In a recent post titled “Balancing the Budget – The Sane Approach,” I republished in its entirety an article in The Wall Street Journal titled “The Right Way to Balance the Budget” and offered a personal observation about the difficulty in trying to assimilate enough unbiased information to form an opinion about the best solution for the current fiscal nightmare in America.
A few days later I read an opinion piece that serves as a perfect example to illustrate the kind of polar-opposite thinking clouding the issue. The following is based on a NYT editorial titled, “Budget Hypocrisy.”
Let’s define something first: hypocrisy – the practice of claiming to have moral standards or beliefs to which one’s own behavior does not conform; pretense. For my purposes here, I’ll ignore the morality and belief components and deal only with behavior.
Second, let’s acknowledge that whatever you or I may think of the New York Times and how we individually might characterize its editorial bias, we know immediately with the opening of this piece where it’s going. But that’s good, right? Any editor knows to come out of the chute with guns-a-blazing (in Texas, anyway) so readers have no doubt as to the topic or the publication’s attitude toward it. To wit:
“It was not long ago that Republicans succeeded in holding unemployment benefits hostage to a renewal of the high-end Bush-era income tax cuts and — as a little bonus — won deep estate tax cuts for America’s wealthiest heirs. Those cuts will add nearly $140 billion to the deficit in the near term, while doing far less to prod the economy than if the money had been spent more wisely. That should have been evidence enough that the Republican Party’s one real priority is tax cuts — despite all the talk about deficit reduction and economic growth.”
Okay, then. If you’re an elephant-skinned conservative, you’re outa there. The tone of the paragraph will probably do that all by itself, even without addressing the mix of fact and opinion it contains. For those who stick around, we read:
“But here’s some more: On Dec. 22, just before they left town for the holidays, House Republican leaders released new budget rules that they intend to adopt when they assume the majority in January and will set the stage for even more budget-busting tax cuts.”
The Times then provides background about pay-as-you-go rules adopted by the Democratic majorities in the House and Senate in 2007, essentially creating a zero-sum relationship between tax cuts or increases in entitlement spending and tax increases or entitlement cuts. According to the Times, the new Republican rules “will gut pay-as-you-go because they require offsets only for entitlement increases, not for tax cuts. In effect, the new rules will codify the Republican fantasy that tax cuts do not deepen the deficit.”
But that’s not all. According to Congressional mandate, entitlement-spending increases must be offset by spending cuts only without raising taxes to pay for them. NYT: “Say, for example, that lawmakers want to bolster child credits for families at or near the minimum wage. One way to help pay for the aid would be to close the tax loophole that lets the nation’s wealthiest private equity partners pay tax at close to the lowest rate in the code. That long overdue reform would raise an estimated $25 billion over 10 years, but the new rules will forbid being sensible like that.”
Even worse, according to the Times, is that the new rules direct the House Budget Committee to ignore certain costs when computing the impact of future actions. “For example, the cost to make the Bush-era tax cuts permanent would be ignored, as would the fiscal effects of repealing the health reform law. At the same time, the new rules bar the renewal of aid for low-income working families — extended temporarily in the recent tax-cut deal — unless it is fully paid for. House Republicans obviously believe they have a good thing going with voters by sanctifying tax cuts and demonizing spending. That’s been their approach for 30 years after all, and it unfailingly rallies their base.”
The Times concludes with, “President Obama and the democratic lawmakers . . . need a plan for long-term deficit reduction that recognizes what the Republicans ignore: Never-ending tax cuts make the deficit worse. Prudent tax increases need to be part of the solution.”
So, what if we shred this post and the earlier one (which used historical data to justify the position that successful attempts to balance budgets rely almost entirely on reduced government expenditures, while unsuccessful ones rely heavily on tax increases), process them in a blender with some “make sense of it all” solution, and pour the mixture into a glass? We might have a best-of-both-approaches smoothie, right? Chug it down and make it all better. Or maybe not.
For me, trying to mix oil and water comes to mind. It ain’t gonna happen. We’re stuck with the status quo, which is that no one of either political party or fiscal persuasion has a clue about what to do other than doggedly pursue the same ineffective policies that have created this mess and can only keep us there. And to continue doing that, they’ll push the handy debt-ceiling reset button.
The Second Liberty Bond Act of 1917 established a statutory limit on federal debt to provide the U.S. Treasury with more leeway and allow for modern management techniques in government finance. Currently, we conduct more than 200 sales of debt by auction every year as long as the total debt does not exceed a stated ceiling. How’s that been working recently?
In the last ten years, the debt ceiling has been reset ten times, from $5.95 trillion to the most recent increase of $14.3 trillion on February 12, 2010. On Sunday, the top White House economic adviser warned lawmakers that the United States faces catastrophe if Congress does not raise the debt ceiling.
Here’s a prediction: they’ll stick their heads in the sand, push the reset button, and like voodoo magic extend the edge of the earth a bit farther to put off the day of reckoning until another tomorrow.