Republicans today unveiled the economic agenda they will pursue if they take over one or both Houses of Congress, as many expect they will, that was long on dramatics and short on substance.
The GOP’s pledge to America was chock full of them including:
- Repealing Health Care Reform;
- Roll back spending to pre-stimulus,
- Stop all tax increases, scheduled to take effect January 1, 2011;
- Give small businesses a tax break to 20 percent of their business income.
All of these are great soundbite-worthy ideas that have zero chance of ever seeing the list of day. President Barack Obama would become the least popular president since Jimmy Carter if he went along with any of them. Republicans are no doubt aware of this as they look to box in Obama ahead of the next presidential election.
Many of the Republican ideas are not new. The GOP has always prided itself as the party of small government and low taxes. Trouble is the last Republican President George W. Bush didn’t practice what he preached. Spending mushroomed because of the Iraq War. He was the first president to preside over an economy where job growth in the government outpaced the private sector.
None of this matters to the GOP today as it looks to reclaim the mantle of fiscal conservatism abandoned by Bush.
“During the 1990s, a Republican Congress enacted pro-family policies such
as marriage penalty relief and the child tax credit,” the party says. Unless action is taken, a $3.8 trillion tax hike will go into effect on January 1, 2011 that will unravel these policies.”
What the GOP is referring to are the Bush Tax Cuts enacted between 2001 and 2003 that — among other things — eventually eliminated the estate tax temporarily, which saved the heirs of the late George Steinbrenner and other dead billionaires boatloads of cash. It also lowered tax rates on capital gains, dividends and income. President Obama wants allow the cuts to expire for individuals earning more than $200,000 and families making more than $250,000.
Though the Republicans decry the cuts as a fiscal calamity, there is compelling evidence that rich people don’t spend money they don’t have to pay Uncle Sam. It turns out that they are as worried about the economy as everyone else.
“According to the Congressional Budget Office and other authorities, extending all of the Bush tax cuts would have a small bang for the buck, the equivalent of a 10- to 40-cent increase in GDP for every dollar spent,” William Gale of The Brookings Institution wrote recently in the Washington Post. He added that the tax cuts didn’t cause the deficit to skyrocket. That’s the fault of the recession.
The Draconian cuts in spending advocated by the Republicans will do little to encourage growth. In some states, such as West Virginia, a good percentage of the population have government jobs. Moreover, how are these cuts can even can be done with the military’s commitments in Iraq and Afghanistan?
To be sure, government spending is out of control but many economists have argued that the bailouts — while distasteful — were necessary. Interesting how Wall Street is the bad guy everyone blames for our woes.
It’s one of the few areas of bipartisan consensus.