Economics

Will Republicans Get Serious on Spending?

Don't count on it.

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Barely a week has passed since the thumping Republican victory in congressional elections, and Senate Republican Leader Mitch McConnell is enjoying the chance to reveal how the GOP will use its new power.

Speaking to a crowd at the annual convention of the Federalist Society, an influential organization of conservative and libertarian lawyers, McConnell is among friends. They are happy to hear him declare, "Americans want less government, less spending and less debt."

Then the senator tells them what his party is going to do to bring the runaway federal budget under control. "We will vote to freeze and cut discretionary spending," he vows.

What is important is not so much what is said but what is omitted. The four biggest items in the federal budget are Social Security, Medicare, Medicaid, and defense. And those programs escape any mention from McConnell.

They make up about 60 percent of the federal budget. Domestic discretionary outlays, by contrast, account for only about 16 percent. If Republicans focus entirely on those, they will be sending a clear and quite believable message: We're not serious.

It is tempting to think the Tea Partiers will force the party to finally live up to their promises of frugality. But the evidence suggests they are engaged in a task akin to plowing the sea.

Republicans have had multiple opportunities to put their words into deeds, and each time they've declined. The first was with President Ronald Reagan, under whom the federal budget grew by 22 percent, adjusted for inflation. Though he often preached the virtue of a balanced budget, he never actually proposed one.

The GOP got another chance in 1994, when it gained control of Congress. After vowing to get rid of the departments of education and energy, Republicans left them alone. They failed to abolish a single important program.

They did force President Bill Clinton to cooperate in balancing the budget. But even though the end of the Cold War allowed cuts in defense appropriations, total federal spending grew faster than inflation.

Then there was President George W. Bush, who in his new memoir, Decision Points, claims to have been a staunch budget disciplinarian—which is like Kim Kardashian claiming to be publicity-shy.

"My administration's ratios of spend-to-GDP, taxes-to-GDP, deficit-to-GDP, and debt to GDP are all lower than the averages of the past three decades—and, in most cases, below the averages of my recent predecessors," he asserts.

This brings to mind the old jibe about his father: He was born on third base and thought he hit a triple. When Bush the Younger arrived, federal spending was at the lowest level, as a share of GDP, since 1966, and the budget had a surplus.

From 2001 through 2008, though, spending grew 13 percent as a share of GDP, and a $128 billion surplus turned into a $459 billion deficit. That doesn't even count the huge jump in total outlays and the deficit in fiscal year 2009—most of which was the product of his decisions, not Obama's.

Bush is like a billionaire who goes broke over 10 years and then says, "Based on my average wealth over the past decade, I'm rich."

Now, Republicans admit they fell short in the past and insist that they have learned their lesson. But why should you believe them? McConnell's vow to cut discretionary spending indicates that they are captives of magical thinking, not practical reality.

They claim they can save $100 billion a year on those programs. But after 2012, reports the Washington-based Concord Coalition, the total cost of Social Security, Medicare and Medicaid will swell by more than $100 billion annually.

Not only that, but interest costs on the government debt will also grow by $100 billion a year. So even if the GOP makes those discretionary spending cuts, overall expenditures will be higher than the unacceptable levels of 2010.

Nor is there much reason to think Republicans will take on federal support for retirees. In fact, many Republicans campaigned by roasting Democrats for allegedly cutting Medicare—though the Democrats had voted only to cut its growth rate.

It's not a good omen. The Tea Partiers are waiting for congressional Republicans to do everything they can to reduce the size and cost of government. But they may find it's like waiting for Santa Claus.

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  1. Good morning reason!
    Happy Monday!

  2. Ma nishtana ha-laila ha-zeh?

  3. Republicans will make a few cuts. Most of them will be stupid, akin to dropping out of college to work a minimum wage job, despite having scholarships and plenty of low-interest loans. They will then more than offset the few cuts they make with huge tax cuts, vastly increasing the deficit. They will delay, stall, and demagogue anything Obama proposes, even things almost everyone agrees with. Then they will blame him for getting nothing done and the poor state of the economy. They will throw poison pills in every bill they pass through the House, even the most mundane, and likely force government shutdowns as a result. They will continue to spew lies unchecked on Fox, hide from the evil "main stream media", and grovel before their corporate masters.

