend on deficit-creating tax cuts, as they did 12 short years ago? Why spend precious political capital to clean up Republican messes if Republicans will just create new ones?
But if the economy in eight years is far better than we expect it to be today, Congress should change course. If the cuts to spending don’t need to be so deep, then huzzah! Ratchet them back. If taxes can be cut, then let’s cut some taxes — as Clinton did in 1997. The point of austerity is to solve a deficit problem, not yoke the future to the imperfect forecasts of the past. Once the deficit problem goes away, so, too, does the reason for austerity.
Of course, it should go the other way, too. The Bush tax cuts, which were passed to pay down a surplus, should be rescinded now that deficits have returned. But Republicans don’t see it that way.
Underlying the complaints of conservatives such as Gohmert and Americans for Tax Reform is that their goal isn’t to reduce deficits. If it were, they’d be open to tax increases. Rather, austerity is one of many arguments marshaled toward the long-term end of shrinking the size of government. That’s why a deal that solves the deficit problem and then sees government spending rise in its eighth year is a failure rather than a success — it betrayed the actual goal of shrinking the size of the government, even if it succeeded in the putative goal of balancing the budget.
This is why a “fiscal cliff” deal is proving so difficult. There’s little doubt that a mixture of tax increases and spending cuts could bring deficits to manageable levels within a few years. Add in some stimulus, and we could even protect the recovery between here and there. Moreover, since the discretionary spending cuts have already been made, the next set of spending cuts will likely focus on entitlements. Those are easier to make stick, as they don’t come up for a new vote each year.
But for Republicans, agreeing to those tax increases means agreeing to a larger government than would be possible in the absence of those tax increases. That undermines their real goal: not smaller deficits, but smaller government.
Of course, for Republicans, the problem today is that not agreeing to anything will trigger tax increases far larger than anything under consideration in the Obama-Boehner negotiations.
Erza Klein covers economic matters for The Washington Post.