Publius Speaks

Publius Speaks
Become A Follower

Monday, August 3, 2015

Republicans Just Can’t “Cut It”

"WASHINGTON, Jan 6, 2015 (Reuters) - More macroeconomic projections will be included in cost estimates (work done by the Congressional Budget Office and the Joint Committee on Taxation) for major fiscal legislation in the U.S. House of Representatives under a rule change approved on Tuesday, a move critics said could mask the true impact of tax cuts.  The move toward "dynamic scoring," as the approach to gauging the budgetary effect of tax and spending changes is known, was part of a rules package passed on a 234-172 party-line vote as the Republican-controlled Congress began its work.
White House Budget Director Shaun Donovan said in a blog posting that adoption of dynamic scoring would "risk injecting bias" into a decades-old, non-partisan budget process;  "...it could allow Congress to adopt legislation that increases federal deficits, while masking its costs," Donovan said." (By David Lawder)

But that is what Republicans have done all along -- mask the true impact of their tax cuts and their budget cuts.  If they were truthful about any of their budgetary manipulations they would be exposed to the world as the bamboozlers they truly are.  Just take one flagrant example.  Republicans claim to be the Party that wants to reduce the deficit, yet their track record is a very poor one in that regard.  Just take a quick look at the numbers for the last 40 (maybe 100) years or so.

Let's start with a simple comparison done by Stephen Bloch of Adelphi.edu who found: 
"In the past 100 years, there have been eight Democratic and nine Republican Presidents. Five of the eight Democrats oversaw average deficits smaller than they inherited, while seven of the nine Republicans oversaw average deficits larger than they inherited."

Focusing in a bit more, let's take a look at a chart from Mr. Bloch at adelphi.edu.  Let him explain:
"I consider the fiscal year spanning a Presidential election and inauguration to be part of the outgoing administration. This is usually a fair assumption, because most government programs take a while to start, and last for multiple years. Fiscal 2008-2009 is perhaps an exception: both the outgoing and incoming Presidents enacted expensive economic-stimulus programs that were written to take effect immediately. Accordingly, in the following tables, I've given George W. Bush two rows in the table: one for his whole term, consistent with all other Presidents, and one counting only his first seven years, ending with the figures of September 2008, by which time a recession had started but the government measures to deal with it hadn't been enacted yet.
I subtract the deficit in a President's first year from the deficit in the year after that President stepped down (or, in the case of the current President, from the most recent deficit figures I have). This change in deficit is then divided by the number of years it took to achieve it.

chart from blog on deficit  001
Comments on Table 3:Since Kennedy, "every Democratic President has left office with a smaller deficit than he inherited, and every Republican President except Nixon has left office with a larger deficit than he inherited. This may be because Republican Presidents have placed high priority on cutting taxes, and placed lower priority on (or had less success at) cutting spending. Democratic Presidents have perhaps had equal success at cutting spending (I haven't researched those numbers), but have not been bound by promises to cut taxes."
Another writer, David Haggith, in a 3-year-old post at http://thegreatrecession.info/blog/deficits-debts-democrats-vs-republicans-us-national-debt-graphs-year-president/ makes the point another way:
""It seems to me the Tea Party's hero is Ronald Reagan...he is clearly the source (the head waters) of the present economic deluge. You can see how the debt problem hugely ramps up when Reaganomics begins, reverses when Clinton takes us away from supply-side economics by raising taxes on the wealthy, and immediately resurges when Bush takes us back to even larger tax cuts for the wealthy than we saw under Reagan. Debt growth is EVEN STEEPER under George Bush than it was under Reagan. Why? Because his supply-side cuts in taxes to the wealthy were even larger than Reagan's.
We have enough history now to (see that) supply-side economics SHOULD BE a dead idea. Tea Party votes are ALL FOR supply-side economics. So, their ideas are bankrupt. We have CLEAR proof of what worked in history.  It is about the need to make tax increases for the wealthy at the same time one makes spending cuts. The combination for a strong economy that pays its own way is making sure the wealthy pay their own freight and cutting expenses."
Then, he adds this:  "Right now, Republicans and Democrats have created a smoke-screen tax system that appears to tax the rich at a higher percentage rate, but does not, in fact, do so. The rich receive enormous tax breaks...which reduce their effective income tax rate to LESS than the average person's rate. Most importantly, the rich do not make their money off of wage income. They make it off of capital gains, and capital gains are taxed at the same percentage rate that the BOTTOM of the middle class pays. So, the rich wind up enjoying an effective tax rate that is actually lower than anyone in the middle class."

