Republicans LOVE deficits! Since the 70s, deficits have been a matter of 'STB' DOGMA

ProgressiveEconomist

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Sat Jul-09-11 02:50 AM
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Republicans LOVE deficits! Since the 70s, deficits have been a matter of 'STB' DOGMA

Edited on Sat Jul-09-11 02:53 AM by ProgressiveEconomist

for Republicans, with 'STB' short for "starve the beast". If you really want to understand the current phoney debt-ceiling crisis, you need to familiarize yourself with "starve the beast".

The absurd "debt ceiling crisis" Rs have fomented at a time when most Americans want job-creation and more temporary stimulus spending is the culmination of more than thirty years of Republican scheming to end Medicare and other progressive government programs. They want to do this by exploding the federal debt with huge unfunded "tax cuts" and accelerated spending on through-the-looking-glass "Homeland Security" boondoggles, easily-surmounted border fences, aggressive "wars" for "energy security", and other barbarous priorities.

Drawing heavily on a few superb links I googled, in this short write-up I'll summarize briefly the history of "starve the beast (STB)", Dubya's self-confessed intentional squandering of the five-trillion-dollar Clinton budget surplus, and the absurdity of the Grover-Norquist no-tas-revenue-raises-EVER pledge into which "starve the beast" has morphed over the years.

Note the disappearance of stimulus costs (light blue) and the projected future explosion of Bush "tax cut" costs (orange) in the ten-year deficit breakdown graph below (from the first page of http://www.cbpp.org/cms/index.cfm?fa=view&id=3490 ). I'll have more to say about this graph in the "Norquist pledge" section near the end of this lead-in post.

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BRIEF HISTORY OF "STARVE THE BEAST"

In an extraordinarily eye-opening column in Forbes 14 months ago (still online at http://www.forbes.com/2010/05/06/tax-cuts-republicans-starve-the-beast-columnists-bruce-bartlett.html ), former Bush Treasury economist Bruce Bartlett spilled the beans on STB's little-known history:

"I believe that to a large extent our current budgetary problems stem from the widespread adoption of an idea by Republicans in the 1970s called 'starve the beast.' ... STB became a substitute for serious budget control efforts, reduced the political cost of deficits, encouraged fiscally irresponsible tax cutting and ultimately made both spending and deficits larger. ...'

'On July 14, 1978, a few weeks after the Prop. 13 vote, (Alan) Greenspan ... was the first Republican to articulate what came to be called 'starve the beast' theory: 'Let us remember that the basic purpose of any tax cut program ... is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending.' Citing Greenspan's testimony, conservative columnist George Will endorsed ... STB in a column on July 27, 1978. 'The focus of the fight to restrain government has shifted from limiting government spending to limiting government receipts,' he reported. On Aug. 7, 1978, economist Milton Friedman added his powerful voice to the discussion. Writing in Newsweek magazine, he said, 'the only effective way to restrain government spending is by limiting government's explicit tax revenue--just as a limited income is the only effective restraint on any individual's or family's spending.' By 1981 STB was
well-established Republican doctrine. ..."

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DUBYA'S INTENTIONAL SQUANDERING OF THE CLINTON SURPLUS

Bruce Bartlett continues (at http://www.forbes.com/2010/05/06/tax-cuts-republicans-starve-the-beast-columnists-bruce-bartlett.html )

"When Bill Clinton became president in 1993, one of his first acts in office was to push through Congress--with no Republican support--a big tax increase. Starve the beast theory predicted a big increase in spending as a consequence. But in fact, federal outlays fell from 22.1% of GDP in 1992 to 18.2% of GDP by the time Clinton left office. ..."

"Although all of evidence of the previous 20 years clearly refuted starve the beast theory, George W. Bush was an enthusiastic supporter, using it to justify liquidation of the budget surpluses he inherited from Clinton on massive tax cuts year after year. Bush called them 'a fiscal straightjacket for Congress' that would prevent an increase in spending. Of course nothing of the kind occurred. Spending rose throughout his administration to 20.7% of GDP in 2008."

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THE GROVER NORQUIST PLEDGE AND LITMUS TEST FOR REPUBLICAN CANDIDATES

How much have past unfunded "tas cuts" contributed to the current federal deficit and debt? Does it make sense to rule out ANY increase in tax revenues EVER to close the long-term structural deficit? That is the political creed of every Republican who wants to be re-elected with support from Grover Norquist, today's human embodiment of STB dogma.

The whole Republican-Party-Grover-Norquist position is just silly IMO.

Just ask yourself, what is the predicted cost of extending Dubya's expiring "tax cuts" over ten years?

For Dubya's 2001 and 2003 massive upward-tilted tax breaks set to expire at the end of 2012--CBO data provide a precise answer: $4.6 TRILLION over fiscal years 2012-2021 (See http://www.cbpp.org/cms/index.cfm?fa=view&id=3490 and http://www.cbo.gov/ftpdocs/120xx/doc12039/BudgetTables.pdf , lines 13 and 14.)

Clearly, it was Dubya's "tax cuts" that exploded the structural deficit--there can be no doubt about that. Refusing to budge on raising some tax revenues to help close the structural deficit is just ludicrous to me.

A big part of the Greedy Oil Party's swindle on deficits is shown by the narrowing of the light-blue stimulus costs in the deficit breakdown graph at the head of this lead-in post. Right now, Rs are trying to blame Obama for alleged "wasteful spending" that has stanched Dubya's 800,000-per-month job losses and turned the economy in the upward direction. Much of extra government spending during recessions and early recoveries is automatic, and all of it is cyclical, not structural like the huge hole Dubya's "tax cuts" blew in the long-term budget (orange). Republicans are acting as if the public doesn't realize we're recovering from the deepest recession in 80 years, caused by the very unfocused "tax cut" policy favoring the very wealthy Republicans advocate replicating now. Job growth in the few years between Dubya's TWO recessions was the WEAKEST in decades.

what would the Rs have done to turn the economy around since President Obama took over the White House? Rs have obstructed even most small-business tax cuts the Obama administration has proposed, and continue to do so even now! IMO they've consistently opposed tax breaks for ACTUAL job creators, and ignored a consensus among even Bush Administration economists that extra untargeted tas breads for the top 2 percent of the income distribution have weak or no effects on job growth (see . http://www.capitalgainsandgames.com/blog/bruce-bartlett/1864/republican-tax-nonsense ).

CONCLUSION

Why don't Democrats in general and President Obama in particular inform the public about the Rs' "starve the beast" bankruptcy plan for the indefinite future? If they did, IMO millions more voters would realize that Republicans really LOVE deficits, even though they pretend to be concerned about them. Deficits are ESSENTIAL to their long-term political strategy to wipe out the New Deal and terminate progressive government safety-net programs, for the benefit of the plutocrats who OWN most Republicans.

IMO Presidential invocation of the debt clause of the 14th Amendment would be a constitutional response by President Obama to an unconstitutional power-grab by obstructionist Republicans insisting on continuing their fraudulent political strategy. The Greedy Oil Party is risking crashing the world economy to advance their long-term "starve the beast" strategy. Has extension of the debt ceiling, which has occurred hundreds of times in the past, ever been used in the way the Rs are using it?