I am glad to see Republicans are going back to their version of being deficit hawks

Republicans ran on a “platform” of fiscal restraint and being deficit hawks.  Without getting into a debate about whether tax cuts are “spending” (from a budget perspective, whether you have less revenue coming in or are spending more money, the consequences to the budget are the same–more deficits), so far all of the Republicans proposals will not only not reign in the deficit but will make it worse.

First, let’s start with the tax cuts:  Obama and the Democrats are proposing to make the Bush tax cuts for people making $250K and less permanent and let the tax cuts on income above $250k / year expireThe Republicans propose to make all of the tax cuts permanent. According to the Congressional Research Service (pp. 12-13), the cost of Republicans plan (over the cost of the Obama plan) will increase our deficit by $818bn ($678bn in  reduced tax revenue + $140bn in increased debt service)over the next 10 years alone

Personally, I think we should allow the tax cuts on the top earners to expire and extend the middle class tax cuts only temporarily.  Eventually, we should return to the Clinton-era tax rates.

Second, the Republicans are proposing to repeal the $500bn reduction in future Medicare spending included in the Health Care Reform bill.  It should be made clear that under the HCR Medicare spending won’t be reduced.  Rather, the increases in Medicare spending will be $500bn less than was the law before.  According to Politifact:

It’s true the federal government will reduce the growth of future spending on Medicare over the next decade. The reforms to Medicare will result in $500 billion in savings over 10 years. But the law does not eliminate $500 billion out of the current budget for Medicare. There are no cuts to guaranteed Medicare benefits.

In fact, spending on Medicare will actually increase over the next decade, reaching $845 billion in 2019, up from $499 billion in actual spending in 2009, according to the nonprofit Kaiser Family Foundation. Without reform, Medicare spending in 2019 was projected to be $943 billion. . . .

The $500 billion in savings will come from a mix: Higher insurance premiums for wealthier seniors, reductions in payments for Medicare Advantage plans, a new panel to oversee reimbursement rates, and smaller-than-expected increases in payment rates to hospitals and other service providers each year.

So right off the bat, the Republican policies, if enacted, would increase our federal deficit by almost $1.4tn over the next 10 years and much more after that.  In the coming days, I will detail where we will need to cut if we want to reduce future deficits.  They are proposing only to reduce spending by $100bn / year.  Therefore, their policies, if all enacted (including the spending cuts), would still increase the deficit by $400bn over the next 10 years and that assumes their fanciful cuts of $100bn / year.  They have still not come forward with a credible proposal of where those $100bn are coming from.  It seems unlikely they will be able to do so since they have said that cuts to defense spending is off the table as are cuts to social security benefits and Medicare.

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One Response to “I am glad to see Republicans are going back to their version of being deficit hawks”

  1. Risch, Crapo co-requesting $818 million in 213 earmarks | Elect None Of The Above Politics and Views Says:

    […] I am glad to see Republicans are going back to their version of … […]

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