Both Parties Burden Future Generations in Deficit Talks

Both Parties Burden Future Generations in Deficit Talks

Thursday morning, Politico published three articles with enough depressing information to make anyone concerned about America’s financial future wish they had gone back to bed. According to the articles, Republicans and Democrats are working together in ways that will not please the American people.

Three main points stand out for consideration:

  1. A number of Members of Congress are fighting to prevent all sequestration cuts to the Defense Department from being enacted. This is not being done because they believe it will endanger national security – though that is certainly a defensible argument many others in the House and Senate are making. Rather they believe it will cause economic harm. To be fair, many Senate and House Republicans have supported or voted for legislation to replace the defense cuts with cuts from the rest of the budget, but while that shores up the national security argument, it undercuts the economic argument.
  2. Senators not only voted to continue full funding of food stamps next year, despite an amendment by Senator Rand Paul (R-KY) to cut $37 billion from the program and shift nutrition program responsibility to states, but did so in a bipartisan fashion with 13 Republicans joining Democrats in opposing the amendment. Sugar farmers will also continue to receive significant subsidies, with the support of 15 Republican Senators.
  3. Senators Max Baucus (D-MT) and Orrin Hatch (R-UT) are leading the Senate Finance Committee to attempt to pass a tax package before year’s end. However, this is not just any tax package. From the article:

The tax package is a fraction of the cost of the Bush tax cuts, but this list of tax credits — which deal with everything from alternative energy to mass transit — is a top priority for the business community, as well as special interests on K Street.

Let’s look at each of these points in turn:

Regarding sequestration, Anthony Randazzo, Director of Economic Research for the libertarian Reason Foundation, explained that: “It’s disingenuous for Republicans to defend their ideologically-favored projects and then say to Democrats that their ideologically-favored projects should be cut. You have Democrats and Republicans with different frameworks on how they view the world. Defense and justice, fairness, etc. are viewed differently. You can’t tell Republicans they can’t stand against defense spending cuts, and the same is true for Democrats with regards to social programs. But it’s disingenuous for Republicans to tell Democrats cutting their programs won’t hurt the economy while they oppose cuts to the Defense Department.”

A few weeks ago, Senator Jon Kyl (R-AZ) made news in arguing against the sequestration’s defense cuts using economic arguments. Kyl has supported medium-to-significant cuts in other areas of the federal budget. When asked why defense spending is different, his Press Secretary provided the following information in two e-mailed responses:

  1. Senator Kyl made a floor speech on June 4 in which he defended his views on defense cuts. In his speech, he argued that of course defense should not be used as stimulus – but that his argument was based on having one million newly-unemployed Americans being present in a bad economy, and opposing weakening America’s national security capabilities.
  2. When asked if the Senator would support equivalent cuts to what would take place under sequestration if it took place in non-defense areas of the budget, the response was: “Senator Kyl supports smart, precise budgetary cuts, but is opposed to the meat-axe approach.”

Another Senator who has made national news with regards to opposition to sequestration cuts in defense is New Hampshire Republican Senator Kelly Ayotte, who may be on a short list of contenders for Vice President under Mitt Romney. On a conference call with Phoenix Mayor Greg Stanton, a Democrat, on Thursday morning to discuss the impact of sequestration on the nation’s employees, Ayotte was asked for this report if she felt there was a difference between defense and non-defense spending with regards to economic harm. The question was posed because Ayotte previously supported cutting the federal budget significantly through a balanced budget amendment, and opposed raising the debt ceiling last August because the cuts in the Budget Control Act weren’t large enough and were spread over too long a time period.

Ayotte responded by saying she was indeed concerned about the non-defense spending, but didn’t have the final calculations as to how the non-defense sequestration cuts are going to take place. She remarked that cutting defense spending in a broad way similar to how the Budget Control Act would will cause harm to defense contractors, and that by cutting those jobs sequestration will hurt small businesses such as shipbuilders and thus hurt key suppliers.

Ayotte additionally noted that $487 billion in defense cuts are already on their way prior to sequestration. These cuts are likely to happen, as there is bipartisan agreement for them, and that means the Army, Marines and Navy are going to be smaller. The Army, for example, will face a 72,000 troop reduction, and the Navy will have 285 ships rather than the 313 Ayotte believes it should possess.