    Btw, the Republican win makes things FAR more uncertain in Washington. Shouldn't the economy be falling off a cliff right now, acccording to your vaunted "it's all about the uncertainty" theory?

    1. Almost there, but you should've had "LAME stream media" instead of 'mainstream'. Still, good start for a Monday morning.

    2. There are two ways to get out of the current debt crisis.

      1. Inflate the currency, harming the private sector, productive individuals, and conscientious savers tremendously at the expense of the public sector and those that live off entitlements. This strategy relies on shrinking the relative size of the debt by devaluing the currency.

      2. Cut taxes, stimulating growth of the private sector, protecting the savings of those conscientious enough to do so, and rewarding the productive for their contributions. This strategy relies on growing the private sector to the point the debt shrinks in relative size. Tax receipts will not necessarily grow in the short run, but they will in the long run vs. higher taxes.

      1. You can't get out of debt by decreasing your revenue. You must decrease spending.

        The quickest way out of debt is to raise revenue, and cut spending. But that's politicial suicide.

        1. The quickest way to raise revenue is to accelerate economic activity, since the government so often takes a slice when money changes hands.

          But we're currently on the wrong side of the Laffer curve to make tax cuts that "pay for themselves", and the economy is WAY to fragile to withstand a meaningful tax hike right now.

          So the best course of action is to keep taxes flat, and spur economic activity through deregulation. The regulatory compliance and bureaucracy costs of doing business in America are often more expensive than any taxes faced by businesses, their employees, or their customers, and do nothing to help with our debt situation.

    3. Can't tell, is this a spoof or has Chad gotten considerably more depressive?

    4. And if Democrats lose the presidency and were to be in the solid minority, they would delay, stall, and demagogue just as vigorously.

      'Fess up, Chad. You know it's true.

      1. Demonstratably not true, Mr. Fify. The current Congress is by far the most obstructionist in history.

        1. You did some fine dancin' there, Chad.

          I said:

          "if Democrats lose the presidency and were to be in the solid minority, they would delay, stall, and demagogue just as vigorously".

          It WOULD happen. Not that I'd be against it, mind you. But don't pretend both Teams don't obstruct.

          1. IOW, you're suggesting a solid Dem minority wouldn't be a future "most obstructionist Congress in history".

            The fuck they wouldn't. Revenge is a bitch, and when your party loses power they damned well WILL obstruct.

            And idiots like Max will yap at the heels with "racist" barking. Right on cue.

          2. I am not dancing at all. You are claiming the Democrats will do something they have never done in the past, without evidence.

          3. I am not dancing at all. You are claiming the Democrats will do something they have never done in the past, without evidence.

          4. I am not dancing at all. You are claiming the Democrats will do something they have never done in the past, without evidence.

    5. "Most of them will be stupid, akin to dropping out of college to work a minimum wage job, despite having scholarships and plenty of low-interest loans."

      I could compare government largess to somebody who already has 20 grand of credit card debt taking out a 50 thousand dollar loan to get his art history degree. Even if the loan comes at a low interest rate, it will probably adjust in the future too.

      "Shouldn't the economy be falling off a cliff right now, acccording to your vaunted "it's all about the uncertainty" theory?"

      I'm not a big pusher of the uncertainty theory, but it seems as if you've completely missed the point of what it was trying to convey. Yes, there is always a certain level of uncertainty in washington, but not all uncertainty is exactly the same. During times when the economy is doing well, uncertainty doesn't have that much of a negative impact. Also, if the uncertainty is along the lines of "I don't know whether or not I will receive a tax cut in the near future," it will not drag down production. Some people might gamble on the tax cut being certain and increase production in the short term. If the uncertainty is along the lines of, "I don't know whether or not I'll see my taxes raised in the near future," producers will immediately produce less in the anticipation that the tax increase will be a reality. So yes, even a libertarian administration may carry a large amount of uncertainty with it, especially since a true libertarian would probably be doing some serious surgery on the system. Uncertainty is not necessarily bad. Uncertainty becomes a problem when there is a chance that producers may be punished in the near future, and when policy actions go one way, then another, and then back again. This is amplified when the economy is already weak.

