Walking out of the fiscal cliff kabuki theater
Today’s installment of the “fiscal cliff” drama concerns the White House’s efforts to convince America that it really has listed some spending cuts during negotiations. Responding to an exasperated House Speaker John Boehner saying that “we’re still waiting for the White House to offer spendng cuts,” presidential spokesman Jay Carney insisted “the President, unlike any other party to these negotiations, has put forward detailed spending cuts, as well as detailed revenue proposals.”
No, he hasn’t, although he might be able to Jedi-mind-trick his more gullible supporters into thinking he has. To fulfill his campaign promises of $3 in cuts for every $1 in tax increases, the President would have to match his $1.6 trillion in tax hikes with a whopping $4.8 trillion in spending cuts. That would actually be a fairly interesting proposal if he made it, with the provisions that all of his cuts be actual cuts in spending, and all of them occur within the next 2 years, rather than the usual 10-year timetable with 8 “out years” when none of the spending cuts would actually happen. It still wouldn’t be good enough to “fix” the deficit, let alone pay down the national debt, but it would be a genuine step in the right direction.
Alas, those Obama campaign promises are just dried-up gum stuck to the headboard of the 2012 election, as long forgotten as his predictions of 5 percent unemployment, and instructions that he should be drummed out of office if he failed to achieve them. Now he’s not even offering a feeble pretense of $1 in cuts for every $1 in taxes. Most of what Obama portrays as new offers of fiscal retraint was actually contained in the Budget Control Act of 2011… which was weak to begin with, and now stands revealed as so meaningless that Republicans must fight to keep what little deficit reduction it ended up containing. Consider that, and enjoy a hearty laugh at the notion of Washington honoring big ten-year spending reduction promises after the current Congress closes up shop in 2014.
All the rest of Obama’s vague gesture at fiscal restraint is mere accounting trickery. And it’s not even a new trick. It’s one of the oldest cards to fall out of Washington’s sleeve: baseline budgeting. Conservatives sometimes forget the importance of repeatedly explaining this little stunt to the American people; we all know how it works, and it drives us crazy, but we forget just how little information is parceled out to the low-information voter. Here’s a little refresher, courtesy of the Cato Institute by way of Fox News:
“Over the past several years and as a part of the debt limit negotiations, they pretended to cut spending using the Washington definition, meaning that spending doesn’t rise as fast as it was going to,” Dan Mitchell of the Cato Institute said.
The “Washington definition” Mitchell refers to is baseline budgeting, a technique put in place in 1974 as a part of post-Watergate reforms that allows spending increases every year by factoring in inflation and population increases. Under baseline budgeting, legislators frequently use the term “cuts” to describe what is, in reality, a slowing of projected growth.
“The politicians do not want the American people to understand that this is a racket,” Mitchell said. “It’s sort of like your spouse goes to the mall and says, ‘I saved $500 for our family budget.’ You think that’s great news. Then you find out that your spouse actually spent $1,000 priced down from $1,500. That’s exactly what they do in Washington.”
If nothing else, Republicans should adamantly insist on an end to “baseline budgeting” as part of any fiscal cliff deal. I hate to trade lightly with tax increases that I think are both immoral and a really bad idea for the economy, but if we’re going to have them, doing away with baseline budget trickery would at least be a worthwhile purchase for the American people. As Mitchell points out, the Republican revolutionaries of 1994 had a shot at doing it, but “once they were in power for a while, they suddenly decided the cesspool was really a hot tub.” They, and we, are still paying for that mistake. Statists find immense political value in being able to pretend that small reductions in the rate of growth are “cuts.” It means they never really have to put actual cuts on the table. Obama could claim he was making something on the order of $5 trillion in “cuts” over ten years by merely agreeing to a federal spending freeze.
The Republican leadership should see that the time for “negotiation” – which Obama has blatantly abused as time to do some more campaigning – is over, and legislation should ensue. Passing bills in the House would make the President look feckless and irresponsible, if he kept delivering faux-populist rally speeches while the Senate was busy murdering solid legislation from the House. And it’s important for Republicans to go on the record as affirmatively voting for their principles – for the kind of spending restraint and tax relief this economy desperately needs – rather than merely making oblique references to those principles during “negotiations” that will soon be forgotten. It’s not as if the media is suddenly going to become interested in reminding the public of what everyone was saying back in the winter of 2012. It is, however, useful to be able to point to solid votes in the Congresional record.
One politician thinking along these lines is Senator Rand Paul of Kentucky, who made this very point during an interview with Greta van Susteren of Fox News, and went on to suggest that if a bill containing tax increases must crawl forth from the bowels of Congress, the Republicans should vote “present” instead of “yes.” That way, the Democrats would be sole owners of the resulting debacle, which will certainly include (a) economic damage, (b) much less revenue than promised, and (c) precious little in the way of deficit reduction. [Note that Paul did not actually say “crawl forth from the bowels of Congress,” but judging by this interview, he’s about two days away from using that kind of langauge.]
Paul also made an important point that conservatives should never stop repeating: no matter which private-sector pockets get picked through tax increases – millionaires, the much less wealthy people Democrats love to portray as “millionaires,” corporations – the important thing is that private sector is getting smaller, while government grows larger. We are far past the point where such a reversal of proper Constitutional and republican roles should be tolerated, no matter how much class-war rhetoric the Left deploys. If you pay taxes, it’s ultimately coming out of your hide; and even if you don’t pay taxes, it soon will be. As Paul ominously notes near the end of his interview, the people who have the means to escape from this situation are being given some powerful incentives to do so, and we will all be impoverished as a result.
Let’s put an end to the theatrics and insist on a sober discussion of these issues. It’s not really possible to have such a discussion in the few days remaining before the end of the year, but if no other agreement can be reached, it would be worth a full extension of all the Bush tax cuts – increasing the deficit by an amount Democrats would describe as laughably puny on any other day – to buy the time we need.