It’s budget season again, when the parties introduce Potemkin budgets that embody myths but never become reality. Until the Reagan era, a symbiotic relationship existed between the communitarian and libertarian strains in America.
Many in Congress wanted to tax and spend in order to educate children, provide infrastructure, defend the country, protect the weak, elderly and ill. The other side did not necessarily dispute those goals but thought a limit had to be imposed on the government’s slice of the economy and its bite on taxpayers. A compromise was usually reached, expressed in the federal budget and its spending priorities.
With the advent of Reagan the rhetoric changed from limited government and balanced budgets to “government is not the solution, it’s the problem.” He wanted to cut taxes and the size of government. But since cutting popular government programs wouldn’t play well with voters but cutting taxes would, the magic asterisk was born.
The budget would try to cut the growth of government but not enough to cover the revenues lost by cutting taxes. The shortfall, it was promised, would be made up by a fired-up economy and unspecified cuts or revenues to appear fortuitously – thus the magic asterisk.
No surprise the phantom revenues never materialized, but the tax cuts had already been made so deficits increased. To Reagan’s credit he sometimes recognized reality enough to backtrack, some taxes were even re-imposed. Still the deficits accumulated, and by the time of Bush I he felt compelled to renege on his “no new taxes” pledge in order to avert a fiscal disaster. What a wuss.
By Bush II, no such backsliding was permissible in the Republican Party. On the contrary, Dick Cheney went so far as to opine that deficits no longer mattered. They did, of course, and were ballooned by trillions spent on unfunded programs. By the time W left office amid the Great Recession that lax regulation helped cause, a decade of war and a prescription drug entitlement coupled with more tax cuts resulted in red ink as far as the eye could see.
We have about dug out of that hole, though not the accumulated debt created by this fecklessness. Now the Republicans have introduced the latest of their Paul Ryan/Ayn Rand budgets aimed at drowning government in the bathtub and enriching the rich and powerful further. By 2024, it is claimed, this budget would result in balance while taxes would simultaneously be cut on fat cats and corporations.
The alleged savings of $5.5 trillion are to be funded not by cuts to defense, which will keep on growing, so where will the money come from? Well. Obamacare will be eliminated, though CBO says that will actually cost more not less. Wall Street and its bankers will be deregulated so they can crash the economy again. Crumbling infrastructure will be ignored for another decade. Student aid will be cut as will food stamps, school lunches and aid to children so we can create a less competitive work force. Medicare will be “reformed” so that future seniors can buy their own health care rather than depend on the government. This is rather like those reforms to pensions that have left so many retirees without their promised lifetime annuity.
The fantasy budget also proposes sending Medicaid and other expensive federal programs to the states so that they are stuck with the expense, the suffering victims and the buck. Congress gets the problem off their budget and the state houses get the blame. This fake federalism amounts to “out of sight, out of mind budgeting,” but doesn’t address any of the country’s real problems.
If all of that weren’t enough, there’s the biggest asterisk of all. Once again, the rest of the shortfall in the notional budget will be made up by a hypothetical rip-roaring economy. The true believers claim this book will be created when all those corporations and wealthy investors get their tax breaks. A rising tide will lift all boats, and lucre will trickle down to the lower orders.
But this has been tried before and didn’t work. The rich got richer, but the poor get poorer. In fact, this growing inequality has become so hard to ignore that even Republican presidential candidates are paying lip service to finding a solution. This budget sure isn’t it. More money in the hands of the investing class may help the poor, but they are likely to be domiciled in China, Philippines, and Central America. That’s where corporations have sent their jobs and revenues.
It would be encouraging if the Democrats would respond to this dream by a realistic budget that would actually try to reform wasteful spending at the federal level on everything from defense on down. An admission that entitlement spending has to be brought under control could be salutary. And the obvious method would be that adopted in every other developed country – controlling the prices charged for healthcare and substituting a flat payment for comprehensive care for fee for service that causes needless procedures to proliferate.
Such a budget would also tell voters if they don’t want to live in a third world country in terms of education and infrastructure, they will have to pay the price in the form of taxes. You can’t expect competent teachers to work for barista wages. Taxes are the price we pay for civilization, a Supreme Court Justice once said. He couldn’t get appointed today with that sort of radical view.
But no such document can be expected. Rather the Democrats will offer their own fantasy budget with their own version of pie in the sky paid for at no cost to anyone other than the Koch Brothers. That may be good politics, but it is bad math and worse stewardship. Still, in the times in which we live, all the parties know how to do is — go to their corners and come out fighting, to the detriment of the country.