      Your problem is that you don't even try to understand the point.

  4. It is tempting to think the Tea Partiers will force the party to finally live up to their promises of frugality. But the evidence suggests they are engaged in a task akin to plowing the sea.

    I'm sure that the Republicans will cut the deficit as much as the Tea Party wants them to. But the problem is that the majority of the Tea Party isn't serious, either.

    I expect to see no cuts whatsoever to entitlement programs, and a net increase in defense spending. Even NPR, the recent fad in claiming to want to cut things, will come out unscathed.

  5. The four biggest items in the federal budget are Social Security, Medicare, Medicaid, and defense. And those programs escape any mention from McConnell.

    Oh, the "Big Four" go without saying.

    1. How about getting rid of welfare and food stamps?

      1. So by your comment I take it you don't consider Social Security, Medicare, and Medicaid to be welfare. You are wrong.

        But if we use your definition of welfare without the rest of them, it could be eliminated completely and it wouldn't have a significant impact on the long term deficit.

  6. Will Republicans Get Serious on Spending?

    Are you ... you know.

  7. No, they will not get as serious as some of the tea partiers want.

    But to be fair, even if Libertarians had won the election they wouldn't do it either.

    For all the speeches and grandstanding the reality is that once you get to DC you find out quickly that some things effectively can't be done.

    Cut Social Security? Really? You're gonna make my granny eat cat food? No vote for you. Cut Defense? Really? Commie! No vote for you. Cut Welfare? Cool. Make those freeloaders work for a living like I do. I'll vote for you.

    Reality is a real bitch.

    1. Nothing will be effectively done till we effectively get rid of ALL of the status quo politicians.

      1. Correct. If the GOP does not understand this yet, they will in 2012.

    2. Social security has been cut before as has defense, actually in budget battles defense is usually the first to do.

    3. I think you could talk most people into a spending freeze on entitlements. Yes, the left will claim it's a "cut," but still, it's a better way of putting it.

  8. Even if libertarians won the election! That's like saying even if dishwater could fuel jets. Have you made your contribution?

    1. ARFARFARFARFARFARF!!!!!!!!!

  9. Is it just me or does McConnell always have the look or a cartoon chicken that just say the farmer heading his way with a hatchet?

    1. Thank you for pointing this out, but I always thought he looked more like a cartoon goose..

  10. They will replace a few high speed trains to nowhere proposals with bridges to nowhere

    They will cut a few off the welfare role in the US and fund a few more on welfare in Afghanistan

    They will cut some of the TSA while increasing funding for defense of Europe and Asia

  11. It is tempting to think the Tea Partiers will force the party to finally live up to their promises of frugality. But the evidence suggests they are engaged in a task akin to plowing the sea.

    There is 'evidence' that Tea Partiers will simply shut up and sit down now that the election has happened? really? From where?

  12. I can guarantee you that no actual reform will take place until the programs are insolvent and the checks start bouncing. It seems obvious to me that the Fed will print up trillions for US Gov before they allow that to happen.

    They can't kick the can forever, but the general public's unwillingness to consider reform means that the only other option is insolvency.

    1. Any congresscreature who votes to really cut spending does not get strip searched every time s/he enters a public building.

    2. The more I read stuff like this the more I am convinced that nothing will change until we have a Greek style crisis. Most people have their heads completely in the sand, or up their asses, and refuse to sacrifice even one penny of whatever government program they benefit from (SS, Medicare/caid, student loans, etc etc). Things will get very ugly before they change and it ain't gonna be pretty.

      1. I'm not even sure a "Greek style crisis" will resolve the fundamental problem. When the Greek government started proposing cuts, there were riots in the streets even though people knew how serious things were. There was still the attitude of "tax the rich" and "save my program."

