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THE CONSERVATIVE REVIEW - March 22, 2011
Deficits, Promises and Destiny
by: Tony Blankley
Townhall.com
In about a month, the Republican majority on the House
Budget Committee will present its concurrent budget
resolution for fiscal year 2012, which by law will include
their proposed 2012 annual budget and their projection of
the budgets (spending, revenues and the resulting deficit,
surplus or balance) for the following nine years.
It may not be overstatement to assert that this present-
ation may determine whether Republicans win or lose the
2012 elections and whether the United States government
acts in time to save our economic future from ruin.
A month ago, President Obama announced his budget proposal.
It projected $7.2 trillion (adjusted to $9.4 trillion with
later developments) to be added to the national debt over
10 years -- and made no proposal to reduce the burgeoning
growth of the annual deficit due to out-of-control cost
rises in Medicare, Social Security, Medicaid and other
entitlements. Even with unrealistically rosy economic
projections -- such as no recessions in next decade -- the
Office of Management and Budget still projected annual
deficits of $774 billion in 2021.
Even the liberal media -- from the Washington Post on
down -- harshly criticized the president's budget proposal
as an abdication of leadership on the central domestic
issue of our age. But many savvy Washington pros -- both
Democrats and Republicans -- think that with this budget
proposal, the president may have positioned himself to
savage the GOP (and thus gain re-election) should the
House GOP make any real effort at bringing the budget
under control.
Can the House GOP propose a budget that brings the deficit
under control? Even if we consider "control" to be less
than 3 percent of GDP (rather than actual balance), it
will be painfully difficult -- and for some GOP freshman,
supporting such a budget proposal will violate some of
their campaign promises. Here is why.
Most Republican members of Congress promised not to raise
taxes. Most promised to deal with the out-of-control
deficits and debt. Many promised not to cut Social Security
or Medicare.
That first promise, not to raise taxes, means that the
Republican-proposed 10-year budget must keep the Bush tax
cuts in place for all 10 years. If the Budget Committee
does so, then the Congressional Budget Office (the official
score keeper) will find that $2 trillion in revenues will
be "lost" (notwithstanding that many of us believe that a
supply-side marginal income tax cut dynamically increases
economic activity (and thus federal revenues).
So, before the budget committee even starts reducing spend-
ing, it will be $2 trillion in the deficit hole (compared
to Obama's position).
Most GOP members either promised or hinted at not cutting
benefits on Social Security and minimal reductions of
Medicare -- at least for anyone 55 or over.
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One hears steady rumors (but only rumors) that the GOP
majority on the Budget Committee is not going to touch
Social Security, will seek minimally greater market-based
efficiencies for Medicare and do most of its entitlement
cuts in Medicaid (health aid to the poor).
When they combine those efforts with keeping the Bush tax
cuts for the entire 10 years, they will be hard-pressed to
come in with a budget deficit in 2021 of less than half a
trillion dollars. More likely, they are looking at an
annual deficit in 2021 of about $600 billion dollars --
only $170 billion less than Obama's proposal.
So, to get the deficit down to a level that the world bond
market -- and GOP voters -- consider to be under control,
the House GOP will have to propose both letting the Bush
tax cuts expire at some point and reducing net costs
substantially on Social Security and Medicare.
If they do that, not only might many GOP and independent
voters turn on their GOP congressmen in November 2012, but
the members may also thereby break their promises not to
raise taxes, nor touch Social Security, etc. What should
the GOP do?
Back in the 1980 presidential campaign, Ronald Reagan made
three major promises: 1) Increase our military strength,
2) cut income taxes and 3) reduce the budget deficit.
Fortunately for Reagan, he had the foresight during the
campaign to give his priorities to those three promises
(in the order I have listed them). He was able to keep
Nos. 1 and 2, but could not keep the budget-cutting
promise.
Today, there are three objectives or promises that many
Republican congressmen have: 1) Get the deficit and
national debt under control, 2) don't raise taxes and
3) protect full benefits of Social Security and most of
Medicare for those over 55.
The GOP will have to decide which of those laudable object-
ives have priority over the others -- because I would be
amazed (but delighted) if they can keep any two of them,
let alone all three.
For me, the overwhelming historical obligation of our
government -- and the reason the Republicans were given
the majority in the House -- was to get the deficit and
debt under control.
The GOP will risk losing its majority either if they
propose coming in with a half-trillion-dollar deficit
in the 10th out year -- or if they propose getting the
deficit down by lowering costs of Social Security and
Medicare and letting Bush tax cuts expire.
They should listen to the command of history and take
their chances with the electorate by proposing to solve
the fiscal crisis -- even at the price of not honoring
their subordinate promises.
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