Ayotte did state she is not opposed to budget reductions; she desires to stay away from across-the-board spending cuts because they are not the right, strategic way to cut, and keep programs that are effective.

Regarding sugar subsidies and nutrition/food stamp funding, it appears to be Midwestern Republicans who are joining with Democrats to keep the money flowing. Politico explained these battles are part of the lead-in to the big fight coming over the 2012 farm bill, which will spend approximately $500 billion over five years, with 80% of that cost going to food stamps. While it is possible that the entirety of the money won’t be spent as the economy crawls to a recovery and food stamp rolls decrease, history tends to illustrate that once financing is appropriated it rarely sees a reduction, even if the money is not spent.

When it comes to tax reform, the American people face a number roughly around the $434 billion mark in increased taxation if all current tax policies arrive as current law indicates. This includes the elimination of the Bush tax cuts. While the special-interest tax credits are certainly being discussed as part of negotiations related to the Bush tax cuts, Politico also noted the following:

The $35 billion refers to the amount it would cost to extend for one year virtually all of the tax breaks, many of which expired at the end of 2011. It’s possible that any package could have a lower price tag if Congress decides against renewing some of the expired tax breaks.

The tax-extender package tends to be a special interest bonanza, as it includes credits for alternative fuels, energy saving investments by small businesses, oil and gas production, tax credits for research and development, deductions for state and local sales taxes, employee mass-transit benefits, veterans hiring and special measures enacted to help New York following the Sept. 11 attacks.

Unfortunately, both parties are showing their true colors with these tax discussions. On the one hand, the Senate Democratic leadership has aides saying leadership is fine with a “clean extension” of these tax provisions. This is in direct opposition to what Democrats have long said about the Bush tax cuts and most other tax proposals put forward by Republicans. Senator Tom Coburn (R-OK) phrased Republican hypocrisy well when it comes to reforming the tax code through elimination of loopholes and lower rates, noting that, “If you renew tax extenders, how are you going to reform it…The point is it’s a wasted effort.”

Of course, this failure to take even the most timid of steps towards legitimate spending reductions does not end in the Senate. Also on Thursday morning, Red State’s Erick Erickson posted about a Club for Growth “Spending Cut Scorecard” for House Members. Erickson gave the following depressing news:

  • Only 20 members of the House have voted for every amendment to cut spending. All are Republicans.
  • 50 members of the House have voted against every amendment to cut spending. 49 are Democrats. One is a Republican (Bonner).
  • The average Republican voted for spending cuts 59% of the time. (Republican Freshman are only slightly better at 60%.)
  • The average Democrat voted for spending cuts 6% of the time.
  • The nine Republicans, including four freshmen, who have least often voted to cut spending are: Bonner 0%, Meehan 4%, LaTourette 4%, Bass 4%, Simpson 4%, Lucas 4%, King, P. 4%, Grimm 4%, and Dold 4%.
  • The eight Democrats who have most often voted to cut spending are: Matheson 32%, Rush 31%, Kucinich 30%, Polis 28%, Cooper 20%, McIntyre 17%, Velazquez 17%, and Honda 17%.

This year America is going to run its fourth straight trillion-dollar deficit, and Baby Boomers are going to keep retiring at a rate of 10,000 people per day for roughly the next 18 years. If Congress cannot even cut 2.85% from this year’s expected deficit – which is about what Senator Paul’s amendment would have resulted in saving – or stop themselves from using the tax code to get re-elected, how can we trust members of this body? How can the citizenry be assured that the federal government is safeguarding middle-aged people from losing their retirements? Or that it will prevent the Debt-Paying Generation from paying enormously high taxes and bearing the burden of retired Baby Boomers in Greekesque brink-of-collapse fashion while unemployed at unthinkable rates and required to work long past the current retirement age? The short answer is, “We can’t,” and the longer answer is, “We can’t, and our nation is going to suffer greatly for it.”

Dustin Siggins is a policy and politics blogger who regularly contributes to the Green Room, and He is also the co-author of a forthcoming book on the national debt with William Beach of The Heritage Foundation.

Nick R. Brown is a technology policy consultant, political blogger and freelance writer. He has served at non-profits of varying focus across the South and Australia as well as spending time with Digital Society, The Heritage Foundation, and Competitive Enterprise Institute in Washington, D.C. He can be found blogging at his website and tweeting @hownowbrowncow.


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