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The Return of the Free Lunch Party

November 17, 2010

As Ronald Reagan's budget chief almost thirty years ago, a frustrated David Stockman famously lamented that when it comes to spending discipline, "there are no real conservatives in Congress." Now, three decades after he concluded "the supply-siders have gone too far," Stockman called the Republican demand for another $700 billion tax cut windfall for the wealthy, "unconscionable." As well he should. With the new GOP majority's financial toxic brew of gargantuan tax giveaways and still unnamed spending cuts, the Free Lunch Party has returned.
In truth, it never really left. As Stockman experienced first-hand, the national debt tripled under Ronald Reagan. The Gipper's M.C. Escher-like pledge to slash taxes, raise defense spending and balance the budget produced a torrent of red in that exceeded that of the previous 200 plus years of American history combined.
But conservative propagandists soon forgot Stockman's "magic asterisk" and Reagan's subsequent tax increases, neither of which could stop the record budget deficits he produced. After the Clinton balanced budget hiatus in the 1990's, George W. Bush doubled the national debt yet again. As explained in "The Bush Tax Cuts in Pictures," President Bush's Free Lunch dream predictably turned into a budgetary nightmare:

The Center on Budget and Policy Priorities demolished the mythology promoted by President Bush ("You cut taxes and the tax revenues increase") and the usual suspects on the right. CBPP found that Bush tax cuts accounted for almost half of the mushrooming deficits during his tenure.
And as another recent CBPP analysis revealed, over the next 10 years, the Bush tax cuts if made permanent will contribute more to the U.S. budget deficit than the Obama stimulus, the TARP program, the wars in Afghanistan and Iraq, and revenue lost to the recession
put together.

(Worse still, the Bush tax cuts also coincided with an increase in poverty and a decline in Americans' average household income.)
And now, at a time of record budget deficits and record income inequality, Speaker Boehner and Minority Leader McConnell want to make the expiring Bush tax cuts permanent. The leading lights of the GOP still insist that draining $4 trillion from the U.S. Treasury over the next 10 years (including that $700 billion payday for the richest 2%) doesn't cost a cent.

For his part, this summer John Boehner wrongly claimed, "It's not the marginal tax rates ... that's not what led to the budget deficit." In July, Jon Kyl (R-AZ) the second ranking Senate Republican made the same point another way, telling Chris Wallace of Fox News, "You should never have to offset cost of a deliberate decision to reduce tax rates on Americans." Aborted Obama Commerce nominee Judd Gregg (R-NH) soon chimed in, declaring "I tend to think that tax cuts should not have to be offset." For his part, Oklahoma's Tom Coburn argued his math will work in the future if you ignore the past, "Continuing the [Bush] tax cuts isn't a cost, if you added new taxes, new tax cuts, I would agree that's a cost." Senate Minority Leader Mitch McConnell explained how tax cuts magically turn red ink black:

"There's no evidence whatsoever that the Bush tax cuts actually diminished revenue. They increased revenue because of the vibrancy of these tax cuts in the economy. So I think what Senator Kyl was expressing was the view of virtually every Republican on that subject."

Which is sadly right. The supply-side snake oil has been Republican orthodoxy ever since Jude Wanniski first sketched Arthur's Laffer's curve on a cocktail napkin.
In February 2009, Texas Senator Kay Bailey Hutchison offered the purest expression of the tried and untrue Republican gambit:

"I think we get revenue the way we've done it in the past that has been so successful in the past and that is tax cuts...Every major tax cut we've had in history has created more revenue."

In October, now Senator-elect from Kentucky Rand Paul summed up the new fuzzy math of the Free Lunch Party. Regarding that $4 trillion price tag, Paul declared, "I'm not seeing it as a cost to government."
Then again, Rand Paul isn't talking about any ways to cut federal spending, either. And he has plenty of company among the ranks of the Free Lunch Republicans.
Republicans swept to power by promising to cut, in the words of Indiana's Mike Pence, "runaway federal spending." But when it comes to putting taxpayers' money where their mouths are, Pence, incoming Speaker John Boehner, future Majority Leader Eric Cantor, Michele Bachmann and much of the cowardly GOP's top-brass refuse to say what budget cuts they will actually make.
For months, Republicans have refused to "man up" to the draconian budget cuts their tough-talking campaign pledges would necessarily require. Pressed by NBC's David Gregory last month, Mike Pence could not "name the painful choice on a program that you're going to cut." Asked seven times by Chris Wallace of Fox News, failed GOP California Senate hopeful Carly Fiorina responded only, "you're asking a typical political question." Even as he touted the "GOP Pledge to America," Speaker-to-Be Boehner dodged Wallace as well:

"Let's not get to the potential solutions. Let's make sure Americans understand how big the problem is. Then we can talk about possible solutions and then work ourselves into those solutions that are doable."

