Streetcar Line

Fiscal Conservatives Are Winning

Budget plans advance the cause. The left is in retreat. Can we knock off the backbiting and nitpicking?

By 5.12.11

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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.

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About the Author
Quin Hillyer is a senior editor of The American Spectator and a senior fellow at the Center for Individual Freedom. Follow him on Twitter @QuinHillyer.