Morning Jay: Why Won't the GOP Agree to a Tax Increase?
6:00 AM, Jul 6, 2011 • By JAY COST
Eugene Robinson is outrageously outraged over Republican perfidy:
Why won’t the GOP do what the Democrats could not do in December, despite their huge majority in the lame duck 110th Congress?
The budget battle that is brewing in Washington actually has three levels to it. The first is the battle over the debt ceiling, and the desire for congressional Republicans to extract as much as they can from Obama on spending cuts. The second is longer term, and involves keeping the United States out of some sort of Greek-style catastrophe. And the third involves an age-old ideological conflict that has defined the two-party system for some time: how much money should the federal government take in revenues and distribute in outlays?
Turn down the volume on the liberal hyperbole, where every Republican in Congress secretly wants to destroy Social Security, and it is not hard to discover the position of the Grand Old Party. Over the last forty years, the federal government has taken in about eighteen percent of GDP in taxes and spent about twenty percent of GDP in outlays, so why not just keep doing that?
Now, I know what you’re thinking: Oooh…those Republicans are so radical! How dare they want to tax and spend as much as the country has taxed and spent over the last half century! How on earth can we continue to fund food safety and the weather service? How will we rebuild our crumbling infrastructure? I know it's crazy, but those zany GOPers believe that the federal government can indeed find a way to meet its obligations on consumer safety, highways and transportation, social welfare, national defense, and so on without redistributing more than twenty cents of every dollar, just as it has for the last forty years.
The Democratic position is that the federal government should take in more and spend more – just how much more depends on how far to the left any given Democrat is.
Let’s keep this in mind as we now consider the projections of the Congressional Budget Office for the next eighty years.
If a picture is worth a thousand words, this one should make clear why the GOP is not putting tax increases on the table. The fiscal path the country is on will take us to an unprecedented level of spending and taxation. Why should the Republicans want to facilitate this process any more? It is contrary to pretty much everything the party is supposed to stand for. If anything, the GOP earns a fair share of the blame for this impending disaster because the party didn't do anything about it between 2003 and 2007, when it had full control of the government and knew full well that, thanks to the baby boomers and out-of-control medical costs, our terribly outdated Medicare system was set to blow up the budget. At least now, Republicans are no longer a party to making it worse, by demanding -- at last! -- some fiscal restraint and some sensible reforms.
It’s worth pointing out that this is the baseline, i.e. the outcome if all the laws currently on the books are allowed to remain as they are. If, on the other hand, we allow the Bush tax cuts to become permanent, we permanently patch the Alternative Minimum Tax, and so on, then the federal government would collect an average of about 18.4 percent of GDP in revenues over the next seventy years, or about what the average has been over the last forty years.
Of course, keeping revenue stable while letting spending surge would create a Greek-style catastrophe, as annual interest payments on the national debt would exceed forty percent of GDP by 2080. How do we avoid that? Almost all factions within the GOP are united around the same answer: keep taxes where they have been for forty years, restrain discretionary spending, and reform entitlements. This is why the GOP has taken the position it has in these negotiations.
Final point. Take a closer look at the federal outlays line in the above graph and consider that, according to the CBO, 116 percent of the increase between 2011 and 2085 comes from “Medicare, Medicaid, CHIP, and Exchange Subsidies.” Spending outside federal health entitlements will effectively be cut (as a share of GDP) over the next seventy years. It’s health spending alone that keeps us rolling on down the road to serfdom. In other words: The Democrats just enacted comprehensive reform of the health care system, and still the federal government is on pace to redistribute better than one out of every three dollars our grandchildren earn.