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The Party of Fiscal Babies

A Commentary By Froma Harrop

Tuesday, November 17, 2009

Nearly every Republican these days calls for tax cuts and lower deficits, and in the same sentence. Point out that these goals clash -- that taxes pay for government and not paying for government causes deficits, and the Republican counters, "We must shrink government, instead."

Sure. And you're just the boys to do it.

There hasn't been a balanced budget since the last Democratic administration. During the George W. Bush years of mindless tax-cutting, the national debt doubled, and GOP claims to fiscal rectitude became a bizarre joke. The last fig leaf fell off this summer when Republicans demagogued efforts to save over $100 billion by ending subsidies for the private Medicare Advantage health plans.

Here was the lowest-hanging fruit in the fastest-growing government program. It was something most Medicare beneficiaries would barely notice was gone, yet Republicans hollered that Democrats were pulling the plug on grandma.

That dashed any residual Republican pretenses that Bush had led them astray on spending, and a lesson was learned. Clearly, they're not changing a thing.

Bruce Bartlett, an economist in Ronald Reagan's Treasury Department, has criticizing such inconsistencies for several years. Republicans could have embraced his 2006 book, "Imposter: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy," as evidence that they truly regretted the fiscal wreckage of the Bush years. Instead, they turned Bartlett into a Republican pariah.

Bartlett has just come out with another book, "The New American Economy: The Failure of Reaganomics and a New Way Forward." It has received an equally chilly reception from the right-wing media and associated think tanks. That is, they're making no mention of it.

I asked Bartlett whether he feels beaten up by former fellow Republicans. (He's now an independent.) No, he said, "One of the funny things since 'Imposter' came out is the refusal of people on the right to even debate me."

One can't entirely blame them for trying to smother his book sales. Democrats would be hard-pressed to find better talking points anywhere else -- though Bartlett does find fault with them, too.

Bartlett's main point is that there's almost no place to cut domestic discretionary spending. Subtract money going for defense, entitlements (such as Medicare) and payments on the debt, and there's precious little left. Domestic discretionary spending in fiscal 2008 last year totaled $485 billion, while the deficit was $459 billion. You would have had to kill nearly every domestic program to balance the budget. That would have meant nothing for education, agriculture, housing, border patrols, the FBI, highways.

Taxes must go up, and on that subject, Bartlett takes issue with the current president. "You have to look at some other broad-based revenue raising," he said, "but then you run up against the problem that Obama has made the promise not to raise taxes on anyone earning less than $200,000." He deems that approach "irresponsible." The rich can't bear all the costs of government.

The answer is a value-added tax, which is basically a national sales tax. The VAT would tax consumption, rather than income, and at low cost to economic growth. Europeans use a VAT to pay for their cushy benefits.

Bartlett thinks that Congress should commit itself to a number, say $1 trillion, for deficit savings over 10 years. Then it should ask a commission to find a third of that money from higher revenues, a third from entitlement cuts and a third from discretionary spending.

Welcome to the world of grownups, where tax cuts don't magically pay for themselves -- and where middle-class people must pay more for middle-class benefits. When it comes to addressing deficits, Democrats may be lax adolescents, but Republicans are total babies.

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