Republicans Dismiss Big Rescue Efforts

Republicans Dismiss Big Rescue Efforts

Printer-friendly version
a a
Type Size: Small

If Republicans were back in control, what would they be doing to revive the economy? GOP leaders have been notoriously short on specifics, but their broad themes suggest that Republicans wouldn’t want the government to do much at all except get out of the way.

That is the heart of the "two-point" program outlined Wednesday by House Republican leader John Boehner, R-Ohio. Point one: extend all the Bush tax cuts and block President Obama’s plan to let the tax cuts expire for households with annual incomes above $250,000.

Point two: stop President Obama’s stimulus program in its tracks, and then go a step further by cutting 20 percent out of all non-defense and non-security discretionary spending.

Under Boehner’s plan, the federal government would reduce spending for non-security programs back to the levels in 2008. Republican officials estimate that the move would save $100 billion next year. But because Republicans would not touch defense, homeland security, foreign aid, veterans programs or Social Security and Medicare, all of the savings would have to be made in a narrow slice of the budget representing $478 billion of overall spending.

Cuts of 20 percent would be unprecedented, and would probably be politically impossible even for Republicans. They would halt popular projects around the country and force cutbacks at agencies like NASA that have big operations in Republican districts. They could also diminish basic government services.

"Cutting money from the IRS sounds good, but you would have a lot of very mad people who couldn’t get anyone at the IRS to answer their calls," remarked J.D. Foster, a senior fellow at the Heritage Foundation and a former senior budget official under President George W. Bush.

Republicans haven’t offered any clue about where all the cuts would occur, except to say they would stop the government from using any money not yet spent under the $814 billion stimulus program that Congress passed last year.

During his economic speech in Cleveland Wednesday, Obama sharply criticized Boehner and the Republican approach. "There were no new policies from Mr. Boehner," Obama said. "There were no new ideas. There was just the same philosophy that we had already tried during the decade that they were in power -- the same philosophy that led to this mess in the first place: Cut more taxes for millionaires and cut more rules for corporations."

If Congress actually did cut spending by $100 billion, the Republican plan would still not make a dent in the deficit. Extending the Bush tax cuts for top earners would reduce revenues by almost $70 billion next year alone.

Foster and other conservative analysts argue that the government shouldn’t even be bothering with temporary stimulus measures. "We need to get back to policy fundamentals, and stop with the gimmickry like Cash for Clunkers and the homebuyers' tax credit," Foster said. "What’s holding the economy back right now is one thing and one thing alone, and that’s a lack of confidence."

Douglas Holtz-Eakin, president of American Action Forum, a Republican think tank, echoed that view. "The right way to think about this is not to think about stimulus," said Holtz-Eakin, a former director of the Congressional Budget Office. "What you ought to think about are the policies that you should be doing for the long-term anyway. The notion of quick fix money policies is a mistake."

Holtz-Eakin dismissed the conclusion by the CBO and many private economists, who contend that the stimulus programs did indeed boost economic growth and preserved as many as 3 million jobs. Those conclusions, he said, are based on macroeconomic models that are simply programmed to conclude that stimulus measures produce growth.

Scores of leading economists disagree, from Mark Zandi of Moody’s Analytic to forecasters at Goldman Sachs, Morgan Stanley and Macroeconomic Advisers.

To be sure, Republicans have other items on their economic agenda. Two weeks ago, Boehner offered a "five step" list. That list called for rolling back the new health care reform law; blocking Democratic bills to impose "cap-and-trade" restrictions on greenhouse gases; blocking a Democrat "card-check" bill sought by organized labor; and firing Treasury Secretary Timothy Geithner and Lawrence Summers, director of the White House National Economic Council.

But Foster, at the Heritage Foundation, acknowledged that the GOP approach wouldn’t relieve voters’ frustration quickly. "They would need patience, and the politicians would need patience," Foster said. "But it’s a like a doctor with a patient. If you’re giving a treatment, you have to give it time to work."

Click here to visit the Vault home page.