Who's serious about reducing the deficit?

Posted on December 15, 2010


Cut Medicare payments and tweak Social Security. Cut defense spending by directly reducing spending and getting out of Iraq and Afghanistan. Raise income, corporate, and payroll taxes. These issues essentially define what it means to be serious about eliminating the federal deficit, because all of them need to happen before the deficit can truly be brought under control. Serious people can debate how much of each is necessary and where to make the largest changes, but anyone who rejects even one of the issues is either ignorant of the scale of the problem, blindly beholden to their preferred ideology, or lying.

Yesterday we discussed these issues. Today we look in greater detail at the public statements of various individuals and organizations to see if they are actually serious about cutting the deficit, or if they just claim to be serious.

The Republican Party

Since President Bush II presided over a massive expansion of government during his eight years in office, the GOP has, in most respects, become the party of “spend and don’t tax.” This analysis relies largely on two documents – the2008 GOP platform and the 2010 guideline document called “A Pledge to America” (APtA).

  • Cutting Medicare Benefits: APtA does not directly discuss cutting Medicare benefits, but there are a couple of statements that, combined, provide some information about the GOP’s view of Medicare. The section on repealing the health care legislation discusses the costs of the legislation and how it relates to Medicare, specifically saying that “the new health care law includes… $528.5 billion in Medicare cuts, which will be used to create new programs not related to seniors” and that the cuts “will fall squarely on the backs of seniors.” The implication is that the GOP would not be willing to cut Medicare in a way that forces millions of seniors out of Medicare, but the APtA is not more specificThe 2008 platform commits the GOP to fixing Medicare by “rewarding quality care, promoting competition, [and] eliminating waste, fraud, and abuse.” In the past, such vague language has meant that the GOP is interested in cutting Medicare benefits, but it is unclear whether this would be sufficient to effectively address Medicare’s effect on the deficit.
    Judgment: Unclear
  • Cutting Social Security Benefits: APtA mentions Social Security only twice, and in neither case does it discuss benefit cuts. The 2008 platform, however, has more information. For example, while the platform says that current and near retirees shouldn’t be affected by Social Security reforms, it calls for “comprehensive reform” that would create “personal investment accounts which are distinct from and supplemental to the overall Social Security system.” Shifting Social Security from a public system to a largely private system based on “personal investment accounts” would dramatically cut spending on Social Security.
    Judgment: Serious
  • Cutting Defense Spending: According to APtA, the GOP is committed to doing “all that is needed to protect our homeland, support our troops and the veterans who have so honorably served us…” and to “ensure critical funding is restored to protect the U.S. homeland and our allies from missile threats from rogue states such as Iran and North Korea.” The first statement has no dollar amount expressed, but the language implies no limits. The second statement goes further and calls for putting missile defense money back into the budget, a clear increase in the defense budget.The 2008 platform goes much farther, however, calling for the GOP to “significantly increase the size of our Armed Forces,” and an expansion in the size of the armed forces is incompatible with cutting defense spending.
    Judgment: Not Serious
  • Exiting Iraq and Afghanistan: The APtA doesn’t mention US forces in Iraq and Afghanistan at all except in relation to Iran. The 2008 platform, however, says that the GOP “[owes] the commitment that American forces will leave [Iraq] in victory and with honor. That outcome is too critical to our own national security to be jeopardized by artificial or politically inspired timetables.” This is clearly an open-ended commitment, a position that is incompatible with exiting Iraq (and presumably Afghanistan) in time period appropriate for deficit reduction.
    Judgment: Not Serious
  • Raising Taxes: According to APtA, the GOP plans prevent the Bush-era tax cuts from expiring in order to “help the economy by permanently stopping all tax increases, currently scheduled to take effect January 1, 2011.” Furthermore, the GOP will lower small business taxes by allowing “small business owners to take a tax deduction equal to 20 percent of their business income.” The 2008 platform said essentially the same things but with more detail. These policies are explicitly against the need to increase taxes.
    Judgment: Not Serious

The official stated positions of the Republican Party are contrary to deficit elimination on three of five issues and unclear on a fourth. Only on Social Security is the Republican Party actually serious about doing what must be done to eliminate the deficit. As a result, the Republican Party must be considered not serious about eliminating the deficit.

The Democratic Party

The Democratic Party has been long branded the “tax and spend” party, but in recent years it too has morphed somewhat to a “spend but don’t tax” position. The party website has an issues page where an overview of the party’s views on all the issues below is available. The 2008 Democratic platform document has more detail.