That charade has only continued since the election. Within 24 hours, Cantor, Bachmann and Tennessee's Marsha Blackburn all did the duck-and-cover on spending cuts. With defense, Social Security and Medicare (not to mention interest on the national debt) off the table, the unexplained GOP pledge to cut $100 billion in "discretionary" spending would necessarily gut the departments of Education, Transportation, Interior, Commerce and Energy by more than 20%.
Which is why, as Politico reported Wednesday, the prospect of serving on the House Appropriations Committee scares the bejesus out of the talk-talking deficit hawks of the new Republican majority:

Rep. Michele Bachmann (R-Minn.) was asked to be an appropriator and said thanks, but no thanks. Rep. Steve King (R-Iowa), a tea party favorite, turned down a shot at Appropriations, which controls all discretionary spending. So did conservatives like Lynn Westmoreland (R-Ga.) and Jim Jordan (R-Ohio), an ambitious newcomer who will lead the influential Republican Study Committee...
"Anybody who's a Republican right now, come June, is going to be accused of hating seniors, hating education, hating children, hating clean air and probably hating the military and farmers, too," said Jack Kingston (R-Ga.), a fiscal conservative who is lobbying to become chairman of the House Appropriations Committee. "So much of the work is going to be appropriations related. There's going to be a lot of tough votes. So some people may want to shy away from the committee. I understand it."

That same spinelessness was also display on CNN's Anderson Cooper 360 earlier this month. Refusing to reveal what Boehner described as "lot of tricks up our sleeves in terms of how we can dent this," Republicans are now saying they will wait for President Obama's deficit commission to weigh in.
To make that point, Cooper showed a Meet the Press clip of Texas Senator and NRSC head John Cornyn using President Obama as a human shield:

DAVID GREGORY: What painful choices to really deal with the deficit, is Social Security on the table? What will Republicans do?
SEN. JOHN CORNYN (R-TX), CHAIR, NATIONAL REPUBLICAN SENATORS: The president has a debt commission that reports December the 1st and I think we'd all like to see what they come back with. And my hope is they'll come back for the bipartisan solution to the debt and particularly entitlement reform, as you -- as you've mentioned.
But I -
DAVID GREGORY: But wait a minute, conservatives need a -- a Democratic president's debt commission to figure out what it is they'd want to cut?

As it turns out, the new Republican majority lacks both courage and a sense of irony. After all, the deficit commission was established by President Obama's executive order after a bill to create it was filibustered in the Senate by 53-46. That defeat came only after several Republican Senators voted against the very bill they once supported. As Politics Daily summed it up:

This reversal early this year involved six Republican co-sponsors of such a commission who voted against their own Senate bill. The six were McCain, Brownback, Mike Crapo of Idaho, John Ensign of Nevada, Kay Bailey Hutchison of Texas and James Inhofe of Oklahoma. McConnell had once supported the idea, but he too voted against it. The bill required an up-or-down vote on the commission recommendations. McConnell and others said they feared the panel might suggest raising taxes.

Aside from Paul Ryan (whose plan to privatize Social Security and Medicare made him a GOP pariah during election season), virtually the entire Republican leadership team tried to run out the clock before Election Day without ever detailing the spending cuts they claimed to champion. As for the Tea Party demand for a balanced budget amendment to the Constitution, its followers have made clear that they have no stomach for the cataclysmic cuts to government services needed to get the federal ledger back in the black.
If defense, Social Security, Medicare and the required interest on the national debt are untouched, that's over $2.2 trillion in the so-called lock box. Somehow, Tea Partiers would have to magically cut $1.3 trillion of the remaining $1.6 from President Obama's proposed budget to break even. As the New York Times described in April, "Tea Party supporters said they did not want to cut Medicare or Social Security -- the biggest domestic programs, suggesting instead a focus on 'waste.'"

"That's a conundrum, isn't it?" asked Jodine White, 62, of Rocklin, Calif. "I don't know what to say. Maybe I don't want smaller government. I guess I want smaller government and my Social Security." She added, "I didn't look at it from the perspective of losing things I need. I think I've changed my mind."

Ms. White might want to talk to her Tea Party friends and their elected Republicans officials. Because while they refuse to lay out the painful spending cuts they claim to support, the Free Lunchers want to continue to reduce taxes even as the combined level of federal, state and local taxes is at its lowest level since 1950.
And not just income taxes. Despite the fact that less than one-quarter of one percent pay it, Republicans want to kill the estate tax (and the $25 billion in revenue it generates annually) once and for all. Ditto the capital gains tax, which the likes of Newt Gingrich want to see rounded down from its current 15% to nothing. As Gingrich put it:

"China has zero capital gains. Can you imagine how many factories we'd build if we had zero capital gains?"

As for corporate taxes, which have declined relatively as a source of revenue for the United States, Gingrich like other Republicans wants to slash the rate from 35% to the Irish level of 12.5. The cost to the Treasury? $2.1 trillion over 10 years.
And so it goes.
If this - dangerously irresponsible tax cuts coupled with the cowardly refusal to detail spending reductions - all sounds familiar, it should. Or at least it does to David Stockman. In July, he wrote in a New York Times op-ed, "If there were such a thing as Chapter 11 for politicians, the Republican push to extend the unaffordable Bush tax cuts would amount to a bankruptcy filing." Or, as he summarized the devastating impact of the Republican Free Lunch Party in the Times print edition, "How my G.O.P. destroyed the U.S. economy."


Jon Perr
Jon Perr is a technology marketing consultant and product strategist who writes about American politics and public policy.

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