        In some ways, the problem is a product of American geography and federalism. No matter how much, for example, a congress-person from, say, Virginia, wants to cut a particular farm subsidy, there will be a congress-person from the same party from Nebraska or Iowa who will defend said subsidy. Not saying I don't like federalism it's just that it has this result. Madison understood the issue in Federalist #10, he just didn't realize to what extent professional pols would play quid pro quo with each other.

      2. Does anyone else laugh a little bit when "Greek style" is used as a modifier. For those who may not know "Greek style", "Going Greek", are euphamisms for butt sex.

        1. Sounds like that's what happening to the US right now so I think "Greek style" is an appropriate adjective.

  13. Short answer: yes.

    Wait, what's that? By spending you really meant cutting spending?

  14. Oh they'll make cuts alright.

    BIG cuts!

    When an agency requests a 12% increase in funding the Republicans may only increase the agency's budget by 8%.

    That means the agency must labor with 4% less funds thanks to those heartless Republicans. Oh the pain!

    When a government union requests an 8% pay increase the republicans may only give them a 5% raise.

    Those poor poor union workers will have just received a 3% cut! Oh the sorrow wrought by those evil Republicans!

    They'll be budget cuts all over the place... yet the budget will continue to increase... nobody will understand why because they made all these difficult cuts...

    1. You're right. A lot of what they'll try to claim as spending cuts will actually just be cuts in projected increases.

      1. The sad thing is, it's often the media playing that trick.

    2. Ah, yes, the old excuse when someone spends money they don't have--"But darling, I actually saved us money--it was on sale! What do you mean we can't afford to buy it?"

  15. Chapman is a tool. Is he so ignorant of civics that he thinks that the House of Representatives, the only body the Republicans control, decides spending issues all by itself? He quotes McConnell, who is the Senate minority leader. Nothing like quoting the guy that isn't in control of anything!

    Republicans don't control the government, not even half. Sure, they will probably not do much about spending, but not necessarily for the reasons Chapman claims.

    1. Your civics teacher must have neglected to tell you that all spending bills must originate in the House of Representatives.
      Your civics teacher must also have neglected to tell you that while the president proposes a budget, it is up to the House of Representatives to approve it.

      The House of Representatives that will be controlled by the Republicans starting next year.

      You really need to demand a refund from your civics teacher.
      They did a lousy job.

      1. Fortunately, my civics teacher taught me that you need more than the House of Representatives to pass legislation. I know where appropriations bills originate, which is why I questioned the quote, not only of a Senator, but of a Senator in the minority.

        Since you don't seem to up on civics, either, the House can originate bills all day long, but they have to actually pass the Senate, controlled by the Democrats, and be signed by a currently Democrat President. Republicans tried "shutting down" tiny parts of the government through de-funding in the 90's and people screamed bloody murder. So expecting a Republican controlled House to actually cut spending can only be described as ignorant.

        1. Oh, I get it.

          You admit that the (soon to be) Republican controlled House has sole control over the writing of appropriations bills.
          You're saying that the Senate and Prezbo can block those bills.
          That is not the same as controlling the content.
          Sure they can attach conditions to their acceptance, but that is not the same as control.

          "So expecting a Republican controlled House to actually cut spending can only be described as ignorant."

          I'd call it wishful thinking.
          People don't seek positions of power for the purpose of destroying the apparatus of power, no matter what party they affiliate themselves with.

          That's why libertarian types will never have influence in government - as people who support liberty they don't seek positions of power where they could change things.

          People who support power seek positions of power.

          1. Certainly. And I think the House is likely to pass some small measures of spending reductions bills. I don't see this the same as cutting spending, which they won't even attempt all that much.

            The gist of the article isn't "The House will try and get shot down" but "They won't even try". I suspect after they fail to pass anything, Chapman will say "see, they didn't cut spending", even if they push a bill through the House.

            1. As long as nothing they propose will pass, why not shoot the moon and pass House bills that slash spending to the point that Ron Paul starts to wonder if they are being irresponsible? How can that do anything but help them in 2012 after the Democrats in the Senate and White House spend two years pushing business as usual while we're facing high unemployment and the specter of massive inflation?

