GOP Blowing Chance at Real Spending Cuts

In proposing to cut entitlement spending, Republicans risk everything. They could ignite the furor of senior citizens (who reliably show up to the polls) so terribly it might jeopardize the GOP’s chances in 2012. But, Republicans rightly insist, social programs must be reformed to avert fiscal disaster. If President Obama offered to trim entitlements as part of a deal to raise the debt ceiling, Republicans surely wouldn’t balk because the offer included a small tax increase…. Would they?

Alas, they would and they do. Obama has courageously offered to touch the “third rail” of American politics, not to mention the pride and joy of modern Democratic policymaking. While Republicans were prepared to exhaust their political capital to cut Medicare and Social Security, now their mortal enemy has asked to do this unenviable work for them if they’ll only agree to a very modest tax increase.

“We have a responsibility — and an opportunity — to reduce our deficit as much as possible and solve this problem in a real and comprehensive way,” Obama said in his weekly radio and Internet address. “I’m willing to do what it takes to solve this problem, even if it’s not politically popular. And I expect leaders in Congress to show that same willingness to compromise. The truth is, you can’t solve our deficit without cutting spending.”

Obama’s most sweeping proposal in these talks that Republicans rebuffed amounted to $4 trillion in savings over 10 years (no, that’s not a typo). Republicans have revealed their top priority is not debt reduction nor entitlement reform but reflexive opposition to raising any taxes at all. Disgraceful.

I wish this weren’t so. I ran as a reform-minded Republican for Congress in 2006, and though I had major policy disagreements with Republicans, especially on the Iraq war, I believed the GOP was the party more willing to do what is necessary to right out fiscal ship. Now, facing a real financial crisis when the conversation even involves the word “default,” Republicans show they are focused on narrow political gains at the cost of the nation’s economic health. This is not acceptable.

Consider the courage it took Barack Obama to propose entitlement cuts. He surely noticed how the public treated George W. Bush’s effort to reform Social Security and modernize Medicare. What President Bush’s got for his boldness was inaction from his own party and disapproval from the public on Social Security. He also succumbed to signing a Medicare prescription drug bill that vastly expanded the healthcare program without changing its “defined-benefit” structure. Now the “big-government socialist” Obama is poised to do what Bush wanted to do but couldn’t, and Republicans want no part of it.

The Congressional GOP is not only stubborn, but delusional. It wants the debt deal to include a Balanced Budget Amendment. What’s so crazy about this idea is that it would need to go before not just Congress but our state legislatures. We need a solution to the debt problem and we need it fast. There’s nothing fast about amending the Constitution.

Contrast this with the president’s proposal. He wants to close tax loopholes for the wealthy and corporations. Why the outrage at such a modest, responsible idea? The special tax breaks that rich people, oil companies and all other fat-cat beneficiaries of our current distorted tax code receive are simply welfare-queenism of a kind that today’s Republicans can’t recognize. It’s perfectly consistent with conservative values to ask the well-to-do to sacrifice for the good of all Americans. It’s even more desirable if Obama’s opponents can leverage tax hikes for spending cuts. Unfortunately, Republicans have abandoned their war against the debt in favor of a war against common sense.

When the great British historian Paul Johnson wrote that what really separates Americans from the rest of the world is not that we have no problems, but that we solve big problems. Left or right, Republican or Democrat, all agree that we have to make changes. With competing visions of the role of the state, a solution will involve compromise. The President is willing to do this, showing great political courage. Republicans should join him for the sake of the nation and their own credibility.

Jobless Rate Teaches What Our Politicians Don’t Want to Learn

Now that U.S. unemployment has reached a shocking 9.2 percent, we can confidently declare America’s political class knows nothing of how to foster a sound economy. Remember, this isn’t just any 9.2-percent unemployment; this is the jobless rate two and a half years after the recession hit. What does this sorry economic state suggest our leaders should do?

First, they should treat our economy as the national economy it is. Unfettered importation of cheap goods from China and other nations may comport with the mindless free-trade dogma that reigns supreme among America’s cloistered university economists, but try getting our millions of unemployed citizens to like it. It makes little sense as well to import $700 billion a year in oil, which both funds enemy nations and makes it harder to create innovative “green jobs” here in the U.S. Think it could be worse? Keep in mind that in the first three months of 2011, when unemployment was reported at 9.5 percent, the total percentage of U.S. adults without a full-time job was 16.8 percent. (The jobless rate is always worse than it appears.) Our public is simply taking a beating from inexpensive overseas labor. We need policies that will put us at a competitive advantage. For one thing, we should have a tax policy that will keep manufacturing on American shores. If companies like GE and Boeing want subsidies and tax credits, they should hire domestic labor. For another, we must grow our intellectual capital and therefore should end subsidies for higher education in areas unrelated to math and science. Financial aid to major in African dance is not an investment in our future.

The Center for Immigration Studies cites the recent jobless figures to make a different point—to call for restricted legal and illegal immigration. While I believe America must remain open to promising, innovative immigrants who desire life on our shores, tighter border security could at least spare our lower-skilled workers much pain and insecurity. But trade and immigration are two facets of the same issue: our need for a national economic policy that is truly national, meaning tighter borders and adherence to fair trade.

A second lesson our leaders should learn is that they must stop micromanaging commercial activity through such failed policies as the 2009 “stimulus.” The Obama administration falsely sold this $787-billion mistake as the only policy that experts said could jolt economic vitality and avert a second Great Depression. Instead, we reached 10 percent unemployment for much of 2009 and 2010. Our neighbor Canada, however, created no large spending programs, and used tax policy and deregulation to stimulate its economy. Before our two nations enacted recovery packages in 2009, our jobless rates were nearly identical and rising at the same pace. After the acts went into effect, however, Canada’s unemployment rate ceased to grow and then fell much further than ours would, to 7.4 percent.

President Obama has pursued dreadful economic policy—he even now admits that his talk about “shovel-ready” projects in the stimulus was misguided—and takes a stay-the-course attitude almost as galling as President Bush took after he disastrously debuted as a war leader. In the 2008 campaign, Obama talks a good game about “change.” Now is a good time to act on that idea.