Republicans talk loudly about the importance of deficit reduction; they claim to be the party of fiscal responsibility; unfortunately – their proposals don’t match their rhetoric. The House GOP budget doesn’t balance until sometime after 2040 in large part because it’s much a deficit reduction budget than it is a cut taxes for the rich budget. At a very macro level – the math is very simple. We have to reduce the long term deficit; this is clear. But we won’t be able to resolve the deficit issue unless we reach full employment and we won’t able to reach full employment if we’re focused on cutting government spending right now. In fact – cutting government spending would “significantly” harm the economy right now (source).
Economists are able to project economic growth for America and the world; they understand the relationship between cutting taxes and the deficit, between cutting government spending and the deficit. That is after all what they get paid to do; they’re the experts. And the experts say under current policy we would see America’s debt as a % of GDP rise over the next 10 years if we continue to do nothing. If we see deficit reduction of $2 trillion – debt to GDP will stabilize or if we see deficit reduction of $4 trillion – that will put the country back on a path towards reducing the deficit. That’s why you hear President Obama talking about a $4 trillion deal; that’s why you keeping hearing the $4 trillion number being floated in the news.
How we get to $4 trillion really matters. Republicans want to cut government spending by $4 trillion while continuing to cut taxes for the wealthy by multiple trillions thus not really reducing the deficit. Democrats want to raise taxes by $1.4 trillion coming almost exclusively via increasing the maximum tax rate for the wealthy and taxing dividends and capital gains more as well. Democrats are ultimately trying to find a balance for deficit reduction; Republicans are proposing huge sweeping cuts to Medicare, Social Security and every government program they can find in order to avoid raising taxes on the rich (source).
They continue to push for more cuts to “discretionary spending” which is already on track to reach “historically low levels”; in short – there isn’t that much low hanging fruit in the discretionary spending budget and that means we would see significant cuts to important government programs if the Republicans got their way.
As we shared HERE:
In 2011 – House Republicans proposed to cut the following programs by significant amounts as Fox News highlightsHERE:
- $430 million to fund PBS, NPR and other educational programs (source).
- $169 million from nuclear energy
- $593 million from the Internal Revenue Service
- $74 million from the FBI
- $379 million from NASA
- $6 million each from the National Endowment for the Arts and National Endowment for the Humanities
- $2 billion from job-training programs
- $1 billion from the National Institutes of Health
- $224 million from Amtrak
- $755 million from the Centers for Disease Control and Prevention
The Center on Budget and Policy Priorities explains more about discretionary spending HERE:
Congress Has Cut Discretionary Funding By $1.5 Trillion Over Ten Years. Debates over how — and how much — to reduce projected deficits often overlook the fact that the first stage of large-scale deficit reduction is already in law. Legislation enacted last year, most notably the Budget Control Act, will produce $1.5 trillion in savings in discretionary (that is, non-entitlement) spending for fiscal years 2013 through 2022. These cuts will shrink non-defense discretionary funding — which includes an array of domestic programs ranging from education to law enforcement, food safety, and environmental protection, as well as international programs — to its lowest level on record as a share of GDP, with data going back to 1976 (see second chart). The enactment of these budget cuts is one reason that an additional $2 trillion in deficit reduction, rather than some bigger number, would be sufficient to stabilize the debt ratio. (See the bullet above.)