      2. My, that was stoopid!

    2. He sure is. If the republicans decide that they can't want to compromise with Obama and the senate and we end up having a government shutdown, Chapman will be one of the biggest whiners about it here at Reason.

  16. Will Republicans Get Serious on Spending?

    The real question is will the American people get serious about spending. The answer is an unequivocal "no". The reason? See Newton's First Law of Motion.

    1. One way the people might get serious is if Obama, or even some credible person, spells out the dire scenarios that will arise if they do not get serious. But this won't be done because it would precipitate one such scenario. Interesting times.

      1. "one way the people might get serious is if Obama, or even some credible person,..." does that mean Obama is not a credible person but people are STILL listening to what he says or that people are finally ignoring him and are paying attention only to CREDIBLE people?

        1. Let me be clear.

          There are those who call me "Mr. Incredible."

          1. Over to you, Barney the Frank...

            1. Wow, I heard that they put Maxine on hold! Damn that TSA!

  17. The Grand Old Pussies may make a half-hearted attempt on spending but I'm not hopeful of any tax relief.

  18. I'm quite confident the latent negativity throughout the comments and this article are a huge reason why libertarians are not more successful. We're like a beaten wife - we're so accustomed to the victim mentality that we cannot react appropriately when we see a potential escape.

    It will never be perfect. But the situation has improve tremendously. Which is all the more reason to fight harder, not whine and throw up our hands in despair before the new congress has been sworn into office.

    Now is a time to redouble our efforts. It's not inevitable that government will grow forever. The republicans will need a lot of work. But now is as good a time as any to advance the cause of freedom, both through legislative battles and voter education.

    1. This was satire, right? The beaten wife analogy, redefined?

      Check it out: you, the republican voter, are the wife; they, the republican politicians are the husband. And you just keep on going back to them, saying to yourself as always, "this time -- this time -- things will be different."

      But amazingly, you're apparently so whipped you even go so far as to completely twist the meaning of the one analogy which best describes your situation.

      You will, I suppose, interpret this as 'negativity' -- suffice to say, it is not. If so, try to realize: that's a symptom of the condition. You cannot change him; you can only leave him.

      1. 0x90 is right. The Libertarian is not the beaten wife, he's the guy who never falls in love or marries because he's afraid of getting hurt. He dies alone, yelling, "SEE! SEE! I WAS RIGHT, IT'S ALL A SHAM!!!"

        🙂

    2. Hear, hear. A giant nation-wide movement opposed to big government has just tipped the House in an historical election, and a bunch of libertarians are sniffing that it won't make any difference. Maybe not, but whining and cynicism won't help.

      Jump in front of the parade and try to steer it. Start proposing specific cuts that most people can get behind. Take what you can get, and figure out how to get more. That's how the Fabian socialists got us into this mess. Libertarians could help get us out of it if they dropped the all-or-nothing attitude.

      1. Libertarians are not the problem. The problem is that there ain't enough of them because the Nation is populated with ass cakes.

      2. Libertarians are not the problem. The problem is that there ain't enough of them because the Nation is populated with ass cakes.

    3. I didn't buy into their false promises in 1994 and I'm certainly not buying into them now.

    4. ""Which is all the more reason to fight harder,""

      What does fight harder mean? Best I can tell, the general public is not interested in tough choices that cut services to them. At best, they seem to be interested in cutting services that don't affect them.

      Look at the Robin Hood plaform Obama ran. It wasn't about cutting services, it was about getting someone else (the rich) to pay for them. I view it as a problem with taxation in general. The more money you take from the citizenry, the more they want in return.

    5. You mean, like the libertarians who voted for Obama because he was going to restore civil rights? And how did that work out? About as well as it did for the libertarians who voted for Bush in 2000 because he promised smaller government and less foreign intervention.

      Why the fuck do people keep falling for this? Do their memories get erased every six months?

  19. Eliminate the Department of Education, the Department of Transportation, the Department of Health and Human Services, the Department of Energy, TSA, BATF, NSA, Department of Homeland Security, and Merge the FBI and CIA.

