By Kelly Sloan
It seems now, writing this, that the debt ceiling skirmish has come down to two plans; one each from Republican House Speaker John Boehner and Senate Majority Leader Harry Reid. The President, despite his near-daily campaign speeches on national TV, apparently still has no plan.
Senator Reid’s is audacious only in its attempt to lay claim to any actual cuts; nearly half of the proposed CBO-adjusted $2.2 Trillion “cuts” in the Reid plan are attributable to the wind-down of the wars in Iraq and Afghanistan and represent money that was never scheduled to be spent. It is sort of like saying that I cut my personal spending for August by $450,000 by not buying a vacation home in Miami that I had no intention of buying in the first place.
Perhaps, in order to trim a bit more from the budget, Reid could follow up with a plan that would allow the United States Government to cut another few trillion by simply refusing to purchase Switzerland.
Notably though, however insincere Reid’s proposal otherwise is, it does not include the Democrats rapaciously lusted-over tax hikes either.
The Boehner plan, which comes on the heels of the Senate’s refusal to pass the “Cut, Cap and Balance” proposal that would actually begin to offer a solution to problem, is not perfect. In exchange for a $1 Trillion increase in the debt limit, it calls for a spending cap that would require Congress to spend $1 Trillion less than planned over 10 years. The problem is simply that every congress is sovereign, and therefore not bound in any meaningful way to what a previous congress decrees that it do; and we just do not know what congress will look like 6, 8, or 10 years out.
The second part, which allows the President to request another $1.5 Trillion debt limit increase following acceptance of the recommendations of a bipartisan congressional committee to cut an additional $1.8 Trillion, offers little assurance of the systemic reforms to federal entitlements that are prerequisite to any solution.
For all that, the plan does jam a fragile stick into the gears of federal spending, slowing the exponential rate of government growth witnessed over the past few years. And, critically, it too does not impede economic growth by raising taxes.
The simple fact that neither plan before congress – even the one offered by the Democrat’s – augments the tax burden is a remarkable victory for both the Republicans, and the nation.
Real reform, and a solution to the economic troubles facing the United States, will not, can not, happen absent a conservative Republican takeover of at least the Senate, and most probably the White House as well. As I pointed out after the 2010 elections, the best the GOP can realistically hope for, in the face of a government with such an ideologically dysfunctional economic philosophy, is to keep from compounding the damage.
Mere control of the House is not sufficient to advance any sort of reform-minded agenda. The House Republicans have done exactly what they were given a mandate to do – dig in, hold back the onslaught, and counter attack judiciously, while waiting for reinforcements.
The GOP has successfully held the line on taxes, and that is exactly where the battle needed to focus. As crippling and dangerous as the spending issue is – and that may yet result in a credit downgrade and a host of other economic problems – suppressing desperately needed job growth by raising taxes on the very people who can provide those jobs would only exacerbate an already precarious situation; and ironically keep actual revenues below what would be realized through tax rate cuts.
In the days leading up to the deadline, Republicans need to guard vigorously against any recidivistic urge on the part of the Democrats to re-introduce tax augmentation to the equation. The next step for Republicans, in the coming months, is to fight for a reduction in the corporate tax rate, at least to a level that is medial to, if not logically below, the rest of the industrialized world. Follow this up with a reduction in the capital gains and dividend rates, to spur investment and get money moving again.
If these measures, coupled with a reasonable attempt at keeping any kind of a leash on spending, can be accomplished, the economy will start to grow, along with jobs. Then, if conservatives can regain some ground in the Senate and retake the Presidency, we can focus on the real cuts and reforms necessary to repair the nation.
In the meantime, Republicans cannot afford to lose political perspective. There is far too much at stake.