As they resist budget restraint and Wisconsin’s reforms, their ideal becomes a crumbling city where government accounts for 40 percent of available jobs.
House Republicans have fulfilled their campaign pledge to cut $100 billion in spending in the first year, passing a continuing resolution (CR) on February 19 cutting that much for this year from President Obama’s 2011 budget, which was exactly their pledge. That involves a $61 billion cut for the rest of this year from the baseline of the CR that is now funding the government through March 4.
The deficit in President Obama’s 2011 budget is more than 16 times the size of that $100 billion cut at $1.645 trillion, according to the President’s own January budget report. Yet the Democrats are vociferously objecting even to that small down payment on the cuts that are necessary and still to come!
Government Spending = Prosperity, Not!
Rep. Chris Van Hollen (D-MD), ranking Democrat on the House Budget Committee, went on CBS’s Face the Nation on February 20 to argue that the Republicans’ draconian spending cuts equal to 2% of the 2011 budget, and 6% of the 2011 deficit, would destroy 800,000 jobs. The Wall Street Journal tracked down the foundation for that number, and found it was a fabrication put out by the Economic Policy Institute, a disreputable union front.
But Van Hollen was not off on a frolic of his own. His argument does reflect the thinking of the entire Democrat party, and of President Obama, reflected consistently in his State of the Union address. The Democrats are fully and firmly committed to the belief that increased government spending is the source of jobs, economic growth and prosperity.
That was the dominant Keynesian thinking in the period from the 1930s to the 1970s, when it crashed and burned among sentient folks in the hopeless inflation/recession cycles of the '70s decade. The fallacy is failure to recognize that the money for government spending must come from somewhere. If it comes from taxes, the money for the spending comes out of the economy, and the higher tax rates increase disincentives to growth. If it comes from more deficits and borrowing, the money also comes out of the economy, and it contributes less to growth in the public sector than in the private sector. Increased government spending, taxes, deficits and debt are all a drag on the economy rather than a boost.
But the liberal Democrats are stuck in that 1930s-1970s thinking, and that is why as soon as they were back in power, the Obama Administration went right back to that with its trillion dollar stimulus bill and Obamanomics. That was supposed to keep unemployment below 8%, with total employment by the end of 2010 projected at 137.6 million jobs as a result. In reality, by the end of 2010, we were 7.4 million jobs short of that deluded expectation, still another failure of Keynesian economics proving that thinking yet again disastrously wrong.
In today’s modern world, that 1930s-1970s Keynesian thinking can only be attributed to a poor education. What increases economic growth, jobs and prosperity is not government spending but increased production, which comes from increased incentives for production. That means lower tax rates and regulatory costs on production. That was the new, more modern, supply-side economics that President Reagan brought to Washington, resulting in a 25-year economic boom without inflation. The rest of the world watched and learned from Reaganomics, which is why countries like China, India, and Brazil have been growing steadily. America is starting to fall behind now because the Democrats are taking us back to the 1930s-1970s era, with their Rip Van Winkle economics pretending that everything since 1980 except the financial crisis of 2008 never happened.
The Republicans’ $100 billion spending cut is just a small down payment on what is necessary and what is coming in House Budget Committee Chairman Paul Ryan’s 2012 budget that will set spending on a different course for the next several years. If the Democrats cannot abide even a 2% cut for 2011, with a $1.645 trillion deficit, they will be on a different planet when it comes to Ryan’s 2012 budget.
What the Democrats are revealing on a daily basis right now is that they are at war even more with the Tea Party than with the Republican Party. Tea Party activists take note, the daily message of the Democrats right now is that the Republicans don’t want to spend enough. The Democrats are even saying now that smaller deficits and debt will be bad for the economy.
The awful truth is that the Democrats consider the Tea Party and its grassroots activists to be on another planet, and bitterly oppose everything they believe in. That is what was reflected in Rep. Barney Frank’s recent comment comparing the Tea Party to a meeting between the Mad Hatter and the White Rabbit.
With this political dynamic going on, Republicans would be foolish to be intimidated into backing down by the threat of a government shutdown. Dogging them is a widespread misreading even among conservatives over what happened in the 1995 government shutdown battle. Then House Speaker Newt Gingrich and the Republicans won the substance of that battle, as Clinton agreed to most of their spending cuts and tax cuts in the end. The result was a booming economy in the late 1990s, and the transformation of $200 billion budget deficits at the time into historic, unprecedented budget surpluses, peaking at a record $236 billion in 2000.
Nor did Gingrich and the Republicans lose the politics of that fight. In 1996, the House Republican majority was reelected, along with the Senate Republican majority, the first time that had happened in almost 70 years. What has been overlooked is that Clinton sailed to reelection not only because Dole was hopeless, but because the public was rewarding him for agreeing to the Republican spending and tax cuts.
As a matter of pure politics, that is the bigger danger for the Republicans in the looming budget battle, that Obama will revive his now hopeless prospects for reelection by in the end embracing the Republican budget agenda. We can already see the political possibilities in that with the public approval bubble Obama got from agreeing to extend the Bush tax cuts. The real lesson for Republicans is that they must drive a hard bargain before they come to agreement with the Democrats on the budget. Adding to that is that the Republicans will lose standing with Tea Party independents for any such budget deal they make caving in to more spending for the Democrats.
Democrats versus Democracy
A man of faith in a godless age is hitting Americans where it hurts.
Mr. and Mrs. American Spectator Reader, let P.J. O’Rourke talk sense to your kids.
In Britain, defending your property can get you life.
The debacle of this president’s administration is both a cause and a symptom of the decline of American values. Unless Congress impeaches him, that decline will go on unchecked. An eminent jurist surveys the damage and assesses the chances for the recovery of our culture.
It won’t take long for conservatives to scratch this presidential wannabe off their 2008 scorecard.
The American Christmas, like the songs that celebrate it, makes room for everybody under the rainbow. Is that why so many people seem to be hostile to it?
Was the President done in by the economy, or by the politics of the economy?