CBO Debunks GOP’s Economic Plan

GOP has been very persistent in their claims of the way to fix our economy is through austerity — spending cuts to programs such as Medicare, Medicaid, Social Security, Education, Infrastructure, etc. Democrats have countered their plan with a balanced approach of spending cuts but with a focus on spending that would not hurt the most vulnerable in our society and increased revenue through modest tax increases and eliminating tax loop holes and tax subsidies.  

Politico is reporting the Congressional Budge Office came out with a report on Tuesday that shows spending cuts alone will not fix our budget problems. 

Indeed as measured by CBO, 2011 was a year that saw spending trends break heavily in favor of deficit hawks. The combined federal outlays for Medicaid, Medicare and Social Security rose by a little more than 3 percent — less than half of what had been the five-year average. Military spending grew by 1.1 percent, and after a 7.2 percent increase in 2010, other government activities fell by a negative 2.2 percent.   

Yet even in this climate, the deficit in 2011 ended up well north of $1 trillion for the third year in a row, all underscoring the poor economy but also the need for more change on both sides of the ledger. Addressing this gap was the great hope attached to the House-Senate supercommittee created by the August debt-limit agreement, but two weeks before the Nov. 23 deadline, taxes remain such an ideological stumbling block that it puts the whole enterprise in serious jeopardy. 

GOP did come out with a proposal this past week for $300 billion in increased revenue, however, as I wrote earlier this week, it did not appear to be the compromise they wanted everyone to think it was. It was clearly an effort to try to shed that ‘do-nothing Congress’ image.  

On November 2nd Treasury Secretary Timothy Geithner and Senate Minority Leader Mitch McConnell meet to talk about the Super Committee’s deficit plan. 

Geithner had come to the Capitol to meet with the Kentucky Republican prior to leaving for the G-20 summit in France, but McConnell steered the conversation back to the deficit-reduction talks and asked if the White House was hoping the supercommittee would fail. 

This has been a favorite theory of conservatives, who argue that failure serves President Barack Obama’s short-term interests by giving him another example of a “do-nothing” Congress. And it has especially rankled McConnell, who was pivotal to the August agreement and is invested in the 12-member panel.  

Geithner, who also was part of the August debt talks, pushed back, saying no, that Obama wanted a successful outcome and had submitted significant detail in September to help the panel meet its target. McConnell then criticized Democrats for being unrealistic in asking for $1.3 trillion as part of a larger $3 trillion deficit-reduction plan. The secretary answered by walking through the Republican counteroffer and showing that its claim of $640 billion in new government receipts was unrealistic itself, since so little of the total represented real tax revenue.  

McConnell was described as silent, and the meeting ended without any counterproposal to find middle ground.  

Just a few more tidbits of GOP’s proposal for the Super Committee’s deficit plan. They include drilling for oil and cutting the top tax rate to 28%. That’s right….MORE tax cuts for the wealthy.  

The former president of the Club for Growth, Toomey irritated Democrats by including ANWR drilling as one illustration of how government royalty revenue might be increased. And his approach to tax overhaul is to lock in such a low top tax rate in advance—28 percent—that tax experts say it would very difficult, if not impossible, to still have any room left for real deficit reduction.

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2 responses to “CBO Debunks GOP’s Economic Plan

  1. “McConnell was described as silent, and the meeting ended without any counterproposal to find middle ground. ”

    Yet, despite being faced with the realities of their proposals, the GOP still remains steadfast in their belief tax break/benefits and spending cuts are the only way to go.
    I really have to wonder what will make them rethink their approach.

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