Editorial: The G.O.P.’s ‘Pledge’

Editorial: The G.O.P.’s ‘Pledge’
Copyright by The New York Times
Published: September 25, 2010
http://www.nytimes.com/2010/09/26/opinion/26sun1.html?th&emc=th


Extravagant promises and bluster are the stuff of campaign rhetoric, but the House Republicans’ “Pledge to America” goes far beyond the norm.

Its breathless mimicry of the Declaration of Independence — the “governed do not consent,” it declares, while vowing to rein in “an arrogant and out-of-touch government of self-appointed elites” — would be ludicrous, if these were not destructively polarized times.

While it promises to create jobs, control deficit spending and restore Americans’ trust in government, it is devoid of tough policy choices. This new “governing agenda” does not say how the Republicans would replace revenue that would be lost from permanently extending all of the Bush tax cuts, or how they would manage Medicare and Social Security, or even which discretionary programs would go when they slash $100 billion in spending. Their record at all of these things is dismal.

The best way to understand the pledge is as a bid to co-opt the Tea Party by a Republican leadership that wants to sound insurrectionist but is the same old Washington elite. These are the folks who slashed taxes on the rich, turned a surplus into a crushing deficit, and helped unleash the financial crisis that has thrown millions of Americans out of their jobs and their homes.

Not only are the players the same, the policies are the same. Just more tax cuts for the rich and more deficit spending. We find it hard to believe that even the most disaffected voters will be taken in. But again, these are strange and worrying times.

Still, the pledge was worth a careful reading. It is a reminder that there is a choice to be made this fall.

THE BUDGET DEFICIT The Republicans’ central claim is that they will be able to reduce the budget deficit, while cutting taxes deeply and making marginal cuts in spending. That pledge is impossible to keep. There is no chance of reducing the deficit without tax increases. The budget has been chronically short of revenue since the start of the Bush-era tax cuts, and more indiscriminate cutting will only dig the hole deeper.

Cutting the deficit will also require curbs on the government’s biggest and most popular entitlement programs — Medicare, Medicaid and Social Security, collectively 40 percent of the budget. Ditto military spending, another 20 percent. Yet Republicans pledge to shield seniors, veterans and the troops from spending cuts.

It is difficult to put an exact number on the size of the deficits and debt implied by the pledge, because the details are sketchy. What is known is that if current tax and spending policies continue, the deficit (currently estimated at $1.3 trillion) will double in size as a share of the economy in the decades to come.

TAXES AND TAX CUTS The Republicans’ pledge also fails to mention that President Obama has already called for extending the tax cuts for 98 percent of taxpayers (couples making up to $250,000 and individuals making up to $200,000).

So what the pledge is really advocating is a permanent extension of tax cuts for the top 2 percent. In all, the pledge’s tax proposal would add $3.7 trillion to the nation’s debt over the next 10 years, nearly $700 billion more than the administration’s proposal.

The drive for permanent high-end tax cuts is profligate; there is no other word for it. The nation cannot afford it. We are fighting a war in Afghanistan and only now winding down the war in Iraq. The baby boom generation is about to retire. To keep competing, the country needs enormous investment in infrastructure, energy alternatives, education and basic research.

The pledge asserts that letting the high-end tax cuts expire would kill job creation. With the economy weak, letting all the tax cuts expire would be a big hit to consumer spending and, by extension, job growth. But richer Americans tend to save, not spend, their tax cuts. Of 11 ways to boost the economy analyzed by the Congressional Budget Office, preserving the high-end tax cuts ranked last.

Republicans also assert that letting the high-end cuts expire would devastate small businesses. But less than 3 percent of taxpayers with business income would be affected. Republicans claim that 50 percent of small-business income would be hit. The only way to get that number is by including “small businesses” like some major law firms, investment funds, actors and athletes — hardly Main Street.

In any case, business owners do not typically base their hiring decisions on their income tax rate. If the top tax rates reverted to the pre-Bush levels, wealthy owners would keep less of the additional profit. But if a hire is profitable before tax, it will be profitable after tax. Undeterred by facts, the pledge would let small-business owners deduct 20 percent of their business income. Given the Republicans’ broad definition, that implies another big tax cut — an estimated $25 billion over two years — flowing to many high earners.

SPENDING The Republicans’ document promises the American people a “fact based” discussion of the scale of the nation’s budget problems. Then it offers a laundry list of spending-cut proposals, none of which are up to the scale of the problem, and many that cannot be taken seriously.

Calling the $862 billion stimulus wasteful and unnecessary, it says Congress should immediately cancel any unspent funds. Never mind that the stimulus, while too small given the depth of the crisis, still prevented a bad recession from being much worse.

There is also not much to cancel. Of roughly $260 billion left, contracts have already been signed for $150 billion. Another $45 billion is tax cuts that will soon be claimed, and $33 billion is for safety-net spending, like food stamps. That leaves $31 billion in investment projects — like roads and rail systems — still up for grabs. At a time when the private sector is not creating enough jobs, canceling them would be a mistake.

The House Republicans also promise to roll back spending, saving $100 billion in the first year alone. There are no details, but the proposal appears to reflect an earlier Republican proposal to cut programs like education, food safety and environmental protection.

Even in the best of times, it would be disastrous to slash such vital programs. Right now, it would also remove purchasing power, cost jobs and heighten the risk of a prolonged downturn.

The Republicans also say they will save taxpayers $30 billion by ending the government takeover of Fannie Mae and Freddie Mac. A serious debate on the future of the huge mortgage companies needs to take place. Currently, however, they own or back most new mortgages. Cutting them loose too soon would risk further damage to the wounded housing market.

Then there is the bank bailout, or TARP, the Troubled Asset Relief Program. which the pledge vows to end “once and for all,” for a savings of $16 billion. What it does not say is that new TARP spending was basically outlawed in the Dodd-Frank financial reform bill passed in July.

HEALTH CARE REFORM The Republican plan to “repeal and replace” the new reform law is set forth in a skimpy chapter that fails to offer any real alternative to cover uninsured Americans or reduce medical inflation.

The pledge contains a few golden G.O.P. oldies: medical liability reform that will probably not save serious money; allowing Americans to purchase insurance issued in other states, which could bring down premiums for the healthy while driving them up for the chronically ill; and expanding so-called health savings accounts that are useful for some Americans but not all.

At the same time as they revile reform, the authors embrace, or at least pretend to, some of the most popular, consumer-friendly features of the law, like eliminating spending caps and prohibitions against dropping your coverage just because you get sick. The Republicans say they would provide incentives to states to develop innovative reforms; that, too, is already in the law.

The pledge document does not mention the Republicans’ plan — should repeal fail — to block the annual appropriations needed to carry out reform. That just-say-no approach is flat-out irresponsible. The health care reforms are so intertwined that it is hard to eliminate one provision without undermining others.

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Americans are right to be worried and even angry about the bad economy. And they are right to demand that Washington do a lot more to revive employment now and start to reduce the deficit soon. But these are hard problems built up over eight years of mainly Republican leadership. The pledge takes the country backward — a place no one should want to go.