The elusive GOP plan for deficit reduction

THE ELUSIVE GOP PLAN FOR DEFICIT REDUCTION…. It’s always been rather amusing to hear Republicans suggest they have the moral high ground on fiscal issues like the federal budget deficit. The modern deficit problems began in earnest under Reagan/Bush. Clinton eliminated the Republican deficits altogether, and handed off a huge surplus to his GOP successor. Bush, we now know, was “the most fiscally irresponsible president in the history of the republic.”

But now that the deficit for the just-completed fiscal year was $1.4 trillion, the GOP has decided it cares about deficit reduction again. Indeed, they’re hoping to see President Obama blamed for the mess he inherited.

Yesterday, A.L. had a good idea. Let’s say the GOP was handed the reins of government immediately, and could do as they pleased. What would they do to lower the deficit? Party leaders have said tax increases of any kind are out of the question, so if Republicans have any intention of moving the budget back towards balance, they’ll have to do the opposite of what they did when they were the governing party: find a way to cut spending. A lot.

One idea that some Republicans have suggested (safe from their position in the minority) is to cancel the rest of the stimulus bill. The near universal consensus among economists, however, is that stimulus spending in the coming year will be crucial. Moreover, the states, including most red ones, are very much counting on this money. I find it hard to believe that the GOP — even with a larger majority — could garner anywhere near enough votes to cancel the stimulus bill. Moreover, doing so would only improve the deficit numbers for one year (after that, the stimulus spending is done). Even if it didn’t harm the economy, it would do nothing whatsoever to improve the long term deficit numbers. […]

[T]he largest source of potential spending cuts is in the defense budget, but the GOP has always been fiercely opposed to any cuts in defense spending, and it’s hard to see that changing any time soon. […]

So that leaves us with entitlement spending. Would the GOP make major cuts to Medicare? It’s possible, but they are currently opposing efforts to rein in wasteful Medicare spending and promising to protect seniors from any cuts whatsoever. It seems highly unlikely that the GOP would make any real effort to reduce spending on Medicare.

So what about Social Security? Well, for starters, Social Security is a much smaller program than Medicare, so even drastic cuts would not make much of a dent in the overall spending picture. Moreover, the last time the GOP tried to “reform” Social Security (by converting it into 401k-style individual accounts), their plan involved massive up front transition costs that were to be paid for by borrowing. In other words, if they passed Bush-style Social Security reform, it would massively inflate both the deficit and the debt, both in the short term and long term.

So what does that leave us with? Not much.

Quite right. Once one takes tax increases, defense spending, and entitlements off the table, serious efforts to reduce the deficit are a fantasy. Given that Republicans actually want to cut taxes and increase military spending, the GOP plan is fairly obvious: take the enormous deficits they created, and make them worse.

I’d just add one thing to A.L.’s analysis. In June, in a story that was largely overlooked, the White House asked GOP lawmakers to come up with some recommended budget cuts. Republicans had spent months saying how much they’d like to trim from the budget, so the president invited them to submit their ideas in writing. The GOP caucus came up with a “bold” plan that would cut federal spending by about $5 billion a year for five years — far less than the White House plan to reduce spending.

But I suggest giving them another shot at this. Republican policymakers turned a massive surplus into a massive deficit, but they claim they now take fiscal discipline seriously. Let’s take them at their word, and invite them to put a plan where their rhetoric is. I’d love to see what they come up with.