You are being bamboozled every time you believe that Republicans are saving, or will save, us money.  Why?  Because their economic concepts are fundamentally flawed unless you can believe the fairy-tale that money actually trickles-down from the wealthy to the middle and lower income groups.  It doesn't.
But that's not the only flaw in their constructs.  They also believe that cutting programs that benefit most of our population will bring us to fiscal solvency.  Republicans don't save money on welfare cuts or other cut-backs that reduce social welfare spending.

They actually cost us more money in the long run, and here's why:
(1) They tend to shift the so-called savings to other areas of the budget.  That's what lowering taxes on the rich is all about -- welfare for the rich is not free.  The extra money for those breaks on taxes for the rich has to come from somewhere.  And it does -- right out of your pocket, if you're middle class, and out of those social program cuts that affect the lower middle-income class, those living at poverty level and those who are known as the "underclass."   Shall we say it?  It's Robin Hood in reverse!  Rob the poor to pay the rich!  Republicans believe it is their solemn duty to aggrandize the rich and they do so by removing all economic supports from the 98% who must work extra jobs or overtime just to keep up with costs of daily living.  

But there is one more shift of the savings from program cuts that must not go unnoticed.  Defense spending.  Republicans don't like it at all when commentators and writers point out the enormity of the military budget, and the undeniable truth that the Congress has so often substantially increased the Defense budget from what was requested by DoD!  Nor did the capitalistic Republican cohort care for the questioning of private contracts by Senators like Bernie Sanders of Vermont.  So many of those private contracts are going to Friends of the GOP that they go into protective mode every time someone questions the billions of overruns in such contracts.  And, one more thought:  why all this talk of war with Iran?  Is it just because Republicans are overly-bellicose in their approach to the rest of the world.  Probably not.  They do, however, know that such "war-talk" provides them with one more excuse to keep the Defense budget soaring, thereby deflecting any questions about where that money is going that gets cut from welfare programs!

(2)  Republicans actually increase costs to our government by short-sighted actions that they claim will cut the deficit and bring us to a stable and balanced budget. 
So, let us first be clear on what Republicans want to do.  They say they want to cut the deficit, but more than that, they want to reduce the tax burden on the rich.  That is why, from way back, Republicans have manufactured phrases like "take responsibility for yourself" "pull yourself up by your own bootstraps" and "entitlements."  They desperately want all of us to believe that the rich should not have to pay for those in our society with special needs.  They want us to believe that it is unfair for wealth to be re-distributed by the government; they want any such re-distribution to be done through private philanthropy as a personal gesture of caring.  But their inconsistency is glaring.  How can the wealthy 1 or 2 % accept any tax breaks or tax subsidies or advantages from government coffers since such welfare must necessarily come from taxes on the earnings of others?  Their naive view of private philanthropy is also disturbing; for private philanthropy is not controlled by need but by personal viewpoints and personal choice, and is too dependent on donations.

And so, we have Republicans gutting programs that subsidize people with special circumstances and needs.   The list is so long that it cannot be inserted here (see one list of proposed Senate cuts by Republican leadership at http://www.politico.com/blogs/glennthrush/0209/List_of_spending_cuts_in_Senate_bill.html 
But we might just mention WIC, TANF, SNAP (food stamps), and Head Start.  We could also cite special programs for Veterans, the homeless, and single mothers, plus Pell grants for students.  But that's just the tip of the iceberg, since right now, the radicalized Republican Party is attempting to lay the groundwork for the dissolution of Social Security, Medicare and Medicaid, to say nothing about the repeal of "Obamacare."  Of course, they don't often talk about "dissolution."  Instead they disguise their intent by talking about "privatizing" Social Security; "vouchering" Medicare, and "devolving" Medicaid to the states.  It's all of one piece -- radicalized Republicans are hell-bent on destroying what they term the "welfare state" (except for the portion that is "welfare" for the rich!).

And what is my point?  Simply this:  Their cost-savings measures actually cost us more money in the long run especially for healthcare, remedial education, job training, incarceration, food and housing. 