  • Cutting Medicare Benefits: The Democratic party website touts improvements made to Medicare in the health care bill that “will improve care across the board, reduce fraud, and finally close the hole in Medicare drug coverage” as well as provide “free coverage for certain preventive services.” The 2008 platform goes further, however, saying that Democrats “will protect and strengthen Medicare by cutting costs, protecting seniors from fraud, and fixing Medicare’s prescription drug program.” While all these things are good to do and will help Medicare, none of them are going to be sufficient to truly fix Medicare – benefit cuts will also be required, and there appears to be no indication that the Democrats will be willing to take this step.
    Judgment: Not Serious
  • Cutting Social Security Benefits: The website also touts Democratic successes in stopping “Republican plans to privatize Social Security.” In addition, the website touts a February 2009 Recovery Act payment to Social Security recipients that added directly to the deficit in 2009. While opposing privatization is not inherently in opposition to cutting Social Security benefits, adding to the deficit directly with one-time payments is.The 2008 platform calls for “safeguarding” and “strengthening” Social Security, and for ending penalties for public service, all things that imply a rejection of Social Security benefit cuts and may indicate actual increases.
    Judgment: Not Serious
  • Cutting Defense Spending: The party website calls for “modernizing” the military while also “eliminating outdated programs and unnecessary spending.” The 2008 platform goes further, calling for the government to “renew the defense R&D system” and “increase the size of the Army by 65,000 troops and the Marines by 27,000 troops.” While modernizing and weapons research are not inherently budget busters, boosting the number of soldiers in the military is.
    Judgment: Not Serious
  • Exiting Iraq and Afghanistan: The party website touts Obama’s removal of 140,000 troops from Iraq and the “ending the US combat presence,” but regardless of whether the remaining troops will be funded using deficit “supplemental” funding of rolled into the defense budget, leaving troops in Iraq clearly isn’t “exiting” Iraq. And the “surge” of troops into Afghanistan with an uncertain timetable for leaving again also doesn’t qualify as exiting Afghanistan.
    Judgment: Not Serious
  • Raising Taxes: The Democrats claim to be for “ending tax loopholes that let corporations hide profits overseas,” “tax cuts to small businesses,” and providing alternative energy tax credits. Closing loopholes increases taxes, small business cuts decreases taxes, and alternative energy tax credits would decrease taxes, but it is unclear how much. None of these issues directly relate to payroll or income taxes, which represent over 80% of federal taxes.However, the 2008 platform talks about eliminating federal income taxes for millions of seniors, exempting start-ups from capital gains taxes, ending “tax penalties on married families,” and offering “additional tax cuts for middle class families” beyond refusing to raise taxes for households making less than $250,000 per year. And while closing corporate loopholes and increasing Social Security payroll taxes on the wealthy will offset some of these issues, the additional revenues will be small compared to what is lost in the cuts described above.
    Judgment: Not Serious

The official stated positions of the Democratic Party are contrary to deficit elimination in all five issues and so the Democrats must be considered not serious about the deficit.

The Libertarian Party

The Libertarian Party focuses on small government and maximal personal freedom. They wrote a platform for the 2010 election.

  • Cutting Medicare Benefits: The 2010 platform claims that retirement planning is an individual responsibility, and that the Libertarians support “restoring and reviving a free market health care system.” Combined, these two positions imply that the Libertarians would eliminate Medicare entirely.
    Judgment: Serious
  • Cutting Social Security Benefits: The 2010 platform says “Libertarians would
    phase out the current government-sponsored Social Security system and transition to a private
    voluntary system.”
    Judgment: Serious
  • Cutting Defense Spending: The 2010 platform calls for “the maintenance of a sufficient military to defend the United States against aggression.” Such a military would have few if any foreign bases, would require little if any deep water navy, and could support a radical reduction in air and strategic forces. All of these produce a major reduction in defense spending.
    Judgment: Serious
  • Exiting Iraq and Afghanistan: The 2010 platform calls for the US to “avoid entangling alliances and abandon its attempts to act as policeman for the world.” Given that our actions in Iraq and Afghanistan could be interpreted as “policeman” roles, this implies exiting both nations.
    Judgment: Serious
  • Raising Taxes: The 2010 platform says that the Libertarians “support the passage of a “Balanced Budget Amendment” to the U.S. Constitution, provided that the budget is balanced exclusively by cutting expenditures, and not by raising taxes.”
    Judgment: Not Serious

The Libertarian Party is serious on four of the five issues above. The last, balancing the budget without raising taxes, is technically not serious but requires a major caveat – the Libertarians would slash so much spending that taxes would naturally drop dramatically as well. Because of this, the Libertarian Party has to be considered serious about the deficit.

The Green Party

The Green Party initially created a detailed platform in 2004, but have since updated certain issues.

