Two budget stories are intersecting in a fascinating way that once again puts the lie to Republican claims of fiscal restraint.
First off, this year represents the smallest budget deficit since 2008:
The White House said Friday that the federal budget deficit will fall to $583 billion this year, the smallest deficit of President Obama’s tenure and the first to dip below $600 billion since the Great Recession took hold in 2008.
On the other side, the Republican House just voted for an inexcusable $287 billion supply-side corporate tax giveaway:
The GOP-led House of Representatives embraced a former stimulus measure Friday, voting to make it and another related tax cut permanent, adding $287 billion to the deficit over the next 10 years.
The largest part of the cut, worth more than $263 billion, is making permanent so-called bonus depreciation, which allows businesses to write off the cost of capital investments and improvements much more quickly.
It was enacted twice during the administration of President George W. Bush, and the most recent version expired last year. The idea behind it is that if lawmakers give businesses a break during tough economic times, they will speed up major equipment purchases and stimulate economic activity.
Those who support making such a stimulus measure permanent argue that it would give businesses the certainty to be able to plan their investments. But opponents — primarily Democrats — mocked the idea, pointing to Congressional Research Service reports that found the break was a weak stimulus to begin with, and that the stimulative effect is likely to fall even further if the break becomes permanent.
The situation is beyond absurd. Republicans still somehow have the brand of fiscal restraint even though Ronald Reagan dramatically increased the deficit, Bill Clinton balanced the budget, and George W. Bush blew the deficit sky-high again before ending his term with the greatest economic crash since the Great Depression. Like Bill Clinton, Barack Obama is doing his best to close the gap, even as Republicans try to blow it back open again with supply-side cuts that we already know don’t work.
But there’s a double absurdity at work here, which is that in a poor economy the country shouldn’t be trying to balance the budget at all. Paul Krugman and the Keynesians have been proven right on this question repeatedly, even as the austerity fetishists and the supply-siders have been proven wrong at every turn. We know now definitively what we should have known instinctually back in 1980: that supply-side economics is junk science and a proven failure. We also know from the European experience that austerity economics only sends countries further into recession–with the added effect of increasing deficits in the bargain, thus supposedly necessitating further cuts in a negative reinforcement loop.
Democrats are supposed to be the party of stimulus and fiscal laxity. Republicans are supposed to be the party of belt-tightening and fiscal austerity. Instead we see repeatedly that Republicans play fast and loose with the nation’s budget in order to deliver tax breaks to their wealthy friends, while Democrats spend their time closing the deficits Republicans create. But even more bizarrely, we see Democrats counterproductively pushing austerity economics when they should be pursuing Keynesian stimulus, even as Republicans ironically vote for stimulus–albeit in its weakest and worst-targeted guise–in the form of tax breaks for the rich.
When budget politics has gone this far into funhouse mirror land, it almost makes popular polling on budget issues irrelevant. How are voters even supposed to know which party represents what policies, or even which economic theory they’re working under? While Republicans are clearly more destructive and wildly irresponsible, both sides are operating in such self-contradictory opposition to their stated economic ideologies and branding that it’s a wonder voters can even make sense of it all.
In truth, most of the time they don’t. That’s part of why American politics tends to be so shallow and focused on ephemeral issues, and why budget battles look more like circus acts than deliberative debates.