The Congressional Spectator

The Moment of Truth

Last week, Republicans took the first step away from bipartisan hypocrisy on taxes and spending. Will Democrats pull them backwards?

By 4.18.11

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A good rule of thumb: Whenever leaders of both parties hail legislation that passed with bipartisan majorities as "historic," hold on to your wallet. That seems to be the case for the historic spending deal Congress passed last week to avoid a government shutdown.

Although everyone from President Barack Obama to House Speaker John Boehner praised the deal for including the biggest single-year spending cut in history, the Congressional Budget Office now says its impact on the current fiscal year's budget deficit would be too small to pay for a single week of bombing in Libya.

In a way, it is fitting that this was the closest the two parties could come to fiscal responsibility. While many things have contributed to our country's deepening fiscal crisis, there is an informal bipartisan agreement that has been a major driver: ever since Ronald Reagan whipped stagflation, the country has essentially been paying for Democratic spending programs with Republican tax rates. Economic necessity has prevented Democrats from raising marginal tax rates back to their pre-Reagan heights. Politically necessity has kept either party from doing more than nibbling around the edges of the Great Society, even when struggling to bring deficits under control. David Frum once called this neat little trick post-Great Society government at pre-Great Society prices.

Demographic changes like the aging of our population plus the diminishing returns on post-Reagan tax cuts -- slashing the top income tax rate from 39.6 percent to 35 percent just does not give the same bang for Laffer Curve buck -- made this bargain untenable. Fiscal conditions have particularly deteriorated due to the profligacy of the past two administrations.

George W. Bush simultaneously splurged on guns and butter in a feast not seen since Lyndon Johnson was in the White House. He launched two wars, created a new entitlement program, and presided over a vast increase in non-defense discretionary spending, all completely unfunded. While regularly tut-tutting the mess his predecessor has left him, Obama followed up with a spending binge that made Bush look like Calvin Coolidge by comparison.

Yet last week may have marked the end of this bipartisan shell game. While the fiscal 2012 spending blueprint introduced by House Budget Committee Chairman Paul Ryan is not without faults, it is perhaps the most honest long-term budget endorsed by a major party in years. It tells the truth that we cannot pay for the promises the federal government has made while keeping the tax burden at is historic levels. So the Ryan budget seeks to maintain that tax burden, roughly 20 percent of GDP, while paring down spending commitments to a level that tax take can pay for.

Democrats, by contrast, want to maintain the benefit levels promised by current law. But they are not honest about what it will take to pay for them. When the president unveiled his new deficit reduction plan, complete with 12-year budget windows, he pretended those benefits could be paid for simply by increasing the tax burden on upper-income taxpayers.

Unfortunately for the president, only about $800 billion can be recouped by returning to the Clinton tax rates on those earning more than $250,000 a year. And that's assuming the static revenue estimates prove accurate. The rest would have to be raised by increasing taxes on the middle class -- and that's something the president and most Democrats in Congress have repeatedly said they will not do. Obama has said he would like to cut taxes for his non-rich 98 percent. Many Democrats are in favor of making the Bush tax cuts for the middle class permanent.

Of course, there are Democrats willing to go further than the president. The House Progressive Caucus introduced an alternative budget that slashed military spending and contained tax increases more ambitious than anything Obama will endorse ahead of next year's election. Their plan got exactly 77 votes. To put this in perspective, more Democrats in Congress voted "present" on the Republican Study Committee budget -- that is, a proposal to the right of Ryan's budget -- than were willing to support the Progressive Caucus' handiwork.

Republicans are at least willing to try to shrink the federal government to a size their tax rates will pay for. Democrats are still insisting that their promised government benefits can be financed with Republican tax rates for everyone but the top two percent. The math just ain't on their side.

The Democrats nevertheless hope that the politics may be. They are already in full campaign mode against the Republicans' proposed reforms of Medicare and Medicaid. Instead of any tough medicine, they are promising to pay for the post-Great Society welfare state by raising taxes on somebody else.

Last week may have marked the end of bipartisan entitlement trickery. But old political habits die hard.

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About the Author

W. James Antle III, author of the new book Devouring Freedom: Can Big Government Ever Be Stopped?, is editor of the Daily Caller News Foundation and a senior editor of The American Spectator. You can follow him on Twitter @jimantle.