Here we go again. Republicans unveiled their "Pledge to America" Thursday and promised to restore fiscal responsibility -- doing little or nothing, as usual, to actually make that happen. In fact, the "Pledge" in its current vague form would actually worsen the deficit and drive up the debt. I never thought I'd be nostalgic for the heady days after the GOP takeover of Congress in 1995, but those guys had the courage of their convictions. Then, the "Contract with America" promised to pass a balanced budget amendment that would have required that the budget be balanced unless three-fifths of Congress gave itself a pass. Sure, proposing a balanced budget amendment is almost always a gimmick and a substitute for real action, but still. Sixteen years later, the Republicans' earnest new "Pledge" doesn't even shoot that high, substituting airy talk about fiscal "responsibility," fiscal "crisis," fiscal "challenges" and fiscal "discipline," "stability" and "decisions" for any real plan to do something about the nation's looming, well, fiscal "train wreck."
In 1995 the Republicans meant business -- Newt Gingrich's in-your-face House passed the balanced budget amendment by more than the required two-thirds vote (300-132), and even Bob Dole's more measured Senate came within two votes of approving it -- the vote was 65-32, with 14 Democrats voting yes (including Joe Biden!) and two Republicans holding out -- Dole and Oregon moderate Mark Hatfield. Really just Hatfield, since Dole voted no to preserve the procedural option to bring it up again. It's probable that the three-fourths of the states necessary to ratify the amendment would never have done so (since it would have eventually slashed the federal dollars they rely on to balance their own budgets). But imagine for a moment what a real balanced budget requirement -- no gimmicks and no escape clauses except for an economic crisis -- would have done to the Bush tax cuts, the Medicare prescription drug program, Social Security and so on. We'd be living on a different sort of fiscal planet -- quite possibly a better one, but one that many of those who voted so blithely for the amendment would not have liked one little bit.
The 1995 BBA would have required that the budget be balanced within seven years, and Republicans, who gave President Clinton not a single vote for his brave deficit-reduction plan two years earlier, were contemptuous of the president and confident that the death of the amendment would, in Gingrich's words, guarantee them victory at the polls in 1996. Clinton went on to whip Dole in the 1996 presidential race, and in 1998 the budget was balanced. This wasn't due to any amendment or gimmick, but luck and hard work. It took a booming economy and two deficit-reduction deals: the first President Bush's in 1990 and Clinton's in 1993, both of which Gingrich and most Republicans had rejected as destructive and wrongheaded.
Now come the Republicans of 2010 to lecture the nation again on fiscal responsibility, which they honor by digging the deficit hole even deeper. They would extend the Bush tax cuts for everybody, at a cost of about $4 trillion over the next 10 years, and then throw in a bit of dirt to try to fill the hole by whacking domestic discretionary programs, which account for all of about 17.5 percent of federal spending and are by any measure not the problem. You could certainly make a case that freezing domestic programs is the sort of tough medicine it will take to begin turning things around. But you can't help but wonder how Republicans -- who have pretty much proven themselves as pork-happy as any equivalent number of Democrats -- will react if they have to make good on this pledge by slashing the very programs they helped fatten when they ran Congress. Conveniently, the "Pledge" doesn't specify where or what to cut, and that allows anyone who signs on to imagine that his or her program won't be.
Democrats shouldn't get a pass -- where's their plan? Obama has done little more than appoint a deficit commission and franchise the entire effort to them. But at least Democrats have been doing the heavy lifting to try to keep the economy out of the abyss. It's disappointing that the GOP Pledge slimes the Troubled Asset Relief Plan (TARP), which was proposed by President Bush, continued by Obama and now -- according to The Financial Times Thursday -- is on track to cost less than $66 billion and perhaps even turn an overall profit. But apparently it's politically irresistible to bash "bailouts" once the economy is back on a safe footing.
And one more thing: The Pledge promises to freeze government hiring for non-security employees, implying that government jobs are out of control. But let's take a look at the numbers, shall we? There are fewer federal employees now (about 2.1 million in 2009, according to the Office of Personnel Management) than at the end of the Reagan administration (2.2 million). Say what you will about President Clinton's declaration that "the era of big government is over," but federal jobs fell on his watch, from 2.2 million to 1.8 million. Guess when they started to go back up again? In 2001, when President George W. Bush took office, jobs rose a bit over the level in Clinton's last year and rose to 2 million by the time he left office. It is always popular to beat up on federal employees, but in terms of spending -- not the problem.
Enough about the Pledge. Ylan Q. Mui's front-page story in The Washington Post last week explained how middle class Americans who've been relying on the stock market to fund their children's college costs and/or their own retirement are in trouble, since market returns have been so bad for years now. This isn't news to anyone with a stock portfolio or a 401(k), but it made me wonder (again) why some think it's a good idea to privatize Social Security and gamble Americans' retirement security on the market. Over the long, long haul, of course, the market has been a pretty good wealth generator. But people don't retire over the long, long haul. If you happen to be retiring this year, your portfolio has been suffering through a lost decade. Two numbers pretty much tell the story:
On Sept. 22, 2000, the Dow closed at 10,847. On Sept. 22, 2010, the Dow closed at 10,662.
Of coursed the market shot up during those 10 years, and if you'd timed it right, you could have made good money; ditto if your individual stocks rose while others fell -- the Dow is an imperfect measure and an average, of course. But for buy-and-hold investors with index funds, the last 10 years have made Social Security look good just the way it is.
George Hager is a member of the USA Today editorial board.
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