Political Hay

The Democrats’ Waving Hand

Super committee failure is preferable to Republicans allowing their focus to drift from the only issue that matters -- government spending.

By 11.21.11

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Although it scares me greatly to wish for the same thing as Paul Krugman, I, like that master of Progressive misdirection, am pleased that the "Super Committee" of Congress, assigned to find a way to reduce our debt and deficits, is on the brink of failure.

It's not that I'm opposed to movement to fix our very serious fiscal issues. Rather it's that the only possible deal from a committee which includes John Kerry (D-MA) and Chris Van Hollen (D-MD) is a bad deal. We should consider ourselves fortunate that Democrats weren't smart enough to say yes to Republicans' attempt to cave in on taxes. Rep. Jim Clyburn (D-SC) asked rhetorically "Do we look stupid?" In fact, they now do -- though they're probably not smart enough to realize it.

It's taken years to screw up our finances this badly. Another 14 months isn't going to make it that much worse.

Rather than take a bad deal -- meaning any deal that increases tax revenue other than by increasing economic activity -- Republicans must focus on repeatedly putting forward solid budget-cutting and entitlement-reforming legislation. The best path toward electoral success is to show the electorate that Democrats are utterly irresponsible with our national fisc and to remind voters that just as households cut back on expenditures when times are tough, so must the federal government.

Don't forget, as Milton Friedman taught us, government will spend as much money as it takes in, plus however much more it can get away with. Thus the idea of raising taxes as budgetarily beneficial is simply a dangerous misdirection. Increasing tax rates -- which always generates less increased revenue than the CBO's static modelers predict -- will reduce spending cuts by reducing the need for politicians to make hard decisions.

Again, Friedman: The true burden of government is not the deficit; it's not even the taxes. It's the spending.

Focusing on the budget deficit is like focusing on a magician's waving right hand while he slides the card from his sleeve with his left. Of course he wants you to focus on the right hand, but an experienced watcher of magic won't be fooled. If you want to get our fiscal house in order, therefore, do not focus on the deficit -- the Democrats' waving hand -- but on spending.

If we're aiming to cut 4 trillion dollars of deficit, for example, as the Simpson-Bowles Commission suggested, then a plan that is even one-quarter tax increases lets the politicians off the hook as far as finding a trillion dollars of spending cuts.

Rather than compromise with Democrats just for the sake of getting something done, let's aim to oust Democrats from control of anything in Washington and then put a good plan in place.

I say this as someone who is generally a strong supporter of divided government.

But in most of our past, the minority party was the loyal opposition. Today's Democrats (only the minority in the House, to be clear) are the tools of radical leftists from environmentalists to union thugs and of statists and parasites like teachers' unions and trial lawyers. They are loyal to those special interests regardless of cost to the nation and should therefore be excluded from influencing power over important policy and regulation to the greatest degree possible.

It is the Republicans' job to make voters understand that -- a hard sale for a party that barely a decade ago was as unworthy of voter support as today's Democrats are and which still hasn't convinced many of us that their reborn fiscal sanity evangelism is heartfelt. (Every episode such as their trying to "compromise" with John Kerry makes their commitment less credible.)

As barely-convincing as Republicans may still be regarding the importance of spending restraint, persistent 9 percent unemployment is a harsh and effective teacher -- better than any Republican other than perhaps Ronald Reagan could be, and even he had the advantage of coming out of the Jimmy Carter economy. Seeing the destruction of Greece and near panic in Italy and Spain also helps get the message across. American workers are finally learning the true bitterness of the crop sowed by Progressive, anti-capitalist, us-versus-them policy -- the very crop that the Occupy Wall Street movement and the NLRB want to plant more of in our once productive economic fields.

Just as it's not a "compromise" to take a teaspoon of poison rather than a tablespoon, congressional Republicans should not compromise with their Democrat counterparts. Instead, the goal must simply be to beat them.

For today, the left seems to think that a Super Committee failure will allow Republicans to be demonized as do-nothing, millionaire-coddling obstructionists. But John Kerry and friends are betting on the wrong horse. Super Committee Republicans came to the table offering increased tax revenue through soak-the-rich tax code changes that would, for higher-income Americans, limit deductions such as for mortgage interest and charitable contributions. Karl Marx would have been proud that conservative "stalwarts" like Pat Toomey (R-PA) and Jeb Hensarling (R-TX) were willing to play into the class warriors' hands simply out of a desire to reach an agreement -- and Democrats still said "no."

A Super Committee failure is not an outright Republican victory. Instead it is a defeat of every elected politician inside the Capital Beltway -- and not just members of Congress. President Obama has miscalculated, assuming that his failed leadership will not be noticed and that all blame will go to Congress. But the buck stops with him and he won't be able to pin it on Republicans, not least because few Americans have even heard of the Super Committee members.

While the Super Committee's failure will be a modest positive for Republicans by virtue of being a negative for the President (despite his obvious hope that the Committee would fail) and because Republicans were, despite themselves, unable to cave in on tax increases, the impact of this on the 2012 elections should not be overstated. By next November's elections, this failure will be nearly forgotten, much like Simpson-Bowles, and debate will return to renewing the Bush tax cuts.

Democrats are in a hard spot with this. If the economy is bad, they can hardly argue that raising taxes is a good idea -- especially since Barack Obama said in 2009 that "you don't raise taxes in a recession." If he tries to split hairs between the weakest recovery in modern history and a recession, it won't work. And if the economy is improving, Republicans will have a strong argument that we don't want to derail the slowly accelerating economic train by anti-growth tax hikes.

After all, while it's not much mentioned, Obama followed up "you don't raise taxes" by pointing out that in order to spur economic growth "we cut taxes" and that raising taxes "would just suck up, take more demand out of the economy and put businesses in a further hole." Is there some magic thing that happens when a group of economists say that a recession has ended which would change the fundamental truth -- yes, it's true even though Obama said it -- of the impact of tax hikes?

When a liberal friend (or is that an oxymoron?) says that the Bush tax cuts threw us from surplus to deficit, point out to them that CBO figures (as compiled by the Tax Foundation) show that 44 percent of the swing from surplus to deficit in the decade since 2001 was caused by government spending and another 28 percent by the recession. Only 16 percent is attributed to the Bush tax cuts, and that's based on static modeling that gives the tax cuts no credit for increased economic activity which they -- like every tax cut -- undoubtedly caused.

Democrats talk about how popular the question of raising taxes on the rich does in polls. But deep in our hearts, the average American knows that our nation is not about beggar-thy-neighbor policies, and we know that our nation -- just like Greece, Italy, and Spain -- has a spending problem, not a revenue problem.

Although financial markets may at first react badly to the Super Committee's near-certain failure, that failure is a blessing. Not a blessing in disguise, just a blessing. It's time to stop focusing on the Democrats' waving hand of deficit reduction and get to the business of electing politicians who will actually cut spending.

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About the Author
Ross Kaminsky is a self-employed trader and investor and is a senior fellow of the Heartland Institute. He is the host of The Ross Kaminsky Show on Denver's NewsRadio 850 KOA on Saturday mornings from 6 AM to 9 AM. You can reach Ross by e-mail at rossputin(at)rossputin(dot)com.