Current Republicans are NOT Fiscal Conservatives

I have heard a number of people, including George Will, talk about President Obama being a bit to the right of Dwight Eisenhower and Richard Nixon. I agree, Obama is not a particularly progressive president and seems far too willing to give too much away in negotiating to reach a common area. That does not mean he is not to be applauded for compromise in an age of total non-compromise by the extreme right, he just over does it. The stimulus package should have been far greater than it was to get the economy going, and public works for our infrastructure should be part of our economic recovery. And in no way should we be reducing the safety net for society in terms of is now called entitlements. Reducing these takes the economy the wrong direction as well.

The whole area of deficit reduction, which I have written about being is a red herring. We need to create jobs and get the economy running before reducing debt and he should know that. One writer noted that Reagan won his election by claiming the national debt was at all time high of 1 trillion; not it is 13.64 trillion, and who created all that debt? Primarily Republicans, including Reagan and those who lead into undeclared wars that congress would have to approve. $10/84 trillion in debt lies in the hands of the Reagan and the two Bush administrations; we only found relief in the Clinton years which George W immediately squandered.

The same writer, Tim Hogan wrote about a conversation he had with Karl Rove about a dozen years ago when Hogan was concerned about the national debt. Rove said, “Deficits don’t matter!” When pressed about the matter in relation to our experience as a nation in the 1990’s. Rove replied, “No no, no, no…What I mean is that the people don’t vote on deficits. That’s why they don’t matter.” Scary reasoning.

In the 2002 elections at a discussion in the Vice President’s office O’Neil was showing how the numbers were growing the deficit which threatened the economy. Cheney cut him off saying, “Reagan proved deficits don’t matter… We won the midterms. This is our due.” A month later Paul O’Neil was fired as Bush’s first Treasury Secretary.

Here are some charts  and comments that Cate Long had in an article Republican fiscal conservatism is a myth.

Government has expanded tremendously at every level in the United States over the last several decades. Expenditures have risen; constituencies have gained new subsidies; and loads of debt has been taken on. It’s unstable and it’s time to go on a diet.

The Republican party declares that they are the party of fiscal conservatism which has been beating back the profligate Democrat party. Here is the war cry from their 2008 party platform:

The other party wants more government control over people’s lives and earnings; Republicans do not.  The other party wants to continue pork barrel politics; we are disgusted by it, no matter who practices it.  The other party wants to ignore fiscal problems while squandering billions on ineffective programs; we are determined to end that waste.  The entrenched culture of official Washington -– an intrusive tax-and-spend liberalism -– remains a formidable foe, but we will confront and ultimately defeat it.

I wondered if the Republicans’ charge was accurate or if both parties had a tendency to spend tax dollars to buy support. Was there any quantitative evidence that Republicans were running tight fiscal ships? Looking at the finances of the states might create a better understanding. All states except Vermont must end the year with a balanced budget. Many of them require reserves in the form of rainy day funds. I pulled data from the National Association of State Budget Officers Fiscal Survey of the States, Fall 2011 covering “Total Balances and Balances as a Percentage of Expenditures, Fiscal 2010 to Fiscal 2012″. This is basically what states have left over at the end of the fiscal year. What I found is that both parties can practice sound fiscal policies or run very close to the edge of fiscal catastrophe. Republicans have no lock on tight fiscal ships.

The top chart shows that three of the ten states with the highest year-end budget surpluses and rainy day funds were controlled by Democrats and seven were controlled by Republicans. The four states with the biggest year-end balances are energy-producing states, led by Alaska. The guaranteed energy revenues that these four states enjoy would likely lead to big surpluses regardless of which party ran the state.

The chart below shows the ten states with the weakest year-end fiscal position. Six of the ten were controlled by Republicans. This data shows that a state can be Republican-controlled and still skirt the edge of the economic precipice.

The nation has really big fiscal problems to face; rhetoric and myths will not solve our problems. We need government but it needs to be run wisely and efficiently. Both parties seem to have been fiscally imprudent. There is likely to be myths about the Democrat party, too. Let’s find them and debunk and get on to rebuilding our nation.

More data: Reagan tripled the deficit from $997 billion to $2.85 trillion the highest percentage ever. At that rate it would be $75 trillion today. He raised the debt ceiling 18 times more than Carter, Clinton and Obama combined. He lowered taxes on the rich and then spend like mad to outdo the Russians in the cold war. He bailed out Chrsler and the saving-and-loan industry; $150 to the S&L’s were never repaid.

Eric Black this year also questioned Paul Ryan’s fiscal conservativeness. He writes, Pre-Reagan, the term "fiscal conservative" referred to those who wanted to balance the budget or at least hold down the accumulation of debt. Since Reagan, "fiscal conservatives" are those who always favor tax cuts, and the cuts generally turn out to make the tax code less progressive. This fits Ryan and Romney both. They have lots of idea for reducing government spending, especially on programs that benefit the poor, the elderly and the sick. (The one exception is military spending -- which I personally try to avoid calling "defense" spending since the United States maintains a military establishment far far far in excess of anything that could reasonably be called necessary to defend the country from any real threat to “national security” as that term would be defined by any other more normal country.) The Ryan budget plan cuts pretty much every government function except military.

If you made those cuts and left the tax code alone, you would shrink the deficit reasonably steadily and eventually get to balance. If, instead of leaving the tax code alone, you phased in some small increases in top tax rates, or eliminated some loopholes and deductions, or both, you could get to a surplus and actually start to pay down the debt that conservatives are always complaining about.

We need some real progressives with sound economic policy to get this country going again with good middle class jobs, and revitalized infrastructure and care of those in need.