[Nesster]

Why Republicans Can?t Propose Spending Cuts -- Daily Intelligencer

“Where are the president’s spending cuts?” asks John Boehner. With Republicans coming to grips with their inability to stop taxes on the rich from rising, the center of the debate has turned to the expenditure side. In the short run, the two parties have run into an absurd standoff, where Republicans demand that President Obama produce an offer of higher spending cuts, and Obama replies that Republicans should say what spending cuts they want, and Republicans insist that Obama should try to guess what kind of spending cuts they would like.

Reporters are presenting this as a kind of negotiating problem, based on each side’s desire for the other to stick its neck out first. But it actually reflects a much more fundamental problem than that. Republicans think government spending is huge, but they can’t really identify ways they want to solve that problem, because government spending is not really huge. That is to say, on top of an ideological gulf between the two parties, we have an epistemological gulf. The Republican understanding of government spending is based on hazy, abstract notions that don’t match reality and can’t be translated into a workable program.

Let’s unpack this a bit. We all know Republicans want to spend less money. So the construction of the debate appears, on the surface, to be a pretty simple continuum based on policy preferences. Republicans like Mitch McConnell say government spending is “out of control” and would, at least ideally, like to bring it into line with revenue entirely through spending cuts. Democrats like Obama endorse a “balanced” solution with revenue and taxes. Right-thinking centrists, like the CEO community and their publicists like Mike Allen and Jim VandeHei, think we should cut deeply into entitlement spending while also raising tax revenue. (VandeHei, in a video accompanying his execrable story, asserts, “There’s money to be cut everywhere.”)

There really isn’t money to be cut everywhere. The United States spends way less money on social services than do other advanced countries, and even that low figure is inflated by our sky-high health-care prices. The retirement benefits to programs like Social Security are quite meager. Public infrastructure is grossly underfunded.

The Bowles-Simpson “plan” was an earnest and badly needed attempt to reconcile the GOP’s hazy belief that government is enormous with reality. They did everything they could possibly do: They brought in representatives from all sides for long meetings with budget experts, going through all aspects of federal policy in detail, in the hope of reaching an agreement on the proper scope of government and how to pay for it. It failed. The Bowles-Simpson plan wound up punting on all the major questions because it simply couldn’t bridge that gulf between perception and reality. That’s why, in lieu of any ability to identify government functions to eliminate, the plan simply pretended the federal government could have everybody do a lot more work for less pay.

The real domestic savings in Bowles-Simpson came from building on Obamacare’s steps to save money by holding down the growth of health-care costs and to cut defense spending by pretty steep levels. But these turned out to be ideas that alienated rather than satisfied Republicans. So basically it turned out to be impossible to find real spending cuts that Republicans wanted.

It’s true that Paul Ryan’s budget plan had some deep cuts. But none of those cuts touched Medicare for the next decade or Social Security at all. Ryan just kicked the crap out of the poor. So, that provision aside, if you’re not willing to inflict epic levels of suffering on the very poor, there just aren’t a lot of cuts to be had out there.

Republicans and even many centrists like to endorse taking away Medicare benefits from people like Warren Buffett. But even defining “Warren Buffett” at a level way below Warren Buffett’s income level yields pathetically little money. (The very rich have a vastly disproportionate share of income but not a vastly disproportionate share of entitlement benefits, which means taxing them produces way, way more savings than reducing their social spending.) This is why the spending side of the fiscal cliff negotiation is so discouraging. The potential cuts on the table range from fairly painful steps like reducing the Social Security cost-of-living index to even more painful steps like raising the Medicare retirement age, and none of them would save all that much money — certainly not on the scale that Republicans want.

When the only cuts on the table would inflict real harm on people with modest incomes and save small amounts of money, that is a sign that there’s just not much money to save. It’s not just that Republicans disagree with this; they don’t seem to understand it. The absence of a Republican spending proposal is not just a negotiating tactic but a howling void where a specific grasp of the role of government ought to be. And negotiating around that void is extremely hard to do. The spending cuts aren’t there because they can’t be found.

[skyredoubt]

Exactly. It is just such a myth that govt spending is out of control and any attempt to reconcile it to reality fails miserably. Yet people need a boogeyman to hang to...
Regardless of what one thinks of desirability or undesirability of big govt deficit (the real answer being: "it depends"), the recent deficits are almost entirely driven by the recession - that is, lower tax receipts vs. automatic spending on unemployment insurance, food stamps etc. This deficit is not something that the govt really "decides on", but rather an emergent phenomenon, a lagging indicator of economic health.