A report by the Congressional Budget Office (CBO) in 2014 may be enlightening in this regard.  In discussing the Republican plan to block-grant SNAP, SSI, and child nutrition programs to states, the CBO presented the following:

"By CBO estimates, this option (to block-grant these programs to states) would reduce spending on SNAP by $281 billion from 2015 through 2023—or by 41 percent of the amount that would be spent under current law. For SSI, mandatory spending during that period would decline by $49 billion, or by 9 percent. For child nutrition programs, the reduction would be $74 billion, or 33 percent. For SNAP, the effect on projected spending would be larger early on, whereas for the child nutrition programs and, in general, for SSI, the effects would be larger in the later years.

"A rationale against this option is that, from 2015 to 2023, it would cut mandatory federal spending for programs that support lower-income people by $404 billion (with an additional cut of $42 billion in discretionary spending, if appropriations were reduced as specified). Who was affected by that cut in spending and how they were affected would depend on how states structured their programs and how state spending changed. But such a cut—amounting to 28 percent of the projected mandatory spending on SNAP, SSI, and child nutrition programs during those years—would almost certainly eliminate benefits for some people who would have otherwise received them, as well as significantly reduce the benefits of some people who remained in the programs.
"Another rationale against this option is that block grants would not be as responsive to economic conditions as the current federal programs are.  If federal spending did not increase during a future economic downturn and the number of people eligible for benefits increased, states that could not increase their spending (probably at a time when their own revenues were declining) would have to reduce the benefits received by each participant or tighten eligibility, perhaps adding to the hardship for families just when their need was greatest."

What the CBO doesn't tell us is what exactly would happen to the people who lose their benefits?  And therein lies the rub

What cost analyses fail to do is to calculate the unintended and unacknowledged effects on the overall budgets of cities, towns, communities, counties, states and the federal government in terms of the long-term effects of such cuts or transfers of funding.  Does the homeless problem get larger and eat up more money for emergency room care?  Do children become incapacitated in school settings because of hunger, or because of lack of health care, and does that cost us in lost potential?  Does the cost of police presence increase because stealing of food and other essentials rises?  Does incarceration increase because of desperate people doing bizarre things out of their desperation?  Do mental health facilities have to increase their intake and staff in order to accommodate those who go "off the deep end" because of their situation? We could go on and on, but let us turn to another report that spells-out quite clearly some of these long-term costs, especially for children and families, that Republicans ignore.

From the Children's Defense Fund 2014 Report on Children:
"Child poverty costs the nation at least $500 billion each year in extra education, health and
criminal justice costs and in lost productivity.
Child abuse and neglect cost the U.S. $80.3 billion each year in direct costs and lost productivity.
A single case of nonfatal child abuse and neglect costs $210,012 over a lifetime, and a case of
fatal child abuse and neglect $1.27 million, mostly due to lost productivity.
Gun deaths and injuries cost the U.S. $174.1 billion each year, or 1.15 percent of our total gross
domestic product (GDP).
Racial and ethnic health disparities cost the U.S. an estimated $1.24 trillion in medical costs and
lost productivity between 2003 and 2006.
The high school students who dropped out of the class of 2011 will cost the nation’s economy an
estimated $154 billion in lost income over the course of their lifetimes.
The gap between Black and Hispanic compared to White high school achievement in 1998 cost
the U.S. $310 to $525 billion in lost GDP by 2008 and the income achievement gap cost $400
to $670 billion.
The achievement gap between American students and those in top-performing countries like Finland and Korea in 1998 cost the nation $1.3 to $2.3 trillion in 2008 or 9 to 16 percent of GDP.

We Can Afford to Do Better The amount the U.S. spends per minute on corporate tax breaks would pay the salary of 16 child care workers. More than 220,000 children are currently on waiting lists for child care assistance. Expanding child care increases poor mothers’ work participation.
Three days’ worth of the amount the U.S. spends on corporate tax breaks would provide a whole year’s worth of SNAP food assistance for the estimated 737,000 children who don’t have enough food.
The amount the U.S. spends a year on corporate tax breaks for private jets would pay the salary of 6,400 high school teachers.
All poor infants and toddlers could have been served by Early Head Start if the government diverted just 18 days of defense spending. Currently only about 4 percent of eligible children reap the benefits of this high quality early learning experience. Quality early education programs return 7 to 10 percent a year for every dollar invested.
More than 17,500 low-income children could enroll in Head Start for a year for the cost of just one F-35 fighter jet among the nearly 2,500 the Department of Defense is scheduled to buy."

Republicans in the House want "dynamic scoring" of budget and programs.  Well here is my version: score the dynamic effects on people in the long run, and weigh that against budget cuts that show a savings only in the short run.