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Responding to Sen. Gregg

April 2nd, 2009

The Washington Post published an OpEd yesterday by Sen. Judd Gregg of New Hampshire and the Ranking Minority Member of the Senate Budget Committee. His words, penned under the title A Budget to Beggar Us, should be considered reflective of the Republican Senate Caucus on the budget… and should have us all very worried. I might expect this sort of knee-jerk ideologically motivated writing from the House, but to see this from the Senate is very disheartening.

As an exercise, I’m reproducing the entire article below and will respond to each point, because he’s pretty much wrong on every issue and a summary rebuttal just isn’t going to cut it this time.

A Budget To Beggar Us

By Judd Gregg
Wednesday, April 1, 2009; A21

When speaking with the hardworking New Hampshire families and business owners whom I represent in Washington, I hear the same concerns echoed by Americans across the country. People are worried about keeping their jobs, their homes and their savings safe. They ask, “When will the economy recover? What kind of economic future will our children have?”

These questions are not easy to answer. Yet I believe that over the next couple of years, the country will recover from this severe recession. We are an inherently resilient nation.

I’m not entirely certain where Sen. Gregg confidence comes from. That the United States has survived previous disasters is no indication that we will unquestionably recover. This is perhaps the most important flaw of Gregg’s letter, because such confidence takes away our modesty. There is no reason to agonize over whether a choice is the right or not if you are certain success is inevitable. Such logic suggests we go about as if nothing is going wrong and pursue are normal political objectives. Sounds a little like fiddling while Rome burns, does it not?

Our longer-term future is harder to predict, though, especially since the Democratic Congress is on the cusp of adopting President Obama’s budget blueprint. This is a defining budget. It shows very clearly where the president and the Democratic majority want to take our country: sharply to the left.

When Congress says “budget” it is important to understand what they mean. Congressional budgets don’t spend money… in fact, most laws don’t spend money even if they sound like they do. What spends money are the appropriation bills passed near the end of the fiscal year.

There is no doubt that the president came into office facing significant economic challenges. To stabilize the economy, he has been forced to take aggressive steps, some of which may have been necessary to avert a systemic financial collapse.

But don’t be fooled when the president says the economy he inherited is the reason that future deficits and debt skyrocket.

The President’s budget is an attempt to retool the American economy to be competitive in the 21st century. As the most prosperous nation in the 20th century, we have the greatest built up momentum in the direction of what was successful then. But it’s now, and that means reexamining how we have structured our economy and make sure it works going forward.

Don’t believe for a moment when the Republican’s tell you that the economy is a purely self-organized affair. Small businesses have routinely indicated that the greatest challenge to their continued success is the rising cost of health care. Other industrial countries don’t have this problem and it puts us at a competitive disadvantage. Our health care system is as it is because of our government’s actions — or failure to act.

The president’s budget makes clear that a huge expansion of government is not just about today’s economic downturn. Once the recession is behind us, this budget will continue pushing for more and more government in our everyday lives.

It’s not the President’s budget that makes clear… it was six months of campaigning that made it clear Obama envisioned a new role for government. McCain yelled and screamed about it for months, to no avail. The American people knew what they were getting when they cast their vote. As the Republicans were fond of saying during the Bush years… elections have consequences.

Instead of tightening Uncle Sam’s belt the way so many American families are cutting back these days, the president’s proposal spends so aggressively that it essentially adds $1 trillion to the debt, on average, every year.

Except for some accounting gimmicks, the budget makes no attempt to cut wasteful spending or find savings. It ignores reform for major entitlement programs such as Medicare and Social Security, which are on track to cost us $67 trillion more than we have over the next 75 years.

Gimmicks and rhetoric, all of it! First, the general consensus among economists is that as households tighten their belt it is imperative for the government to step up spending to ensure the economy doesn’t slide further into contraction. The government has tried to cut spending in the face of economic decline in the past… it was the policy of the Hoover Administration which gave us the Great Depression.

The Medicare and Social Security numbers are a scare. Social Security is sound and I haven’t heard anyone convince me otherwise. Believe me, I’ve asked lots of people. Medicare, on the other hand, is a real concern if medical inflation continues as it has. But that is what makes the President’s intervention into health care so important. If costs continue on their current trajectory, no one is going to be able to afford health care… it doesn’t matter if we are talking about private citizens or the government, it’ll bankrupt us all.

The new spending is coupled with the largest tax increase in U.S. history — $1.5 trillion over 10 years.

It is the largest single tax increase because it follows on the heals of the Bush tax cuts that combine to be the largest tax decrease in U.S. history. The tax cuts were reckless then — even John McCain said as much at the time — now we have to clean up the mess.

Who will pay all those taxes? The president says it’s just the rich. But let’s keep in mind that a lot of these “rich” people are actually small-business owners, and small businesses create 70 percent of the new jobs each year. When millions of Americans are out of work, taxing job creators and making it harder to run a business are certainly not the answer.