    Defund the National Endowment for the Arts, NPR, farm subsidies, and suspend 'international aid'.

    Raise the retirement age to 70, bring the troops home from everywhere, close the foreign bases, and sell the property.

    Freeze government hiring for 5 years, Force all elected officials to fly commercially

    FOR STARTERS.

    1. Phase out Medicare and SS, starting with means testing, possibly moving through a "mandatory" 401(k) phase, and ending with letting people decide how to spend or invest their own money.

      1. "means testing" is redistribution!

        1. Yes it is. But it is less redistribution than not means testing.

    2. I disagree with a few of those, but a few more:

      Cut all federal employee salaries by 5%, those over 100K/year by 10%, and those over $150K by 15%.

      Increase employee contributions to their pensions.

      End Saturday mail delivery.

      Decertify federal employee unions.

      1. Actually I think they could eliminate all federal funding of the U.S. postal service. Technology has changed enough to where there is no real benefit gained from the federal government subsidizing the USPS.

        I agree with everything else you said. I'm curious to know what you disagreed with me about though.

        1. I wouldn't close the NSA and *all* foreign bases, because I think they are part of the legit government function of defense. And I'd be leery of raising the retirement age that high, and of merging the FBI and CIA (though I think they need to talk to one another more often). I'd pretty much agree with the rest of your list.

  20. I see another Reasonoid just wants to go to cocktail parties.

    Damn you for not kissing my political affiliation's ass.

  21. The quickest way out of debt is to raise revenue, and cut spending. But that's politicial economic suicide.

    1. I wholeheartedly disagree.

      There are mainly ways to raise revenue and/or cut spending.

      Raise Revenue: Legalize and tax drugs, prostitution, internet gambling.

      Cut spending: Close American military bases in Europe and anywhere else not needed; shut down any number of government programs; end farm subsidies; stop government pension imbalances.

      None of these are economic suicide. They are all political suicide though.

      1. Ending subsidies helps on both sides of the equation. You lower spending, while at the same time make the economy more efficient. How's that for a multiplier?

  22. Bowden nails it. He gets booed at first but after about half a minute the tea partiers start to figure out that what he's saying is right and that he's not just raining on their parade for no good reason. He starts at about 2:20.

    http://www.youtube.com/watch?v.....r_embedded

  23. Alt-text:

    It turns out Social Security was actually repealed in 1947, but due to an accounting snafu, the checks have still been going out. So we [air-quote]"fixed the problem"[air-quote]

  24. We're in this fix, and we probably will not get out of it, because it is hard to beat free. When Bush II caused the biggest increase in gubermint entitlement spending (Medicare drug benefit) there was no increase in taxes (expected) but not even PRETEND cuts in other programs - pure poopless unicorns.

    The partys have reached the nirvana of symetry - tax cuts without spending cuts and spending increase with tax increases - ever increasing deficits as far as the eye can see.

  25. D'oh!
    tax cuts without spending cuts and spending increases withOUT tax increases

  26. Ce message a une vue exceptionnelle sur internet, il a une analyse tr?s claire approfondie de la situation internet. Merci de partager cela avec nous.

  27. From Arbusto to HopenChange to the Mooseonrollerskates. Smuck after smuck after smuck. Bring back the monarchy!

  28. These RINOs are Democraps in drag.

  29. Why do Libertarians even try? No one is going to listen until the nation is bankrupt and people are buying shit with wheelbarrows of money. Then things get real interesting. With modern America's penchant for selecting leaders the likes of George W. Bush, Barry Obama, and Sarah Palin in relatively "good" times -- just imagine the horrible despots that might rise up if things go to pot.

  30. Some of you people have a problem with our cynicism because we have seen this before. It's not just reason people, Lew Rockwell and Co aren't exactly jumping for joy with the election results.

    Honestly you think Republicans other than the Pauls are actually serious about cutting defense spending and actually changing our foreign policy? The Bible Thumpers certainly will scream like Banshees if you take away their toys and desires to kill Muslims, Arabs and Pashtuns.

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