GOP’s Familiar, Troubling Plan to Torpedo Biden’s Presidency
January 17, 2021 9:00am by Bruce Bartlett
The Republicans’ Familiar, Troubling Plan to Torpedo Biden’s Presidency
Fiscally reckless GOP leaders are already laying the groundwork to attack spending under a Democratic administration.
Bruce Bartlett, October 26, 2020
“Like a phoenix, the deficit hawk will be back soon enough, as soon as it is politically convenient.” -Glenn Kessler, Washington Post fact-checker, October 17, 2020
“My party is very interested in deficits when there is a Democrat in the White House. The worst thing in the whole world is deficits when Barack Obama was the president. Then Donald Trump became president, and we’re a lot less interested as a party.” —Mick Mulvaney, White House chief of staff, February 19, 2020
One reason Republicans are far more successful than Democrats in implementing their agenda is they have a long-term plan that actually anticipates Democratic victories from time to time; in fact, the occasional Democratic victory is essential to its success. The basic strategy here is called “starve the beast”: it involves big tax cuts when Republicans are in power and hardline deficit reduction when Democrats are in charge. (Occasional Democratic control is actually essential to give Republicans political cover for spending cuts that might otherwise prove politically painful for them.) It worked perfectly during the administrations of Bill Clinton, George W. Bush, Barack Obama, and Donald Trump, and Republicans are now preparing to keep it going through an almost-inevitable Joe Biden administration.
The theory, which first emerged in the late 1970s, is to continuously shrink the size of government by denying it necessary revenue. Ronald Reagan explained the basic principle of beast-starving succinctly in a February 5, 1981, address to the nation:
“Over the past decades we’ve talked of curtailing government spending so that we can then lower the tax burden. Sometimes we’ve even taken a run at doing that. But there were always those who told us that taxes couldn’t be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.”
Tax cuts create budget deficits, which alarm Wall Street and put pressure on Congress to restrain and cut spending and raise taxes. Since Democrats are dependent for campaign contributions on the same class of ultrawealthy individuals who fund the GOP, Democrats are always quick to take up deficit reduction when they are in power. There’s nothing a Democrat hates more than being branded a tax-and-spend liberal. (The famous tax pledge that virtually every Republican officeholder has signed ensures that the bulk of deficit reduction will come on the spending side.)
Bob Woodward wrote a whole book, The Agenda, about how Bill Clinton pretty much abandoned all his campaign promises immediately upon taking office in favor of deficit reduction. Clinton forced a number of Democrats in Congress to cast agonizing votes in favor of spending cuts, tax increases, and budget controls that led many to defeat in 1994—a move that helped immeasurably in putting Republicans in control of Congress for the first time in 40 years. Republicans voted against Clinton’s deficit-reduction package, all the while proclaiming their fealty to a balanced budget and eternal opposition to budget deficits. Later, when the 1993 budget bill eliminated the deficit and created budget surpluses, Republicans falsely took credit.
The minute George W. Bush took office, his first order of business was a big tax cut. Fortunately for him, Clinton had bequeathed him projected budget surpluses that Bush could simply draw down to pay for the tax cut. It was possibly Clinton’s worst mistake in office to simply hoard the surpluses rather than using them to pay for Social Security or health reform, thus taking them off the table when Republicans regained power. A long-term Democratic strategy would have locked up the surpluses so that Republicans couldn’t piss them away on tax cuts.
According to the Congressional Budget Office, if Bush had left fiscal policy on autopilot—no spending increases for stupid wars, no programs to buy the votes of the elderly with a Medicare drug benefit, no tax cuts—the national debt would have been entirely eliminated. Over 10 years, there would have been a surplus exactly equal to the $5.6 trillion national debt Bush inherited. But he raised spending by $5.6 trillion and reduced revenues by $6.1 trillion below baseline, thereby increasing the debt by $11.7 trillion. (The Congressional Budget Office carried Bush’s policies that remained in effect over into the Obama administration in order to arrive at this 10-year total.)
The extraordinarily hypocritical Republicans treated the vast rise in debt as if it were entirely Barack Obama’s fault when he took office in 2009. They even blamed him for spending programs they themselves had created, such as the Troubled Asset Relief Program, which helped keep the economy afloat during the recession that began in December 2007—during the Bush administration—and didn’t end until June 2009. Republicans also voted en masse against Obama’s stimulus program in February 2009, illogically insisting that budget cuts would be more stimulative. (Notice that no Republican suggested that budget cuts would be stimulative when the coronavirus tanked the economy in early 2020.)
