Two Things the Right Will Not Admit About the Deficit
First, that the Obama administration’s actions have reduced, not increased, the deficit. “Indeed,” Steve Benen writes at The Maddow Blog, “the fiscal difficulties Republicans created during the Bush/Cheney era have been largely resolved, with deficits that are projected to keep shrinking [emphasis added] and debt levels that are stabilizing.”
And second, that congressional Republicans’ single-minded mania about reducing the deficit has impeded economic recovery:
Here’s the buried lede from the Congressional Budget Office, which on Tuesday released its Budget and Economic Outlook for the coming decade: D.C.’s deficit obsession has been quite effective at cutting deficits at the expense of the still-struggling economy.
“[E]conomic activity will expand slowly this year, with real GDP growing by just 1.4 percent,” according to CBO’s projections. “That slow growth reflects a combination of ongoing improvement in underlying economic factors and fiscal tightening that has already begun or is scheduled to occur-including the expiration of a 2 percentage-point cut in the Social Security payroll tax, an increase in tax rates on income above certain thresholds, and scheduled automatic reductions in federal spending. That subdued economic growth will limit businesses’ need to hire additional workers, thereby causing the unemployment rate to stay near 8 percent this year, CBO projects.”
In other words, intentional efforts to reduce annual deficits and stabilize the debt are working. But if you retrain your gaze from the government’s balance sheet to the real economy, you’ll see the impact of that austerity is fewer people working and slower growth. According to CBO, the recovery won’t really pick up steam until next year, and the economy won’t have recovered until the end of 2017, when it will reach its output potential, and unemployment will fall to 5.5 percent.
Whether they admit it or not, most Republicans are not stupid enough to believe that they can have both more deficit cutting AND more economic recovery. It’s either/or, not both:
The problem, of course, is that there are two competing issues that are incompatible — policymakers can focus on improving the nation’s finances or strengthening the recovery. Emphasizing one is detrimental to the other. If the nation wants faster growth and lower unemployment, policymakers are going to have to stop taking money out of the economy.
It’s a concept Republicans just can’t wrap their heads around.
The likelihood that they would have to compromise with Democrats to replace the sequester has led to a growing inclination among Republicans to simply pocket the savings and move on to other battles.
House Budget Committee Chairman Paul Ryan (R-Wis.) has predicted that the sequester will hit on schedule, making it easier for conservatives to approve a plan later in March to prevent a government shutdown. Tuesday, a parade of conservative lawmakers took to the House floor to argue for that outcome.
They know this will hurt the economy — the CBO just explained it to them — but they don’t care.