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Iowa Debate Confirms GOP Won't Pay Down the Debt

August 12, 2011

Four years ago, perhaps the most telling episode of the Republican presidential nominating process came during a debate at the Reagan Library when three candidates raised their hands to declare that they did not believe in evolution. But when all of the GOP White House hopefuls assembled in Iowa raised their hands in unison to reject any debt reduction compromise featuring a lopsided 10 to 1 ratio of spending cuts to tax increases, they offered the defining moment of the 2012 campaign so far. In a nutshell, while the United States can comfortably afford to pay down its national debt over time, Republicans simply won't.
Of course, Thursday's spectacle comes as no surprise. As Ezra Klein explained last month, when the Republican leadership balked at President Obama's proposal to reduce the debt by $4 trillion over the next decade in a package consisting of only 17% in new revenue, they weren't just walking away from a historically great deal. They were even turning their backs on the sainted Ronald Reagan.
After Reagan's massive supply-side tax cuts of 1981 unleashed an ocean of red ink, the Gipper raised taxes in seven of his 8 years in office, 11 times altogether. (Nevertheless, Ronald Reagan tripled the national debt.) Given that record, Klein concluded, "Today, tea party conservatives would be begging Sen. Jim DeMint to primary the Gipper."

As Klein explained, by any standard, Obama's offer to the Republicans was a very good one:

[George H.W.] Bush also included taxes in his deal, and Clinton relied heavily on taxes in his first deficit-reduction bill, which passed without Republican votes. In 1997, when he was working with Republicans, he actually cut taxes slightly while passing spending cuts. But of course the economy was in much better shape then, and Clinton had already increased revenues substantially.
The one-third rule doesn't break down until you get to the deal Obama reportedly offered Republicans in the first round of debt-ceiling talks: $2 trillion in spending cuts for $400 billion in taxes, or an 83:17 split. And that, if anything, understates how good of a deal Republicans are getting. Tax revenues and rates are much, much lower than they were under Reagan, Bush or Clinton. And next year, Obama is pledging to extend most of the Bush tax cuts, which amounts to a $3 trillion-plus tax cut against current law.

Which raises the obvious question when it comes to new tax revenue for the federal government: if not now, when?
With the economy in recovery, 2013 seems like a very good time to start. After all, at just over 14% of U.S. gross domestic product, the total federal tax burden is at its lowest level since 1950. And while income inequality is at record highs, tax rates for households earning over $1 million annually have plummeted. (Between 2001 and 2007- a period during which poverty was rising and average household income had fallen - the 400 richest taxpayers saw their incomes double to an average of $345 million even as their effective tax rate was virtually halved.) As the Center on Budget and Policy Priorities revealed , according to the Congressional Budget Office "middle-income households are paying overall federal taxes -- which include income as well as payroll and excise taxes -- at or near their lowest levels in decades." As it turns out, total U.S. taxes are not only much lower than virtually every other major industrialized economy, but the gap has been growing for years.

Often overlooked in the Republicans' "no means no" position on new taxes is that the bills for the wars in Afghanistan and Iraq remain to be paid. George W. Bush was the first modern president to cut taxes during war-time. And those bills, which now top $1 trillion and with interest payments and health care for veterans could reach $3 trillion by 2020.
And still, those expenses pale in comparison to the Treasury-draining effects of the Bush tax cuts. These two graphs from the Washington Post and CBPP make that point crystal clear. Analyses by CBPP showed that the Bush tax cuts accounted for half of the deficits during his tenure, and if made permanent, over the next decade would cost the U.S. Treasury more than Iraq, Afghanistan, the recession, TARP and the stimulus - combined.

In 2009, Utah Senator Orrin Hatch explained Republicans' concept of fiscal discipline when George W. Bush sat in the Oval Office:

"It was standard practice not to pay for things."

Sadly, as Thursday's pathetic debate grandstanding in Iowa shows, Republicans have no interest in making up for lost time. Even Fox News' generous hypothetical plan for a 10-1 ratio of spending cuts to revenue increases is an offer the GOP could refuse.