  • Cutting Medicare Benefits: The 2004 platform says that the Greens would “pursue savings and cuts from abundant waste and fraud, eliminate unnecessary services that benefit providers more than patients, and rein in pharmaceutical industry price-gouging.” However, there is no call for benefit cuts for anyone in the platform.
    Judgment: Not Serious
  • Cutting Social Security Benefits: The 2004 platform specifically calls for maintaining Social Security’s integrity, opposes privatization, and expanding effectiveness. These may, or may not, include cuts to Social Security Benefits.
    Judgment: Unclear
  • Cutting Defense Spending: The 2004 platform calls for foreign military bases to be shut down and demands that the US cuts the defense budget by half.
    Judgment: Serious
  • Exiting Iraq and Afghanistan: The 2004 platform doesn’t mention either Iraq or Afghanistan, but two different recommended 2010 updates call for an “immediate cessation of US combat operations in Iraq and Afghanistan” and a complete withdrawal of military forces and bases from both nations.
    Judgment: Serious
  • Raising Taxes: The 2004 platform and 2010 recommendations suggest raising both Medicare and Social Security taxes by applying payroll taxes to all income, not just the $110k, boosting corporate taxes and taxes on the wealthy, imposing a carbon tax, and more.
    Judgment: Serious

The Green Party is serious about three of five issues, unclear on a fourth, and not serious on the last. However, given the willingness to increase taxes and to radically cut defense spending, it’s entirely possible that the Green Party’s unwillingness to cut Medicare benefits would be more than offset by cuts in defense and additional tax revenues. For this reason the Green Party is considered serious about the deficit.

In conclusion, these four political parties take eliminating the federal deficit with varying degrees of seriousness. The Democrats take the deficit the least seriously, the Republicans slightly more, the Greens even more, and the Libertarians the most. This doesn’t take into account the political palatability of the solutions into account, however, and so it’s possible to make an argument that the Green approach to the deficit is the most serious because it’s more likely to be acceptable to voters than the Libertarian approach.

Political VIPs

There are a slew of high-flying political VIPs who also claim to care about the deficit, but in most cases they’re no more serious than the party or special interest they represent.

  • Nancy Pelosi:Pelosi’s statements at her House website are not clear on the idea of Medicare or Social Security cuts, support the withdrawal of forces from Iraq and Afghanistan, and are generally supportive of lowered spending at the Pentagon. However, she appears to be enamored of lower taxes, meaning that on balance Nancy Pelosi is not serious about tackling the deficit
  • John Boehner: Boehner, soon to be Speaker of the House, is very good at making his views on his House website so vague as to be nearly meaningless on Medicare and Social Security. However, as one of the primary architects of “A Pledge to America,” that document’s lack of seriousness on deficit reduction, along with Boehner’s admitted desire to cut taxes, means that John Boehner is not serious about eliminating the deficit.
  • Harry Reid: Reid has worked to increase the size of the military and lower taxes when what is necessary to address the deficit is lower defense spending and higher taxes. His stance on Social Security and Medicare benefit cuts are unclear based on his Senate website, but he does support withdrawal from Iraq and Afghanistan. Because of his stance on defense spending and taxes, Harry Reid is not serious about tackling the deficit.
  • Mitch McConnell:According to McConnell’s website, he is opposed to cutting Medicare benefits and has no opinion whatsoever on Social Security. He opposes tax increases but doesn’t specifically advocate cuts on his website, but he does oppose any specific timetable to withdraw from Afghanistan. As such, Mitch McConnell is not serious about eliminating the deficit.
  • Jim DeMint: DeMint’s website indicates that he supports lower taxes, wants to privatize Medicare and Social Security, and supports high levels of defense spending. His statements about military “honor” imply an unwillingness to withdraw from Iraq or Afghanistan as described “A Pledge to America,” even though DeMint was not officially associated with its writing. From his stated position, Jim DeMint is not serious about eliminating the deficit.
  • Rand Paul: Paul’s stated positions don’t match up with his rhetoric on reducing the deficit. While Paul would like to discuss changes to Medicare and Social Security, he believes in increasing defense spending and is unwilling to consider tax increases. Therefore, Rand Paul is not serious about tackling the deficit.
President Barack Obama

The President is in a unique position with respect to his ability to influence the deficit. First, he’s a member of the Democratic Party and is allied with members of his party in Congress. Just looking at his allies and party would suggest that his positions on reducing the deficit is not serious. After all, the Democratic Party’s position on the deficit was the least serious of all the parties and both Senator Reid and Congresswoman Pelosi are also not serious about eliminating the deficit.

Obama has also produced a Fiscal Year 2011 Budget that represents his national priorities. It’s easy enough to look at the summary tables and see that deficits are reduced by not eliminated between 2011 and 2020. If Obama were some other president, this might have been enough to declare him as being not serious about the deficit, but Obama has done something that most other Presidents haven’t – he created the National Commission on Fiscal Responsibility and Reform (NCFRR) specifically to investigate how best to eliminate the deficit.

And what does the NCFRR recommend? In essence, they recommend cutting all spending instead of just defense spending, raising taxes by eliminating loopholes and deductions, cutting Social Security benefits by raising the retirement age and other cuts, cutting Medicare benefits by limiting Medigap plans and eliminating dual-eligibility (with Medicaid) and other cuts, and eliminating “supplemental” spending requests by building such spending into the budget explicitly. There are many details in the official plan, but on the face of it, it appears to meet all the requirements of being serious about reducing and ultimately eliminating the deficit.

As for what this says with respect to President Obama’s seriousness about eliminating the deficit, it’s probably fair to say that it’s unclear.

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