Senator McConnell has been telling anyone who is willing to listen lately that during the first two years of the Obama administration, Congress gave Obama and the Democrats everything they wanted. This is part of the larger narrative that Obama should own the current economic condition because his policies have not resulted in unemployment rates less than 8%, deficit reductions, or a robust economic recovery.
“In fact, he’s been in office for three years. He got everything he wanted from a completely compliant Congress for two of those three years… We are living in the Obama economy.”
The reality, however, doesn’t match this narrative very well.
The plan to bring down Obama was hatched in the first months after his inauguration. That plan was to unanimously oppose the Obama administration at every turn in order to, according to McConnell, “Keep our fingerprints off of these proposals,”
In October 0f 2010 McConnell said, “The single most important thing we want to achieve is for President Obama to be a one-term president.”
Here were the results of that opposition.
Obama was unable to allow the Bush tax cuts to expire for those making more than $250,000 a year because he didn’t have the 60 votes needed to overcome a Senate filibuster. Cost $544B.
The DREAM act also failed in the Senate, though there were 55 votes in support.
The Senate threatened a government shutdown over key appropriation and debt ceiling bills.
The stimulus package was almost $100B less than originally proposed because of Republican opposition and still had no Republican votes in the house and only three moderate Republicans in the Senate.
The Healthcare reform package received no Republican votes even after it was stripped of the public option that was an important part of the original proposal.
The recent budget proposed by Obama is no different.
The administration claims that the budget includes $2.5 of spending cuts for every $1 in tax increases.
The Republicans criticize the budget because they claim it includes $1.9 trillion worth of new tax revenue and $1.5 trillion worth of more spending.
The truth is that they are both playing games with the numbers in order to make political points in an election year.
The administration’s numbers include the budget reductions already agreed to in the debt ceiling deal, money from winding down the wars in Iraq and Afghanistan, and reduced debt service. But at least their math is good – $3.8T in reductions compared with $1.5T on tax increases (primarily for letting the Bush tax cuts expire for high income people) does result in $1 of tax increases for every $2.5 in “spending” cuts.
The Republican numbers are based on calculations that came out of the House Budget Committee rather than the CBO. They ignore the war savings and the debt deal cuts. They add back in the Medicare “doc” fix even though they were the ones who voted to pass it without any offsetting revenue to cover the cost. All told, this pretty much wipes out the reductions in the Obama budget. For good measure the Republican’s also increased the Obama budget’s tax increases by $400B because they don’t agree with the administration’s definition of what constitutes a tax versus for example, an increase in pension fund contributions that is scheduled to take effect for federal employees.
What is really interesting about this whole exercise is how the Obama budget – as disputed as it is – compares with the budgets proposed by the Republican Presidential candidates. Even though it doesn’t reduce the deficit as percentage of GDP over the next ten years, it does do better than anything the Republicans have proposed.
This is based on data from the nonpartisan Committee for a Responsible Federal Budget.
Where all of the Republican candidates get into trouble, not surprisingly, is in revenue.
Alice Rivlin founding director of the Congressional Budget Office and a senior fellow of economic studies at the Brookings Institution said, “I don’t expect Republicans to propose raising taxes, but it seems to me that one definition of responsibility is ‘Can you reform the tax system … in whatever [way] you think is best that at least doesn’t make the situation worse?’ And on that score, all of these candidates fail.”
The current debt is 70% of GDP. The “realistic” projection with Obama’s current budget is that the debt will increase to 85% of GDP by 2021.
Because the candidates haven’t produced many specifics, the report includes a range of results for the budget proposals of each candidate based on some assumptions.
As compared to the current realistic projection, Ron Paul is the only candidate whose budget proposals improve on the 85% of GDP by 2021 target set by the Obama administration. Everyone else is worse. What is of concern, however, is the risk in all these proposals. When you consider the worst case assumptions, they are all very bad.
In the best case, Ron Paul would reduce the debt to 67% of GDP by eliminating 5 federal departments and canceling all Federal Reserve debt. In the worst case, debt would increase it to 93% of GDP.
In the best case, Romney would reduce debt in 2021 to 75% of GDP. In the worst case it would increase to 94% of GDP. Those assumptions were before Romney’s most recent tax proposal which, without further offsets in spending, would add $2.6T to the debt, wiping out the reductions in his best case scenario.
Santorum was even worse, reducing debt to 74% of GDP in the best case, but exploding it to 107% in the worst case.
Gingrich’s plans were the worst. There is no reduction of debt even in the most optimistic projection with the worst case projections leaving the debt at 126% of GDP in 2021.
Specifically in the area of healthcare the nonpartisan group projects that repealing the Healthcare Reform bill will add $80B to the debt by 2021 and the alternative Republican proposals could add as much as $330B to the debt.
The bottom line is that budgets remain political documents. The likelihood of any of them including the Obama proposals being enacted in anything close to the form that they were proposed is between slim and none. These are documents that reflect political priorities rather than real spending.
They real spending policies end up being hashed out in Congress.
Given the current make-up of the Congress, that is going to continue to be a challenging task.
Ultimately the American voter is going to have to choose in November whether they want to continue to support the “no tax” policies introduced by the Republicans that they elected in 2010, or punish them for their uncompromising tactics and refocus government on creating jobs.