4 Things Missing From the 'Pledge To America'

Republicans are just as bad at budget math as Democrats.

By SHARE

The theme is compelling, and certainly timely: Shrink government, get spending under control, and force Congress to do more with less, just like the rest of America. But like most campaign propaganda, the Republicans' "Pledge To America" glosses over the nation's biggest problems and largely substitutes slogans for solutions. Here's what's missing from the pledge:

A plan to reduce the national debt. There's happy talk about putting caps on "discretionary" government spending (with the usual exceptions for seniors, veterans, and the military), enacting a government hiring freeze, and cutting Congress's budget. But that's not really what's driving up the national debt. Every politician knows that the biggest budget-busters are Medicare, Medicaid, and Social Security. The Republicans actually have a coherent starter plan for taking on these spending monsters, called A Roadmap For America's Future, developed by Rep. Paul Ryan of Wisconsin. But you won't find any mention of the "Roadmap" in the Pledge To America, because it's not what voters want to hear. Ryan's plan, for example, would gradually reduce Social Security benefits, raise the eligibility age for Medicare, and replace some Medicare benefits with vouchers that seniors would use to seek care in the private market. Try campaigning on that.

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A way to pay for tax cuts. Everybody in America wants lower taxes, which is why campaigning politicians routinely promise them. A key plank of the Pledge To America is the permanent extension of the Bush tax cuts, which would add roughly $370 billion a year to the national debt. But for all the talk about responsible spending, there's no detail about what to cut in order to offset the cost of ongoing tax cuts.

One common argument is that lower taxes will boost economic activity and generate more government revenue, not less, since profits and incomes will soar. But that's not what happened after the Bush tax cuts of 2001 and 2003. When Bush took office in 2001, the federal budget was essentially balanced and the total national debt was $5.8 trillion. By 2009, when Obama took office, the annual deficit was $641 billion and the total debt was $11.9 trillion. The nonpartisan Tax Policy Center estimates that if the Bush tax cuts had never been enacted, the federal debt would be 30 percent lower today. Unless there are unpublished footnotes, the "Pledge" would continue the same pattern of paying for tax cuts with borrowed money.

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A way to lower healthcare costs. Republicans want to repeal the Democrats' healthcare reform law and pass their own, or failing that, pass new legislation that would rein in medical liability, allow Americans to purchase healthcare in any state, bulk up health-savings accounts, and do a few other things. Republicans are targeting a huge Democratic vulnerability: The failure of the huge healthcare reform law to slow spiraling costs. But the Republican proposals wouldn't address the main problem either.

Before healthcare reform, medical costs were already rising about 5 times as much as overall inflation, and that general trend seems likely to continue. The reasons are complicated, but the biggest problems are that patients don't have accurate pricing information, like they do at Wal-Mart or Target, they don't directly bear the cost of the choices they make, and they throw cost-benefit calculations out the window because it's healthcare, after all. The Republican proposals wouldn't do anything to improve on that.

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A true understanding of what ails the economy. Washington politicians, Democrat and Republican alike, think that government policies, or lack of them, are the biggest factor in the economy. Guess again. The U.S. economy isn't gasping for air because of tax policy or too much regulation or stimulus spending. The biggest problem is a lack of jobs, which are scarce because most companies aren't hiring. They're not hiring because business is slow. Business is slow because consumers are reluctant to spend money. Consumers are reluctant to spend money because they've lost trillions in household wealth, they're drowning in debt, and they're not sure if they'll have a job next year. Ideologues create cause-and-effect relationships that support whatever policies they favor, but what we're enduring is really just the business cycle at one of its most uncomfortable moments. It tends to happen no matter what the government does.

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When it works, government helps at the margins. It's now fashionable to discredit the $800 billion stimulus package passed in 2009, yet the nonpartisan Congressional Budget Office estimates that it boosted GDP by a meaningful amount and helped keep somewhere between 1.4 million and 3.3 million people employed. Actions by the Federal Reserve have probably helped even more. The Democrats made a big mistake in early 2009 by underestimating the severity of the recession and making naïve predictions about what the stimulus would accomplish. But that doesn't mean the government screwed up. It just means that politicians overpromised and underdelivered. Now it's happening again.