This is the week for bold, conservative, budget-related
proposals, with major announcements from the Heritage Foundation,
from Speaker John Boehner, and from a group of Republican senators
led by Pennsylvania’s Pat Toomey. Very good. Although some Tea
Party groups
may not recognize as much, conservatives are winning the
political battle over budgets right now. Befuddled liberals, rocked
back on their heels, are responding by
pushing
tax hikes. If that’s their answer, they lose and we
win.
Boehner’s
proposal is the simplest, and it’s well-nigh brilliant. He
called for cuts from President Obama’s proposed long-term budgets
that are “greater than the accompanying increase in debt
authority the president is given.” Also, “We should be talking
about cuts of trillions, not just billions. They should be actual
cuts and program reforms, not broad deficit or debt targets that
punt the tough questions to the future.”
And tax hikes will not be on the
table.
The public can grasp this idea. This proposal paints a
bright line, based on principle, easily measured. The debt limit
should not rise by more than the amount by which five-year budgets
are cut.
Last weekend, my friend Jim Guirard, the longtime chief of
staff for former Louisiana Democratic U.S. Sens. Russell Long and
Allen Ellender, was pushing a slightly different idea but one that
would dovetail quite nicely with Boehner’s. Guirard said
Republicans should go ahead and raise the debt limit, but only by
half as much as Obama requested — with the other half absolutely
dependent on Obama meeting several, measurable, strict savings
targets in the meantime. Without meeting those targets, Obama could
not trigger the full debt-limit hike.
Put Guirard’s proposal together with Boehner’s. Insist
that Boehner’s suggested level of cuts be made — and that they
actually be implemented, as intended, or else the higher debt limit
would automatically be revoked. Or something like that.
Meanwhile, where Boehner lays out parameters, Heritage and
Toomey lay out specifics. Both would balance the federal budget
within ten years. Neither one would raise net taxes. The Heritage
plan would fundamentally reshape large swaths of the federal
government. It would combine income taxes and payroll taxes (for
Medicare and Social Security) into one, flat tax system. It would
provide a federal tax credit to individuals/families to purchase
health insurance, rather than providing the tax break to employers.
It would adopt much of House Budget Chairman Paul Ryan’s plan to
turn Medicaid into a block grant program (with added flexibility to
the states) and to turn Medicare for future retirees (phased in)
into a “premium support” program that would put authority and
choice into individual hands. It would force domestic discretionary
spending back to 2008 levels and then freeze it (with an inflation
allowance only), and it would direct the federal government to sell
$260 billion of assets over 15 years.
All these ideas are basically sound. Conservatives should
quibble only with one of its proposed changes for Social Security:
Heritage eventually would completely end Social Security payments
for wealthy individuals. This is a bad idea. It makes sense to
means-test the program to a certain extent, but to completely
eliminate payments to some Americans would be to break faith with
the idea that, at least at a conceptual level, payroll taxes are
meant as a down payment for future considerations. By breaking that
link entirely, Heritage would actually feed the notion that
successful people are a cash cow to be milked by the less
successful without any “return” due to them. This is Robin Hood,
“soak the rich,” punish-the-productive, feed-the-looters policy
writ large. And, as we shall see, it’s not necessary. Those extra
savings can be achieved elsewhere.
Sen. Toomey shows
how. For one thing, he would return domestic discretionary spending
not just to 2008 levels (as Heritage would do), but to 2006 levels,
and then freeze it for six full years (before eventually letting it
rise, after that, in line with inflation). Believe it or not, this
difference between the two plans could amount to hundreds of
billions of dollars of extra savings.
Conservatives should just dare the left to call these
levels of spending “Draconian” or “heartless.”
“Oh, really?” we should say. “So… was President Clinton
heartless? No? Did he approve budgets that let old ladies freeze in
the streets while children starved under overpasses? Of course not.
Then why would it be heartless to approve domestic discretionary
spending levels that, even after adjusting for inflation and
population growth, are tens of billions of dollars above
what Clinton agreed to? And no, we’re not talking about what he
agreed to in 1995 or 1996, when Republicans were still cutting
budgets; we’re talking what he agreed to in 1999 and 2000, after
Republicans lost their spending discipline.”
If the 2006 levels were good enough to meet Clinton’s
standards of empathy, and then some, surely they should be good for
us now.
Meanwhile, Toomey joins Heritage and Ryan in
block-granting Medicaid to the states. He also joins Heritage in
setting annual spending caps for welfare programs. On taxes, he
would collapse the current six income-tax brackets to three, with
fewer loopholes but lower marginal rates. He would index the
Alternative Minimum Tax to inflation. And he would cut the
corporate income tax rate from 35 percent to 25 percent.
That last proposal, like almost all corporate-income tax
proposals in serious play these days, actually isn’t anywhere near
bold enough. The regular corporate income tax rate should be zero,
at least for U.S.-based companies. (I explained how and why more
than three years ago, here.)
All in all, though, Boehner, Heritage, Toomey, Ryan and
others are driving the debate. Democrats are being forced into
lower spending, and also are being smoked out as inveterate tax
hikers. Economist Larry Kudlow — a solid economic conservative if
there ever was one — has been saying all week that Republicans are
winning the economic debate and winning on actual
legislation as well. He told a radio show Tuesday that the GOP won
in the December deal to extend the Bush-era tax cuts, that it won
in the spending showdown on the Continuing Resolution, and that
Boehner’s proposal on the debt ceiling is a winner as
well.
Kudlow is right. The left is in retreat. Even if not every
provision of every conservative plan is a good idea, and even if
the victories aren’t as big and don’t come as fast as many of us
would like, the reality is that this plethora of overwhelmingly
solid, conservative proposals serves to keep the pressure on,
serves to keep the ball (and public policy) moving in the right
direction, and puts liberals into an electoral box. They will be
defending huge deficits and higher taxes, without being able to
show any economic benefits from them. Unemployment will still be
higher than when Obama took office; gasoline and food prices will
be higher; and the number of homeowners “under water” still will
probably exceed the level Obama inherited.
Now is the time for conservatives to highlight those facts
and attack the left for profligacy and incompetence, rather than to
continue blasting (and nitpicking) each other for supposedly
insufficient “guts” or weak dedication to the cause.
Fiscal conservatives are on the move. The liberal winter
is thawing. The most important battle will be in November, 2012 —
followed by a long challenge to secure the victory by implementing
good policy thereafter.
The excellent news is that people like Toomey, Ryan, and
the thinkers at Heritage are laying out those good policy options
right now. More power to them.
