Monday, November 8, 2010

It will be business as usual

Voters stopped far short of completely embracing Republicans or the Tea Party. They did not hand over control of the Senate, and they still blame the Bush administration – and Wall Street – for the dismal state of the economy. One thing is for sure: with many of the candidates having won by a mere 1% or 2%, and with the Democrats holding the Senate, this was not a mandate for Republicans.

“This was a thumping,” George W. Bush said back in 2006 when the Democrats took charge of Congress with many winning by just a 1% or 2% margin. “But this was no Democratic mandate. The voters are telling us to work together.” Same thing goes for the 2010 elections.

Although the Tea Partiers hate government, they love what it provides. Americans want goods and services, but do not want to pay for them. They want spending cuts in Washington; but if a politician ever says “cut Social Security and Medicare” his career ends.

There are three conflicting demands here:

1. Reduce the deficit: Last summer the Republican deficit hawks demanded that Democrats find $34 billion in cuts to pay for extending unemployment benefits. But if you ask Republicans to do likewise for the 10-year $3.7 trillion cost of extending the Bush tax cuts, they CANNOT do it. In fact, when Republicans were in charge of both the White House and Congress, when asked about the Bush tax cuts and the cost of the war, Vice President Cheney said that Reagan proved that deficits do not matter. When the Democrats got power, deficits suddenly mattered to the Republicans.

2. Cut taxes: The GOP, Tea Partiers, and corporations think they pay too much in taxes; but, really, Americans do not pay much in taxes at all. The United States has one of the lowest tax rates in the world. Among all industrialized nations, the non-partisan Tax Policy Center says only Iceland and Ireland pay less. In fact, according to the IRS, 47 percent of all American households pay no federal income taxes at all (this includes most of the very rich with their many loopholes and write offs).

3. Cut entitlements: The Census Bureau notes that 44% of American households receive federal government entitlements of some kind – including Medicare and Social Security. Half of that amount is Social Security alone. Due to aging Baby Boomers, more people are receiving entitlements than a decade ago while fewer people are paying federal taxes than even just five years ago.

Whenever Tea Party voters are asked by reporters where the federal government should cut spending, they cannot answer, just like the elected officials they support. Occasionally someone mentions a government agency or two, but when you walk them through actual costs, they become uneasy with the reality that one cannot cut much from the budget – at least until we end war in Afghanistan and bring home all troops from Iraq (50,000 still there). Let the Tea Partiers just try to take Social Security and Medicare away from Grandma and see what happens.

What about completely dumping agencies long targeted by fiscal conservatives such as the Department of Education, Department of Commerce, the Environmental Protection Agency, and the IRS (assuming you have simplified the tax code)? What do we save if we dump those agencies?

IRS: $12.97 billion
Department of Education: $46.7 billion
Department of Commerce: $14 billion
EPA: $10 billion

This adds up to about $83 billion – less than 10% of the total 2010 deficit of $1.4 trillion. Sure…it would help, but letting the tax cuts expire for just the wealthy top 1% of Americans cuts the deficit by almost half.

And remember, by shuttering those agencies, you put several 100s of thousands of federal employees out of work. That means federal money must be spent on their unemployment and other available assistance, not to mention still paying them for their vacation days, sick days, and pensions.

The Bush administration inherited budget surpluses from the Clinton administration. What turned these surpluses into deficits, even before the recession? There were three fundamental new costs: the tax cuts, the Medicare prescription-drug bill, and post-9/11 security spending (including the wars in Iraq and Afghanistan and the new Department of Homeland Security). Of these, the tax cuts were by far the largest contributor to the deficit. According to the Congressional Budget Office, the Bush tax cuts have contributed nearly half of the yearly deficit.

From the Washington Post:
“The day the Bush administration took over from President Bill Clinton in 2001, America enjoyed a $236 billion budget surplus – with a projected 10-year surplus of $5.6 trillion. When the Bush administration left office, it handed President Obama a $1.3 trillion deficit and projected shortfalls of $8 trillion for the next decade. During eight years in office, the Bush administration passed two major tax cuts skewed to the wealthiest Americans, enacted a costly Medicare prescription-drug benefit and waged two wars, without paying for any of it. To put the breathtaking scope of this irresponsibility in perspective, the Bush administration's swing from surpluses to deficits added more debt in its eight years than all the previous administrations in the history of our republic combined. And its [the Bush administration] spending spree is the unwelcome gift that keeps on giving: Going forward, these unpaid-for policies will continue to add trillions to our deficit.”

In another article by the Washington Post: “President Obama notched substantial successes in spending cuts last year, winning 60 percent of his proposed cuts and managing to get Congress to ax several programs that had bedeviled President George W. Bush for years.”

But none of this will matter. I believe that the Tea Party's hope for actually effecting change in Washington will start to crumble within the next year as they run head first into reality. The ordinary Americans in this movement lack the numbers and financial clout to muscle their way into the back rooms of Republican Congressional power – no matter how well their candidates performed. As the Washington Post learned from its months-long effort to contact every Tea Party group in the country, of the 1,400 registered groups nationwide (some estimates are higher), 647 replied. Most had fewer than 50 members. If these groups think they can compete with billionaires who buy and sell politicians like they do shares on Wall Street, they had better think again.

During the 2010 midterm elections, the buying of politicians was unabated. Corporate lobbyists lavished $54 million on Republicans destined for leadership roles in the House. As one lobbyist told the NY Times, "Business should be very good." You can bet it will. Corporations have free reign to do as they please – while Americans will be given the business.

The Tea Party was used by the Republicans and their corporate partners for the 2010 midterm election. Its loud populist message gave the GOP just the cover it needed both to camouflage its corporate patrons and to rebrand itself as a party miraculously antithetical to the despised GOP that gave us the Bush administration’s record deficits only yesterday. Besides, the more the Tea Party looks as if it was calling the shots in the GOP, the easier it was to distract attention from those who are really controlling the GOP.

What the Tea Party wants most – less government spending and no federal deficit – is not only impossible to achieve in the way that they think it can be done, it is not even remotely going to happen on the GOP's watch. The elites have no serious plans to cut anything except taxes and regulation of their favored industries. In the party's principal 2010 campaign document, "Pledge to America," it does not even promise to cut earmarks.

Something the Tea Partiers will quickly learn: If you win, the problem is yours. Come January when a new Congress swears the oath of office, they will be responsible for the problems they have complained about. And the Tea Partiers will not like the results because they will not get what they want.

The Tea-Party-backed winners entering Congress are the latest version of hope and change. Will they be able to change much of anything? Probably not.

It is going to be business as usual.

Resource for budget figures:
Resource for deficit numbers:
Other resources: