How Republicans Learned to Repeal Math

[Havakasha]

FRI MAY 13, 2011 AT 02:45 PM PDT
How Republicans learned to repeal math
byJed Lewison
The single biggest obstacle to getting anything done on long-term fiscal policy is that when it comes to balancing budgets, Republicans don't believe that there are two parts to the equation: revenue and spending. They think what goes out the door is the only thing that matters—not what comes in the door.
Put another way, the GOP simply doesn't believe in math.

It wasn't always this way, and Salon's Steve Kornacki highlights what he believes are the two seminal moments in defining the GOP's flawed budget arithmetic. The first was the 1980 primary between Ronald Reagan and George H. W. Bush:

In this wing of the GOP, a new economic theory offered by Arthur Laffer was taking hold: that slashing income tax rates would actually lead to higher government revenues, with lower taxes spurring economic growth and increasing Americans' taxable income. ... On the other side of the GOP ideological spectrum was Bush, representative of the "town father" wing of the GOP -- pragmatists who saw a meaningful role for government in Americans' daily lives but who were wary of bureaucracy and who saw evil in red ink. ... To Bush and his ilk, Laffer's theories were utter nonsense and a recipe for fiscal disaster. ... Bush declared: "It is impossible for Gov. Reagan to balance the budget -- an essential component of bringing down inflation -- if he is to reduce taxes by more than $220 billion over the next three years."
Flash forward to 1990 and President Bush signed into law a tax increase that conservatives—incorrectly—believed touched off a recession. It set off a rebellion inside his party and ever since then, virtually no Republicans have been willing to do anything about taxes other than lower them, and there is no sign that everything is different today.

All hope is not lost, however. If Republicans won't let revenue become a part of the discussion, then at the end of 2012, all Bush-era tax cuts will expire and we'll return to Clinton-era tax rates. After that, even without changing tax rates, tax revenue as a share of GDP will continue to rise, thanks to inflation. That might not be an ideal scenario, but it would be fiscally responsible. And short of another Democratic cave, unless Republicans agree to come to the table, it's exactl

[Havakasha]

Here is a really great read.

The entire article can be accessed from this link:
http://www.salon.com/news/politics/w...xes/index.html

How Republicans became the party of deficits
The two critical moments that marked the GOP as a party that would rather cut taxes than tame deficits
BY STEVE KORNACKI

Jack Kemp and George Bush
If the debate in today's Republican Party over how to address the deficit feels a bit one-note, it's because it is. When it comes to members of Congress, John Boehner's oft-repeated line that "We don't have a revenue problem; we have a spending problem" is the rule among Republicans (with a few notable exceptions). And when it comes to the party's presidential candidates, it's a universally held conviction. There is very little disagreement: Deficits are one of the chief threats to America -- but they can never be tackled by raising taxes; in fact, taxes must be lowered.

The prevalence of this contradictory posture in the GOP is a relatively recent phenomenon. And while the story of how it has taken hold is long and involved, it can be argued that there are really two critical turning points in the modern era.

The first came in 1980, when Republicans staged a presidential primary campaign that -- by today's standards -- was remarkable for its ideological diversity. It boiled down to a two-way race between Ronald Reagan and George H.W. Bush.

The fault lines were clear and well-defined. Reagan represented the rising Goldwater wing of the GOP -- fiercely anti-tax and anti-government, staunchly anti-Communist, and far to the right on cultural issues. In this wing of the GOP, a new economic theory offered by Arthur Laffer was taking hold: that slashing income tax rates would actually lead to higher government revenues, with lower taxes spurring economic growth and increasing Americans' taxable income. In Congress, Sen. William Roth of Delaware and Rep. Jack Kemp of New York proposed radical tax relief legislation in the late '70s, and Reagan embraced the effort in his campaign.

On the other side of the GOP ideological spectrum was Bush, representative of the "town father" wing of the GOP -- pragmatists who saw a meaningful role for government in Americans' daily lives but who were wary of bureaucracy and who saw evil in red ink. Bush separated himself from Reagan on numerous issues (for instance, Bush expressed support for the Equal Rights Amendment and for abortion rights -- both of which Reagan and the New Right fiercely opposed). But the biggest difference between them was on basic economic philosophy. To Bush and his ilk, Laffer's theories were utter nonsense and a recipe for fiscal disaster.

"This program of a tax cut may be good politics in the short run because we are so overtaxed," Bush said of Reagan's plan. "But it would be a disaster in human and economic terms."

In another speech, Bush declared: "It is impossible for Gov. Reagan to balance the budget -- an essential component of bringing down inflation -- if he is to reduce taxes by more than $220 billion over the next three years."

And in a line that haunted him for years to come, Bush told a crowd in Pittsburgh in April 1980, that Reagan was proposing "a voodoo economic policy" that couldn't work.

From today's vantage point, it's somewhat amazing to consider how well Bush did in the '80 primaries. He'd entered the race with virtually no name recognition (a former CIA director, U.N. ambassador, Republican National Committee chairman, and two-term congressman), little money and no organization. Reagan, meanwhile, had come agonizingly close to stealing the 1976 nomination from Gerald Ford -- and entered the '80 contest as the clear favorite. And yet, Bush managed to stun Reagan in the Iowa caucuses and -- very briefly -- appeared poised to repeat the feat in New Hampshire (where Reagan was saved in part by some memorable theatrics). Even after that, Bush still went on to post another upset in Pennsylvania before fading for good. His performance was so strong, in fact, that Reagan -- who had wanted to put a fellow true believer (perhaps Kemp) on the ticket -- was compelled to offer him the No. 2 slot.

But while Bush's showing was impressive, what really mattered was that Reagan and his fellow Laffer adherents had won. Within seven months of taking office, Reagan pushed through Congress and signed into law a massive reduction of tax rates. Supply-side economics was no longer just a theory; it was now the official doctrine of the Republican Party -- and the official policy of the United States. In the nearly 200 years before Reagan took office, the country had racked up a total of about $1 trillion in debt. By the end of his two terms, that number had nearly tripled. It was during the Reagan years that conservatives learned to rationalize massive deficits.