Sunday, May 23, 2010

Checking Under the Hood

Watching Libertarians and conservative Republicans these days is a little like sitting down in the driver's seat of a fancy new car in a showroom. It looks great and has that brand new car smell that every one likes. It even has a great price. Everything seems like a go until you check under the hood and find out there’s no engine. All of a sudden that great price doesn’t seem so attractive anymore. Without even turning the ignition key you get the feeling that you were taken for a ride.

Rand Paul’s recent win in the Kentucky Republican primary is a case in point. Nice car, great price, nothing under the hood. Forget for a moment Paul’s brain fart on the air when he admitted what almost every politician and citizen south of the Mason Dixon line has felt for nearly five decades: that the Civil Rights Act of 1964 went way too far for their tastes. No, the real issue isn’t whether Paul is a racial bigot – for the record I don’t believe he is, just sadly one of those people who naively believes the market can root out racism if it’s given half a chance, as though it hasn’t been given every chance and failed miserably at it. For me the real issue with Paul and others like him is that they say all the right things, all the while knowing they can’t deliver on any of them.

I mean, seriously, how much political courage does it take to stand in front of a mic and announce you’re going to cut taxes and reduce the size of government. One might as well start singing the words to “God Bless America” and start handing out free candy to children. Like the fancy car, we’ve been titillated by the glitz, now we want the vroom. To coin a phrase from an old commercial, “Where’s the beef?”

Except there is no beef; just rhetoric. And Paul and the Right know it. With all the talk about cutting spending in Washington and reducing the deficit, the facts are that there is very little left in the budget that isn’t already tied up. Defense spending, entitlements and other mandatory spending account for almost 80 percent of all federal outlays, with social security taking the biggest bite. Of the $3.55 trillion budget, there is a whopping $713 billion available in discretionary spending. Assuming you slash all of that – and by the way that would include eliminating the departments of homeland security, health and human services, transportation (which includes the FAA), EPA, education, justice, and all of NASA – you would still be just over $400 billion in the red. Even if we pulled out of Iraq today, we would not make a significant dent in the deficit. Unless revenue – called receipts – increases significantly over the next few years, there will be a sizable budget deficit staring at us for quite some time, regardless of who’s in charge. There isn’t a single Republican in Washington who doesn’t know this.

And if by some weird circumstance you could actually manage to do without all the aforementioned departments – yes even homeland security – and you withdrew all troops, not just combat, from Iraq, and you could somehow live with a deficit somewhere around $350 billion, you would have a new problem. Job losses from closing those departments and the fallout that would have over connecting sectors in the economy could actually make the deficit worse than it is now. Revenues could fall by as much as 20% over current projections, and the unemployment rate would soar to 1930s levels and would likely remain that way for several years to come. We would no longer be in a recession; we would be in a depression and most of the world would be joining us very shortly. Cutting has never gotten a nation out of an economic downturn, let alone balanced a budget; in deed if history has taught us anything it is that spending, despite the negative connotations it has garnered, more often than not has jump-started sluggish economies and allowed the necessary time needed for markets to rebound. It is not the problem it has been made out to be, no matter what the likes of a Sarah Palin might say.

With all the talk of socialism from the far Right, the simple truth is that if the economy had been growing this year at the rate it was growing in 2007, the deficit would be less than half of what it is at present. Now imagine no Iraq War, no stimulus or TARP or bailout, and you’re within a couple hundred billion of breaking even. Not bad for a Stalinist.

So the next time you go shopping for a car, don’t fall for the glitter and shine of the paint job, or that new car smell. Be sure to kick the tires and check under the hood. Make sure it has an engine and that the engine is as advertised. Make sure that Corvette you’re buying isn’t really an Edsel in disguise. Don’t get taken for a ride! And if by some chance you come across a political candidate who promises you he’s going to balance the budget and at the same time cut your taxes, don’t be afraid to ask him how.

1 comment:

Anonymous said...

Good job, Pete. It is amazing that people think the way out of this mess is less government. I'm not a fan of big government. But there's a difference between enforced regulation that protects Americans and Big Brother. The problems we face today (mine explosions, massive oil spills, predator banks and a failing economy) are the result of no government-- a govt. that can't say No to big business. We're living in the Wild West. And fewer regulations are going to fix that? How about getting the corporations off the backs of Americans, instead of the other way around?