"When the president told me yesterday that he wanted a clean increase in the debt limit," House Speaker John Boehner said this week, "It almost took my breath away." It shouldn't have. After all, Congress raised the debt ceiling 17 times under Ronald Reagan and seven more under George W. Bush, including a "clean" increase in 2004 that the entire GOP leadership team supported. And as it turns out, the similarly draconian budget plans offered by Republican White House hopeful Mitt Romney and House Budget Chairman Paul Ryan would add far more to the national debt than President Obama.
In the run-up to last summer's GOP debt ceiling hostage-taking, Speaker Boehner similarly warned Obama that there's "not a chance you're going to get a clean bill," adding, "There will not be an increase in the debt limit without something really, really big attached to it." The really big something Congressional Republicans wanted was a balanced budget amendment. But then as now, the Ryan GOP budget backed by 235 House Republicans and 40 GOP Senators failed that test.
For this year's farce, Boehner has announced a new requirement. "I will again insist on my simple principle of cuts and reforms greater than the debt limit increase," he explained last week. But once again, Speaker Boehner was forced to admit that the new version of the Ryan budget that garnered 228 GOP votes in the House and 41 in the Senate would not meet his own demands:
"Yeah, the big bad House Republican budget that would just gut everything under the sun, according to my friends across the aisle, would still require a $5 trillion increase in the debt ceiling over the next 10 years," Boehner said. "Why? Because of the great big demographic bubble -- baby boomers like me, that are going to retire and continue to retire for the next 20-25 years. It's a big challenge."It's a big challenge, all right. But not because of growing entitlement spending for baby boomers, but because Republicans voted for trillions in new tax cuts for the wealthy without specifying a single loophole they would close to help pay for it.
As it turns out, the party's near-certain presidential nominee Mitt Romney is cooking up virtually the same disastrous "Pink Slime" recipe for America's future. Both Ryan and Romney would deliver a massive tax cut windfall for the rich, paying for it by gutting the social safety net each pretends to protect. Each would end Medicare as we know it with a premium support gambit that would dramatically shift health care costs to America's seniors. While increasing defense spending, the House Budget Chairman and the GOP frontrunner would repeal the Affordable Care and leave at least 30 million more people without insurance. And despite their mutual pledges to end many tax loopholes and deductions to fund their gilded-class giveaway, neither Paul Ryan nor Mitt Romney has the courage to say which ones. As a result, these supposed deficit hawks would actually add trillions more in red ink to the national debt.
That may seem like a surprising result, given Rep. Ryan's declaration that his mission is to "prevent an explosion of debt from crippling our nation and robbing our children of their future." But even with his draconian budget blueprint that cuts Medicaid by a third, ends Medicare as we know it, adds 48 million people to the ranks of the uninsured and by 2050 would result in ending all non-defense discretionary spending, over the next decade Ryan would unleash torrents of red ink from the U.S. Treasury. Ezra Klein explained how Paul Ryan came up $6.2 trillion short:
The Tax Policy Center looked into the revenue loss associated with House Budget Chairman Paul Ryan's plan to cut the tax code down to two rates of 10 percent and 25 percent. They estimate the changes would raise $31.1 trillion over 10 years, or 15.4 percent of GDP. That's $10 trillion less than the tax code would raise if the Bush tax cuts were allowed to expire, and $4.6 trillion less than it would raise if all of the Bush tax cuts were extended.
The Republican congressman says he'll "broaden the tax base to maintain revenue...consistent with historical norms of 18 to 19 percent." So let's say Ryan needs to find close-enough deductions and loopholes to hit 18.5 percent of GDP. That means he'd need to close about $6.2 trillion in tax deductions and loopholes over 10 years.