One comment on “Iowa Debate Confirms GOP Won't Pay Down the Debt”

  1. Only one candidate for the White House will stop the bleeding of billions of dollars annually, by illegal foreigners who have taken advantage of the American people? Even Ron Paul in his book, is hesitating on bringing the full power of the law, to halt in its tracks another terrible immigration Reform package; but not so lady Michele Bachmann.Perhaps this is why Rep. Michele Bachmann exempted from being asked questions on illegal immigration? Her stance on this issue is far above the rest who stood behind their dais in Ames, Iowa? Was this leaving Bachman out of this social issue premeditated? Whether this was the case or not, she strands strong as this uncontrolled illegal immigration invader problem has been ignored by administrations for years. Bachmann will not tolerate any form of Amnesty as President. Every Sanctuary City and state that does not comply by cutting of these ordinances will lose federal funding. It’s been said many times before, that American cannot afford to subsidize Mexico, Central America, Europe, Pacific Rim or other nation; its inhabitants impoverished and desperate illegal immigrants anymore? This illogical problem is crippling America’s economy by the massive payouts for families, which have migrated illegally across our sovereign border.
    Of course open border disciples, business lobbyist will deny the obvious, that this illegal incursion is drowning us in debt—with no end in sight. (FAIR) American Federation of Immigration Reform that of 2009, reported that overall costs to subsidize the illegal alien household was calculated through, federal, State, County and Municipal sources that it was a $113 Billion dollar problem. Federation for American Immigration Reform issued a report in which they estimate the total annual costs of illegal immigration at the federal, state and local level is estimated to be $113 billion combined. The states are bearing the burden of the costs; while the government share is nearly $29 billion, it escalates to $84.2 billion at the state and local level. The annual outlay that illegal aliens cost U.S. taxpayers is an average amount per native-headed household of $1,117. The state-by-state breakdown begins on page 4 of this report at:
    Education for the children of illegal migrants and immigrants constitutes the sole largest outlay to taxpayers, at an annual price tag of nearly $52 billion. Virtually all of those expenses are absorbed by state and local governments. At the federal level, only about one-third of outlays are matched by tax collections from illegal aliens. At the state and local level, an average of less than 5 percent of the public costs is allied with the illegal immigration occupation and recouped through taxes collected from illegal nationals. Nearly all illegal aliens do not pay income taxes; only those who do, much of the revenues collected are refunded to the illegal immigrants when they file tax returns. Many are also claiming tax credits resultant in payments from the U.S. Treasury. Please note this is not a static expenditure, but these dollars amounts are raising all the time.
    Ask yourself, why the Grand Canyon State of Arizona had not choice, but to clamp down against the massive dollar amounts spent to appease illegal alien homesteads How can a small South Western state that is mostly desert, afford to pay out $2 Billion dollars annually for foreigners? Then again-- how can Leftist legislators in Sacramento, California, justify taking taxpayer’s money and giving it to illegal aliens when these persons truly don't exist, other than in ICE enforcement records or Homeland Security? HAS ANY READER THOUGHT OF CHECKING THEIR STATES PAYOUT TO FOREIGN NATIONALS? Although they come here through the magnet of jobs, welfare and each year bring their children. The estimates of 300.000 babies enter via a broken, intermittent border fence, that can no-way be fully enforced without the deployment of troops. Instant citizen for babies is above most payments, is an incredulous cost forced on taxpayers by Liberal judges legislating from their gavel.
    Because entering America without papers is not a—FELONY—it is essentially a giant hole in the wall, which imports not only millions of illegal aliens, but a massive population of criminals; bringing death, mayhem and ID theft on the unsuspecting citizens and residents. As I said in my commentary yesterday, the only way to sever the incentive of jobs (which I never thought I would admit) is issuing every citizen and legal resident a government ID CARD. This could be used to get employed US workers. (8 million illegal aliens have stolen jobs from mostly low income Americans according to reputable sources.) The same official ID card could be presented for voting; instead of the mess we have now, with convicted felons, deceased and illegal aliens, fraudulently using the election process to alter an elections direction.
    You would also use this federal ID CARD to be checked against other data bases, official birth records to see if you have the right to be issued a driver’s license, vehicle insurance, welfare or other Public entitlements. I shouldn't gloat over the welfare payouts in California, but it is a self inflicted wound caused by the Liberals in the capitol. California, the Godfather of Sanctuary State has a $19 Billion dollar budget gap, with a staggering cost of $21 Billion $ according to the National Conference of State Legislators in 2009. We must wonder how the welfare costs have escalated in two years in the once Golden State?
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Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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