Thursday, August 05, 2010

Do the Republicans have a serious economic program?

And, in particular, do the Republicans' economic proposals offer any serious, realistic prospect of reducing the long-term federal deficit--a problem about which they pretend to be terribly concerned, despite their conspicuous record of fiscal profligacy whenever they have been in control since 1980?

I think the answer is obviously no. But don't take my word for it--or Paul Krugman's, for that matter. A recent piece by the right-of-center columnist Clive Crook, who really is seriously concerned about bringing the long-term federal deficit under control, briskly explained why the Republicans' current positions on the relevant issues, expressed in both their talking-points and their actual votes, add up to a fiscal agenda that is transparently fraudulent and unserious. "Right now the party's position is to reject every meaningful spending cut and any and all tax increases. That is not fiscal responsibility. It is complete nonsense." To elaborate:
[....] I think both [tax increases and spending cuts] will be needed to get the long-term deficit back under control. Entitlement reform is indispensable.

Curbing spending on Social Security is relatively easy--technically, I mean, not politically. The retirement age should be raised. Getting a grip on long-term Medicare outlays, which is the real core of the problem, is much more difficult. I'm not optimistic that the Democrats' health-care reform, which I support for other reasons, is going to drive down costs. More likely the opposite.

I agree that spending [cuts] should be part of the solution; indeed, must be part of the solution. The current-policy path of Medicare, Medicaid, and Social Security taken together is such that higher taxes by themselves will not suffice-- even if, as I advocated in the column, the base of the income tax is broadened and new taxes (such as a carbon tax or a VAT) are added in. The more diversified the remedies, the less drastic, hence less painful, individual tax hikes and spending cuts will need to be.

I can't help noticing, though, that most conservatives deny that any tax increases are needed while suggesting few if any specific spending cuts. "The government is spending too much," they say. No doubt. "Cut waste." Yes, that would be good. But I don't see the Republican party promising to raise the retirement age to curb Social Security spending, for instance. I don't see them promising to roll back Medicare outlays. The party's main line of attack on health-care reform was to say that the policy would cut Medicare, and that this was unacceptable. If you exclude tax increases and cuts in Social Security and Medicare, you aren't going to get very far on fiscal control.
Like some other people who should know better, Crook does see one exception to this picture.
The charge that conservatives have no ideas on fiscal reform certainly does not apply to Paul Ryan. His Roadmap for America is nothing if not radical. It proposes a complete overhaul--in effect, the dismantling--of Social Security, Medicare, and Medicaid. On the tax side, it slashes taxes on the wealthy and proposes a broad-based consumption tax.

Ryan is a good thing, and his Roadmap is very interesting. He is grappling with specific proposals, and his plan for long-term entitlement reform deserves a serious look. Note, though, that on plausible assumptions, it is not a deficit-reducing proposal: revenues would fall even more than spending.
This is far too generous to Ryan, even though it is true that he is (on the whole) less blatantly dishonest and hypocritical on these matters than most of the Congressional Republicans. His proposals are indeed radical. But as Ryan Avent and Brad DeLong, among others, have pointed out, when Ryan's ideas are examined with any care, they turn out to be questionable, incoherent, and generally unconvincing.

Furthermore, as Crook himself concedes, there is no plausible reason to expect that Ryan's proposals, if enacted, would actually reduce the deficit. "The problem," Brad DeLong observes,"is that Paul Ryan claims that his roadmap is a deficit-reduction plan [....] Since 1979 Republicans have regularly been offering deficit-exploding plans while claiming that they are deficit-reducing plans. Paul Ryan is simply the latest in a 31-year tradition of fiscal policy three-card-monte--and yet Clive Crook still praises it."

At all events, even Crook recognizes that Ryan is, at best, the exception that proves the rule.
More to the point, the party is not backing Ryan's proposals. If conservatives who say, "Don't raise taxes, cut spending," were willing to contemplate Ryan's approach to entitlement reform, well and good. Few are. The party as a whole is scared of it. Republicans in Congress understand how difficult it would be to get the country behind it. (If George Bush's plan for Social Security privatisation, timid by comparison, got shot down, what hope is there for Ryan's ideas?) Right now the party's position is to reject every meaningful spending cut and any and all tax increases. That is not fiscal responsibility. It is complete nonsense.
By pursuing an effective strategy of almost monolithic obstructionism, the Congressional Republicans have been able to do a great deal of harm despite having a minority of both Houses and no constructive policies of their own. If these people get control of Congress in the fall, which is not impossible, we are all in trouble.

--Jeff Weintraub