And so far, Ryan hasn't had the courage to name a single deduction he would end or loophole he would close. As Matthew Yglesias pointed out, in Ryan's 13-page description of his tax reform vision, those politically tough choice are completely missing:
Thirteen pages dedicated to explaining his vision for revenue-neutral tax reform. And even so he manages to not name a single tax deduction that he's planning to eliminate. Home mortgage interest deduction? I dunno. Electric vehicle tax credit? I dunno. Deductibility of state and local income taxes? I dunno.Rolling out his plan, Ryan admitted as much. The responsibility for making the numbers work and taking the heat for ending popular deductions would go to House Ways and Means Committee, which Ryan claimed would "show how they would go about doing this." It's no wonder Greg Sargent said Ryan's "Path to Prosperity" plan simply "is not serious" while the New York Times called it "careless."
And one other thing. Over the next 10 years, the Ryan House budget would add substantially more to the national debt than President Obama's proposed 2013 plan.
As the Center for American Progress explained, the Congressional Budget Office (CBO) assessment of the Ryan budget "did not test Rep. Ryan's claims about how his policies would actually affect spending or revenue," but "merely showed what would happen to the debt if his claims were true." In a nutshell, they are not:
But the House budget's entire claim to deficit reduction is built on the foundation of those fantasy revenue levels. Without them, the debt goes up, not down. In fact, with all the House budget's tax cuts properly accounted for, revenue would average just 15.3 percent of GDP from 2013 through 2022, not 18.3 percent. The result: deficits would never drop below 4.4 percent of GDP, and would rise to more than 5 percent of GDP by 2022.
The national debt, measured as a share of GDP, would never decline, surpassing 80 percent by 2014, and 90 percent by 2022. By comparison, President Barack Obama's budget proposal, released in February, would stabilize the debt by 2015, and bring it down to 76 percent by 2022.
If this all sounds familiar, it should. Because in February, Mitt Romney also rolled out a new economic plan, one which similarly hemorrhages red ink.
As it turns out, Romney's scheme to "Cut, Cap and Balance" the federal budget does nothing of the sort. As the Washington Post explained in its discussion of an analysis by the Committee for a Responsible Federal Budget, "until the campaign offers a more specific plan, Budget Watch analysts said Romney's entire framework would add about $2.6 trillion to the debt by 2021."
Romney's claim that his plan would promote job and economic growth while reducing the deficit is also likely false. The Bush tax cuts were promoted under the same guise, only to blow a $2.5-trillion hole in the federal budget that was accompanied by worst performance of any post-war expansion" for growth in investment, GDP, and job creation. Romney's tax cuts are even more expensive, clocking in at a cost of more than $10.7 trillion over the next decade and reducing revenue to a paltry 15 percent of GDP, according to Linden. Balancing the budget on those terms, as Romney claims he will do, would be next to impossible.Impossible, Ezra Klein points out, because "Mitt Romney is promising that taxes will go down, defense spending will go up, and old-people programs won't change for this generation of retirees." But even with his shocking cuts to Medicaid, Romney can't get anywhere near balancing the budget unless he eliminates some of the deductions for workers, families and businesses that cost Uncle Sam over $1 trillion a year. And like Paul Ryan, the certain Republican presidential nominee is too cowardly to say what they are.
Earlier this year, his economic adviser Glenn Hubbard admitted Romney's cowardice, explaining "it is not his intention to take on any specific deduction or exclusion and eliminate it." Just two weeks later, Mitt Romney concluded discretion was the better part of valor and refused to reveal which deductions and tax breaks he would end:
"So I haven't laid out all of the details about how we're going to deal with each deduction, so I think it's kind of interesting for the groups to try and score it, because frankly it can't be scored, because those kinds of details will have to be worked out with Congress, and we have a wide array of options."In response, the Post's Klein could only shake his head:
"Let's be clear on this: A tax plan that can't be scored because it doesn't include sufficient details is not a plan. It's a gesture towards a plan, or a statement of intended direction, or perhaps an unusually wonky daydream. But it's not a plan."Here's why.
