In another signal that pressure from the left and right is breaking down consensus in the Senate, Sen. Bob Corker (R-TN) said he will submit an amendment to cap spending as part of the proposed tax cut package supported by the Obama Administration:
I appreciate the work of negotiators to try to provide the American people certainty; businesses and families need to know their taxes won't be going up next year. I haven't yet seen the package and look forward to reading the details when they emerge. At a minimum, I plan to offer an amendment to this bill to cap federal spending as a percentage of GDP to instill fiscal discipline and smaller government while incentivizing lawmakers to pass pro-growth policies. A binding cap on spending coupled with tax certainty would send a strong message to the American people and the marketplace that Washington will not continue to defer tough choices to future generations.
Analysis below the fold.
Corker's statement that the temporary tax cuts would "provide certainty" comes amid certainty that the Bush tax cuts for the wealthiest Americans would be ending soon. I find his argument fundamentally flawed, because a 2-year continuation of the tax cuts will do little to spur long-term capital investment while continuing to politicize upper-class tax rates, creating even more incentive for the wealthiest Americans (Koch Brothers, etc.) to push for a continuation of these cuts.
The fact is, the Bush tax cuts were an epic failure, and a continuation of Reaganomics which created massive federal debt. Since I was 5 years old in 1980, the Reagan and Bush tax cuts have not done anything to curb spending, but rather have created massive deficits and kicked the responsibility to future generations (i.e., my generation) to clean up the mess. Baby Boomers had the money party, and my generation will pick up the tab.
Corker's argument that a spending freeze is the right approach certainly would resonate with the Tea Party and Republicans who believe that government spending is out of control. But in the absence of specific decisions on spending, a cap would be arbitrary, dangerous, and deceptive. We are in the midst of a war in two nations overseas, and the military budget for FY2011 alone is $895 billion. Healthcare spending is likely to increase as the Boomers retire, but Corker seems to have no specific plan to rein in Medicare costs or to provide health insurance to the most vulnerable Americans. And while China and other nations make important investments in energy independence and clean energy technologies, Corker seems to have absolutely no plan to compete in the 21st century economy.
Corker's support for the overall plan suggests a lack of seriousness about deficits, especially at a time when the wage gap has exploded and middle-class Tennessee families are struggling to make ends meet. The lack of an income tax in Tennessee makes it a perfect place for wealthy Americans who want to evade responsibility, as they can easily make purchases across state lines to avoid a regressive 7% sales tax rate.
Corker is a smart and successful businessman who has used low interest rates and competitive wages (translation: hiring illegal immigrants and underpaying his employees while attacking organized labor) to become a multimillionaire. He knows that tax cuts for the wealthiest Americans won't do much to lower the nation's unemployment rate, which remains near 10%. He understands that the fundamental reason that the wealthiest Americans want lower tax rates is because they want to have more security for themselves, not for the nation's economy.
Capping spending is not the right thing to do while the nation's infrastructure is crumbling, while our jobless rate remains far too high, while the gap between rich and poor is growing and the global economy is in crisis. Now is not the time to put on the brakes. Now is the time to put a foot on the gas pedal - something that would be best accomplished through targeted, timely, and temporary government spending on things like unemployment benefits, food stamps, high-speed rail, and energy independence.
Sen. Corker's proposal is just another political stunt without enough specifics to do anything about our exploding national debt.