To his everlasting shame, Obama allowed himself to be railroaded into a budget deal in 2011. Vice President Joe Biden was his chief negotiator. At times, Obama and Biden were willing to go even further than Republicans toward the longtime conservative goal of cutting Social Security by altering the inflation formula that automatically increases benefits. In the end, Obama acceded to Republican demands that there be no increase in taxes. The Republican Speaker of the House John Boehner later said that he got 98 percent of what he wanted in the deal.
During the 2016 campaign, Donald Trump promised to pay off the national debt. As someone who had often stiffed those who lent him money and declared bankruptcy, he asserted that he was uniquely qualified to tame the national debt. But once Trump was in office, he quickly abandoned this promise as he splurged on higher defense spending and a huge tax cut in 2017. (Trump asserted that the government could simply print money to pay off the debt.)
Republicans nevertheless proclaimed their fiscal responsibility by consistently lying about it, saying the tax cuts would pay for themselves through faster growth and simply denying that the national debt had in fact risen. The only honest thing Trump has ever said on the subject was when he said he wouldn’t be around when the chickens came home to roost.
I repeatedly warned Democrats that they needed to put up a stronger fight against the tax cut to lay down a marker for when Republicans inevitably demanded spending cuts to pay for it during the next Democratic administration. Now the chickens are coming home to roost.
Republicans are preparing once again to make the deficit a major issue, to pin all the blame for it on the Biden administration—and to browbeat Democrats into putting aside their agenda and embrace deficit reduction. A Republican operative gave away the game in an interview with Bloomberg News a few days ago.
“A GOP strategist who has been consulting with Senate campaigns said Republicans have been carefully laying the groundwork to restrain a Biden administration on federal spending and the budget deficit by talking up concerns about the price tag for another round of virus relief. The thinking, the strategist said, is that it would be very hard politically to agree on spending trillions more now and then in January suddenly embrace fiscal restraint.”
I fear that Biden’s instincts will lead him to want to start his presidency with an outreach to Republicans and a bipartisan budget deal.
As Washington Post columnist Greg Sargent explained, the first step in this nefarious Republican plot is to deep-six any additional fiscal stimulus. This will bequeath Biden a flat economy when he takes office in January, which will dim hopes for a recovery by reducing economic growth. Deficit-mongering will at least force Biden to waste time and political capital cleaning up Trump’s messes and make it easier for Republicans to blame him for budgetary profligacy, just as they did so successfully with Clinton and Obama. I fear that Biden’s instincts will lead him to want to start his presidency with an outreach to Republicans and a bipartisan budget deal. (He is already making noises about putting Republicans in his Cabinet, and it’s too easy for me to envision former congressional Republican budget hawk John Kasich as his Office of Management and Budget director.)
I believe a Biden budget deal is a sure thing at some point. Republicans planted a fiscal time bomb that will go off automatically on August 1, 2021. They did this by suspending the debt limit in the Bipartisan Budget Act of 2019 until July 31, 2021.
At that point, the debt limit would be whatever the debt is on that day, permitting no further increase. (The Treasury Department will have a little wiggle room through so-called extraordinary measures.)
It is a sure thing that Republicans will demand at least a pound of flesh to raise the debt limit, and many Democrats will be skittish about doing so even if they get control of the Senate. (There is also the question of whether the filibuster will remain in play, which would further strengthen the Republicans’ hand.)
The key issue in any budget deal will of course be taxes. Biden has said repeatedly that he wants to raise taxes on those making more than $400,000 per year and not a penny on those making less. This is unfortunate, because I think he needs to repeal the 2017 tax giveaway in its entirety just to make the point that it was completely unjustified in the first place. And contrary to Republican mythology, it had no stimulative effect. This is important because if it had no stimulative effect, then there can be no depressing effect from its repeal. (Republican dogma about the economically depressing effects of tax increases has been wrong on every occasion since at least the 1930s.)
Republicans have been playing Lucy-and-the-football with Democrats on the deficit for more than 25 years. It’s time for Democrats, at long last, to walk off the field.
~~~
Bruce Bartlett is a former Republican who served as a domestic policy adviser to Ronald Reagan and as a Treasury official under George H. W. Bush. A longtime observer and commenter on economic and political affairs in Washington, D.C., he has written for The New York Times, The Washington Post, The Wall Street Journal, USA Today, Politico, and many others. A bestselling author, his latest book is The Truth Matters: A Citizen’s Guide to Separating Facts From Lies and Stopping Fake News in Its Tracks.