Republicans Mitt Romney and Paul Ryan have promised to slash tax rates and yet still balance the budget by getting "rid of the special interest loopholes, special deductions, lower everybody's tax rates, bring in at least as much revenue to the government." But because neither Romney nor Ryan has had the courage to publicly state which loopholes and deductions they would end, the inevitable result would be trillions in new national debt.
But their cowardice is to be expected. As the New York Times recently revealed, that trillion dollars in annual tax expenditures is now larger than Uncle Sam's take from the income tax each year. And as the Washington Post highlighted last year, "ever-increasing tax breaks for U.S. families eclipse benefits for special interests"
It's important to understand that much of the estimated $1.3 trillion in annual tax expenditures in 2015 (a figure larger than the entire 2012 budget deficit and equivalent to about a third of the $3.8 trillion in federal spending next year) benefit working and middle income Americans. For example, the home mortgage tax deduction was worth $89 billion in 2011. Tax-deferred 401K accounts cost the Treasury $63 billion. The Earned Income Tax Credit had a similar $63 billion price tag last year.
Yet, as Paul Krugman pointed out in "Pink Slime Economics," the deductions and loopholes are the mystery meat in Paul Ryan's budgetary dog food:
We're talking about a lot of loophole-closing. As Howard Gleckman of the nonpartisan Tax Policy Center points out, to make his numbers work Mr. Ryan would, by 2022, have to close enough loopholes to yield an extra $700 billion in revenue every year. That's a lot of money, even in an economy as big as ours. So which specific loopholes has Mr. Ryan, who issued a 98-page manifesto on behalf of his budget, said he would close?In April, the New York Times put Krugman's question into a handy chart of "Who Gains Most from Tax Breaks":
None. Not one. He has, however, categorically ruled out any move to close the major loophole that benefits the rich, namely the ultra-low tax rates on income from capital. (That's the loophole that lets Mitt Romney pay only 14 percent of his income in taxes, a lower tax rate than that faced by many middle-class families.)
We don't know which of these tax breaks Paul Ryan and Mitt Romney would end, because neither has been willing to say anything in public about them. But we do know how we got here.
After Ronald Reagan tripled the national debt with his supply-side tax cuts, George W. Bush doubled it again with his own. (Reagan's performance would have been much worse, had he not raised taxes 11 times to help make up the shocking shortfall.) As a share of American GDP, tax revenues peaked in 2000; that is, before the Bush tax cuts of 2001 and 2003. As the Center on Budget and Policy Priorities concluded, the Bush tax cuts accounted for half of the deficits during his tenure, and if made permanent, over the next decade would cost the U.S. Treasury more than Iraq, Afghanistan, the recession, TARP and the stimulus - combined.
As the Washington Post summed up the CBO's conclusions regarding the causes of the nation's mounting debt last year, "The biggest culprit, by far, has been an erosion of tax revenue triggered largely by two recessions and multiple rounds of tax cuts." An analysis by the New York Times echoed that finding:
With President Obama and Republican leaders calling for cutting the budget by trillions over the next 10 years, it is worth asking how we got here -- from healthy surpluses at the end of the Clinton era, and the promise of future surpluses, to nine straight years of deficits, including the $1.3 trillion shortfall in 2010. The answer is largely the Bush-era tax cuts, war spending in Iraq and Afghanistan, and recessions.But as Ezra Klein explained in the Washington Post, these revealing charts don't tell the full story of the impact of Bush-era policies on future debt facing Barack Obama and the United States:
What's also important, but not evident, on this chart is that Obama's major expenses were temporary -- the stimulus is over now -- while Bush's were, effectively, recurring. The Bush tax cuts didn't just lower revenue for 10 years. It's clear now that they lowered it indefinitely, which means this chart is understating their true cost. Similarly, the Medicare drug benefit is costing money on perpetuity, not just for two or three years. And Boehner, Ryan and others voted for these laws and, in some cases, helped to craft and pass them.Now, history is repeating itself, as Speaker Boehner is once again threatening a U.S. default over debt targets his own party cannot hit.
It almost takes your breath away.