I’ve never understood this argument. If the small-businesses are doing so well that they earn enough in profit to pay the increased tax, then who cares? Our tax code is such that it’s always wise to make more money if you can… so a tax increase does little to deincentivize profit-making activity. More generally, “small-business” is the usual straw-man argument presented to protect “big-business”… just like family-farms are trotted out anytime someone is opposing the estate tax. It’s a marginal case that can be easily handled, not a justification for wholesale obstructionism.

Moreover, all American families will get stuck with a new “light-switch tax” on electricity bills that is in the president’s budget. Even though taxes will go up dramatically, this new revenue will not be used to reduce the deficit. Instead, it is going to expand the government beyond what we can afford.

I assume he’s referring to cap & trade here. Cap & trade is the only economically friendly idea on the table that will save planet Earth from environmental disaster. There are costs for the centuries of poor planetary stewardship that we are just now beginning to understand, but the cost to pay them today are still vastly cheaper than the alternative.

And since the revenue the government collects still won’t cover all its spending, we will be left with an unsustainable level of debt. Under the president’s budget, the national debt doubles in five years and nearly triples in 10 years. Our debt will exceed 80 percent of GDP by 2019 — the highest level since World War II.

I always love the “highest level since World War II” comment. You see the a lot, because WWII is a recognized worthy expense and therefore whatever was a record back then was justified, while today’s new record is — presumably — not. The trouble with this turn of phrase is its breadth. World War II happened to coincide with another global event I’ve already mentioned: The Great Depression. In many ways, the America war effort was just another stimulus plan which jump started the economy. Like I said before, more government spending is what we need right now, not less.

This borrowed money is certainly not free. Our children and grandchildren will be hit with the bill. Sadly, in 10 years, we will spend more on interest payments on this debt than we spend on education, energy and transportation combined — almost four times as much.

Yes, too much interest is bad. But economist have long recognized the time-value of money, and interest reflects that valuation. Oftentimes available money today is worth more than money tomorrow, so we borrow and pay interest, provided the calculations show a net profit on the whole transaction. We can’t simply “freeze spending” because we think all borrowing is bad, unless we want our government to tie one hand behind its back.

What the Senator’s factoid this really tells you is just how little the federal government spends on education, energy, and transportation. Those are all drop-in-the-bucket budgets compared to military spending.

Imagine that as your family budget. Could you afford to spend so much on credit card finance charges that it dwarfed what you spent on food, utilities and other necessities? Neither can our country.

Apples… meet oranges.

At the heart of this budget debate are differing philosophies on the role of government in our lives. Republicans do not believe that we can expand prosperity by expanding government, or by increasing the burden of spending, taxes and debt. We believe that it is the individual American who creates prosperity and good jobs, not the government.

The Republican party has certainly traveled far from its roots. One of the original Republican policy agendas back when the party was formed in the age of Lincoln was National Improvements. The idea that the federal government should be involved with constructing rails, canals, and other large infrastructure projects. It was a massive re-visioning of the federal government and fiercely opposed by what passed for Democrats at the time. But their argument was as true then as it is now: some things are better done collectively than individually… and government is just the word we use to describe those activities we do collectively.

Our nation has a history of each generation passing on to its children a stronger and more prosperous country, but that tradition is being jeopardized by this budget’s attempts to dramatically expand the size and cost of the government, to the point that our children’s opportunities will be crushed under the burden of debt. This budget plan is clearly not the right path for America today or for future generations.

This is such a delightful historical revision. Apparently no previous generation has ever failed to give a stronger nation to the succeeding generation. Except for the generation that gave us financial instability that lead to the Great Depression, or the regional strife that lead to the Civil War, or the societal indifference that gave us the Culture Wars. Those generations took the easy way out and left subsequent generations with even worse problems then the ones they faced. Today’s challenge is no different… do we make hard decisions today, or do we face catastrophic decisions tomorrow?

So the goal of Republicans in Congress is to restrain spending and to reduce the deficit while still moving forward on important issues such as health-care reform, energy independence and national security. Only then will our children and grandchildren inherit a healthy economy and enjoy the opportunities for prosperity, peace and freedom that we were given.

Unless you listen to economists, who say the opposite is true… but it certainly is convenient that such a stance fits so neatly with the Republican party’s rabid anti-tax philosophy. I wish I had such a simple one dimensional ideology that I could just sacrifice everything else in dogmatic pursuit. It would certainly make decisions a whole lot easier… guess that’s the joy of being the minority party.

The writer, a Republican from New Hampshire, is ranking minority member of the Senate Budget Committee.

The rebuttler, a Democrat too far from his home of Washington State, is a twenty-seven year old Information System Director who seems to get it more than the leading Senate Republican on the topic.

probonogeek Politics

  1. Robert
    April 13th, 2009 at 20:14 | #1

    Too bad no one has the guts to leave a comment about this most astute review. I hope more people read it and realize how far the republican agenda has their head stuck up their…oops…I ‘ve said too much. They just preach the same politics of fear and I am tired of it.

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