WHAT TO EXPECT…. It’s easy to imagine, without even considering various comments and post-election moves, what kind of political fights we’re likely to see next year. There will be disputes over health care, government spending, taxes, consumer and worker protections, Wall Street safeguards, etc.
But as Republican officials, including the incoming House majority leadership, plan ahead for 2011, Lori Montgomery had a good piece yesterday on what we can expect from a GOP unaccustomed to governing. The agenda “calls for a radical reduction in government spending, a hard-line stance against new taxes and a ‘sustained’ battle against federal regulators.”
Republicans reject the notion that government spending can spur prosperity. Instead, they favor keeping tax rates steady by extending Bush-administration tax breaks that are set to expire this year and repealing President Obama’s health overhaul. Republicans also want to restrain government regulators and are looking to require congressional approval for any new regulation that imposes costs on the private sector in excess of $100 million a year.
On Friday, Cantor even rejected President Obama’s call for additional tax breaks to spur hiring, such as a proposal to let businesses deduct their expenses more quickly.
Republicans offer “a disciplined approach to removing uncertainty and to allowing the private sector to regain its footing and begin to grow again,” Cantor said in an interview.
Now, Cantor isn’t especially bright, and he may not understand the talking points written for him, but the crux of his economic policy (such as it is) is the preservation of Bush-era tax rates. Asked this morning on Fox News about areas of possible compromise, Cantor ruled out any possibility other than Republicans getting literally everything they want without exception.
Of course, it’s worth appreciating the fact that we know the Bush/Cheney tax policy Republicans are desperate to continue didn’t produce the intended results. Indeed, it was abject failure — it didn’t create jobs, it didn’t generate tremendous growth, and it didn’t keep a balanced budget.
In other words, the one economic policy Republicans will fight for, no matter what, is the one economic policy we know didn’t work.
And then, there’s the approach to spending.
To make good on their campaign pledge to reduce the size of government, Republicans say they are planning a series of quick moves to slash spending soon after they take control of the House in January. Among the likely options: a massive rescissions package that aides said would slice 20 percent from most domestic agency budgets and enact $160 billion in additional cuts endorsed by visitors to Cantor’s “YouCut” Web site.
Such a package would trim more than $260 billion from this year’s $1.1 trillion budget for most government operations — the biggest one-year reduction at least since the military drawdown after World War II, budget experts said.
Because Republicans propose to exempt the Pentagon, veterans programs and homeland security from these cuts, liberal analysts said the reductions would decimate education funding, the National Park Service and other worthy programs.
Of course, it’s not just liberal analysts saying this — it’s plainly true. If one intends to cut $260 billion from the budget, and the Pentagon, veterans programs, and homeland security are off the table, we’re clearly talking about devastating cuts in areas like education, health care, law enforcement, and infrastructure.
How would that help the economy? I don’t know; I don’t think they know; and as far as I can tell, it’s not at all clear they even care. This isn’t about striving for a worthwhile policy goal; this is about satisfying ideological/philosophical demands.
“I don’t get what they think they’re doing to stimulate the economy right now,” Bill Gale, a senior fellow in economics studies at the Brookings Institution, said. “I can understand that people are angry or upset about the economy. But I can’t understand how that anger and anxiety has turned into this set of legislative proposals.”
Let’s make this plain: Republicans aren’t trying to create jobs or improve the economy. If that happens, I’m sure they’d be pleased, but it’s simply not on the list of priorities. When confronted with evidence that their cuts would hurt the middle class, weaken economic demand, and serve as an anti-stimulus in the midst of a weak recovery, GOP officials don’t care about any of that, either.
The New York Times noted the other day that “many mainstream economists say such deep cuts could further strain the economy.” That’s obviously true. It’s equally obvious that Republicans couldn’t care less.
I think some Americans realize how ugly next year will be, but the scope of this fiasco won’t really sink in until the crises begin.
Voters punished the Democratic majority because they were unsatisfied with the state of the economy, but they replaced it with a new House majority that seems painfully anxious to make things worse.
As we’ve talked about before, we have a certain luxury when it comes to our economic problems. Some societies don’t know they have a problem; some know they have a problem but don’t know how to fix it. We know we have a problem and we know how to fix it, but we have policymakers in Congress who refuse to even consider what’s necessary.
We need to spend more to stimulate the economy, while fighting against deflation. The prevailing wisdom in Congress is that we need to spend less while fighting against inflation.
I want to be optimistic about the near future, and think we’ll somehow muddle though, but the rise of reckless, radical Republicans is probably going to be worse than the country realizes.