GOP Bets On Austerity to Lead Them to Victory
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The Fiscal Times
May 24, 2012

A year ago, House Budget Committee Chairman Paul Ryan’s political career was on an awesome upward trajectory after he rocked Washington with a budget blue print designed to slash entitlement spending and shrink the federal deficit. But Ryan’s stock began to tumble after Democrat Kathy Hochul won a special House election in a predominately Republican district in upstate New York by warning voters that Ryan’s plan would destroy Medicare as they know it.

After that, many nervous Republicans began to distance themselves from Ryan’s budget and entitlement reform plan, and for a while, the Wisconsin Republican practically went into hiding.

This year Ryan is back, stronger than ever, leading the charge for a new House-passed Republican plan calling for deep spending cuts, a restructuring of Medicare for those under the age of 55, a major overhaul of the tax system and a balanced budget by 2040. In the wake of a new focus on the European debt crisis and polls showing the deficit ranks among the top concerns of American voters, House and Senate Republicans and presidential candidate Mitt Romney have eagerly embraced the Ryan plan. Ryan, the budget leader, is now in the running to become Romney’s running mate

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DEF ICIT DECISIONS
A new Wall Street Journal/NBC News poll shows that while President Obama holds a slender four-point lead over Romney in the presidential contest, Americans by a sizable plurality say Obama has worsened the nation’s budget deficit and health-care problems.  Asked which candidate would be better equipped to handle the deficit, voters chose Romney over Obama, 57 percent to 38 percent, according to a Pew Research Center poll released last month.

“Our goal is to get the trajectory of our debt on a downward slope . . . so that we can avert a debt crisis entirely,” Ryan said last week during a Washington conference on a looming fiscal crisis or “fiscal cliff’ at the end of the year. “Now as we do this, we have to acknowledge that the status quo of these entitlement programs, which are the primary driver of this debt, needs to be reformed so that we can still fulfill the mission of these programs. That’s the awkward conversation we’re having right now.

That “awkward conversation” is between Romney and congressional Republicans on the one hand, and Obama and congressional Democrats on the other. Each side has a profoundly different notion of what needs to be done now and in the long term to get the economy back on a sustained growth pattern and to address the deficit problem.

The Obama administration and Democratic congressional leaders have repeatedly called for a “balanced” approach to economic expansion and deficit reduction -- including targeted stimulus spending, overall government belt tightening and an increase in taxes on the wealthiest Americans -- to help contain the deficit in the coming decade.  While Democrats say they are open to discussing changes in Medicare, Medicaid and other entitlement programs for the elderly and poor, they are highly critical of anything that would alter the fundamental structure of the costly health care programs.

Obama insists that while the long-term reduction of the deficit is important, the top priority should be growing the economy and getting more people back to work in the coming months. Last week, Obama pressed European leaders attending a G-8 summit in Washington to shift toward a more pro-growth policy and away from austerity to tackle a crisis that threatens to force Greece out of the eurozone and send economic shockwaves worldwide.

EURO CRISIS DILEMMA
Obama strongly indicated he was siding with Françoise Hollande, the new socialist French president, who is pushing for more economic stimulus in the recession-plagued EU instead of emphasizing belt-tightening programs spearheaded by Germany. 

The Republicans, in contrast, see the Greek crisis as a wake-up call for the U.S., believing the key to renewed economic prosperity is getting the debt and deficit under control now, coupled with additional tax relief and elimination of government regulations.

Sensing that swing voters and independents in many battleground states see it their way, Republican voters are  demanding much deeper cuts in domestic programs than Obama and the Democrats  find  acceptable. They also want to extend all the expiring Bush personal and corporate tax cuts, and provide for even more tax relief as part of an overhaul of the federal tax code, while eliminating costly tax deductions and other loopholes.

Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.