[jeffkrol]

Exactly. It is just such a myth that govt spending is out of control and any attempt to reconcile it to reality fails miserably. Yet people need a boogeyman to hang to...
Regardless of what one thinks of desirability or undesirability of big govt deficit (the real answer being: "it depends"), the recent deficits are almost entirely driven by the recession - that is, lower tax receipts vs. automatic spending on unemployment insurance, food stamps etc. This deficit is not something that the govt really "decides on", but rather an emergent phenomenon, a lagging indicator of economic health.

Long time no see... last hurrah????

[reeftool]

The Republicans haven't been very good at controlling spending at all, they just spend away on different stuff. Bush spent like crazy but I guess that was ok. National security is always the excuse they throw out there. A deficit is still a deficit whether it is spent on food stamps and unemployment or the wars in Iraq and Afganistan. Their main tactic is to scare the public. They try to get us worked up and scared about deficit spending on social programs and the next day they will spread fear that if we don't have $X for the military, our very existence is threatened. We went to war in Iraq because of WMD's but they never found any. We invaded Afganistan to get Bin Laden but he wasn't there. I see a pattern here.

[skyredoubt]

Long time no see... last hurrah????

I'm always around, lurking, but no time for full blown discussions Only once in a while, I feel the urge - like in this case this is summarizing very nicely what I've been saying here and there for a long time, having looked at Heritage Foundation numbers several years ago - how they gutted everything they could and still got pathetic "savings" (and of course we all know this is looking for a solution to a non-problem in the first place)...

[Nesster]

More liberal psychoanalysis (I could see how this drives Republicans crazy!)

Is Obama Punishing the GOP Because He?s Mean? -- Daily Intelligencer

Even as they grudgingly have come to accept that they can’t prevent the expiration of the Bush tax cuts for the rich, Republicans have increasingly started explaining this pitiable state of affairs to themselves as the product of President Obama’s unique malevolence. The operating theory here is that Obama is not demanding higher taxes on the rich because it advances his public policy goals. No, his goal, writes Karl Rove today, is to “kick off a Republican civil war.” This odd theory has likewise found expression from Charles Krauthammer (“Obama’s objective in these negotiations is not economic but political: not to solve the debt crisis but to fracture the Republican majority in the House,”) Peter Wehner, and other luminaries of the right.

The psychology on display here is familiar to anybody who has seen a petulant teenager, who assumes that any restriction that causes them to feel anger must have been intended to produce that emotion. Republicans are feeling humiliated and divided, so Obama’s goal must have been to humiliate and divide them.

But this odd, self-pitying belief is also the product of the party’s endemic difficulty at grasping budget math. Since many Republicans genuinely seem not to understand why Democrats insist on raising taxes on the rich, let me explain. Having observed the fiscal debate within the Democratic party quite closely for a long time, I can assure you that humiliating the GOP has nothing whatsoever to do with the Democrats’ goal of raising taxes on the rich.

The United States, in comparison with other advanced countries, has meager levels of social services, retirement benefits, and public infrastructure. It also has extremely high levels of income inequality. It is very hard to bring revenue and outlays closer into line without cutting programs that are already set at low levels and without also exacerbating income inequality. Raising taxes on the rich, within reason (and Democrats justifiably think that restoring a 39.6 percent top marginal tax rate is within reason) is the one way to avoid the basic conundrum. When your deficit-cutting options include grim choices like potentially raising the Medicare retirement age, or other things that could impose real pain to vulnerable people, every additional dollar that allows you to close the gap with less pain becomes precious.

A related and more subtle complaint, raised by Rove today, is that Obama should accept his revenue goals through tax reform rather than raising tax rates. But as Gene Sperling and Jason Furman, two of Obama’s policy advisers, have explained, there just isn’t as much revenue available this way as Republicans think. And even that limited amount of revenue represents a kind of theoretical ceiling — in reality, special interests are likely to prevail on Congress to carve out protections for themselves from any reform, lowering the revenue gain from its already low ceiling. There’s just no other way to get enough revenue without raising rates.

It’s certainly true that Republicans are undergoing some internal strife right now over the tax issue. Daniel Henninger, also on the Journal editorial page, mourns that the president is “dismantle[ing] their party by letting its most basic conservative principles disappear.” But how this is Obama’s fault, I can’t quite figure out. It was Republicans who elevated the unpopular cause of low income tax rates for the rich to a sacred principle, built an entire party theology around punishing even the slightest dissent from that principle, and then enacted the sacred agenda through a rickety budget mechanism that caused it all to expire after a decade. That was a bad idea. Since Republicans are at least considering how to rebuild their party at the moment, my advice would be to do something else next time.