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Are Republicans Hypocrites on Deficits? Yes, but There Is More to the Story

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Are Republicans Hypocrites on Deficits? Yes, but There Is More to the Story

National Review Online December 7, 2020
EconomicsTaxBudget

The GOP’s emphasis on fiscal responsibility didn’t disappear during the Trump years.

The election of Joe Biden is already renewing congressional Republicans’ commitment to addressing escalating deficits and debt. Senator Lindsey Graham (R., S.C.) has pledged to use his (likely) role as chair of the Senate Budget Committee to “create a dialogue about how can we finally begin to address the debt.” On the House side, Representative Bill Johnson (R., Ohio) has stated that he will focus on deficit reduction if selected to lead the Republicans on the House Budget Committee. Other GOP lawmakers have also begun discussing getting the red ink under control.

This predictable Republican shift to fiscal responsibility under a Democratic president has earned widespread mockery from Democrats and reporters, who note that Republicans are happy to borrow for their own priorities under GOP presidents.

And to an extent, this mockery is deserved. It is true that Republican lawmakers focus on deficits — both rhetorically and legislatively — much more under Democratic presidents than under Republicans. We see this most acutely in the battles over discretionary spending, where Republicans helped shut down much of the government to force cuts under President Clinton before engaging in a “compassionate conservative” spending spree under President George W. Bush. Then under President Obama, Republicans pushed the federal government to the brink of default in order to enact tight discretionary-spending caps, which they essentially repealed after President Trump took office.

On mandatory spending, Republicans have long been big spenders, enacting the Medicare drug entitlement under President Bush, large stimulus renewals under President Obama, and bloated farm bills under the past three presidents. In 2017, the GOP Senate voted down a push to trim back health-care costs, and the pandemic has led to trillions in new spending, mostly mandatory.

Large tax cuts in the first year of the Reagan, George W. Bush, and Trump administrations drove each GOP reversal on spending restraint. Even many deficit-fearing Republicans consider tax relief affordable on the assumption that they will also pare back the runaway spending that drives long-term deficits. Conveniently, the large spending cuts never come. In contrast to “starve the beast” — the idea that tax cuts worsen deficits and in turn lead to spending cuts — tax cuts have historically led to large spending increases because they shift lawmakers from a culture of deficit-reduction to one of spreading new benefits around. It would be political suicide for Congress to cut taxes and then turn around and claim that deficits require painful Medicare cuts. Instead, tax-cutting Republicans shift to buying votes with new spending.

And yet, the “Republicans are partisan hypocrites on deficits” argument is not as clean as some suggest.

First, the 2020 GOP backlash against spending and deficits began shortly after the CARES Act was enacted in March, not after the presidential election. Even during the summer and fall, congressional Republicans were capping their proposals for the next stimulus at $500 billion and dismissing President Trump’s calls for nearly $2 trillion. The theory that Republicans secretly agree with Keynesian deficit spending but deprive Democratic presidents in order to sabotage their economies cannot account for Republicans’ “sabotaging” their own economy during the reelection campaigns of themselves and a GOP president.

Second, the recent backlash occurred shortly after pandemic-related spending added an unprecedented $3 trillion to the federal debt. Setting aside the political calendar, it would be irresponsible for $3 trillion in rapid new debt not to get the attention of lawmakers. Similarly, the 2009–12 tea-party backlash occurred during a period in which the debt held by the public nearly doubled. Even those who prefer to table deficit reduction until the economy recovers can be forgiven for beginning to plan these reforms now.

Finally, Republican deficit hawks did not disappear during Trump’s term; they went into exile. I have corresponded with dozens of GOP lawmakers and lead congressional staffers who wanted to address soaring spending during the past four years but saw little point in pursuing politically risky Medicare and Social Security reforms that President Trump had already pledged to veto. In late 2018, McConnell threw out a trial balloon encouraging Medicare reform. This year, Senator Mitt Romney’s TRUST Act, which would begin a process to guarantee the solvency of the Social Security, Medicare, and Highway trust funds, received surprising bipartisan support. And during the past two years, several GOP senators regularly (and quietly) reached out to moderate Democratic senators to gauge interest in a taxes-for-entitlement-reform deal.

Of course, muting your budget-deficit concerns for fear of crossing your own party’s president— while happily attacking deficits when the other party wins the White House — is not exactly a profile in courage or leadership. Most GOP lawmakers have not lost their concern for runaway deficits. They lost the nerve to risk a mocking tweet from President Trump.

Moving forward, congressional Republicans may be anticipating Tea Party 2.0. All the same ingredients have returned: conservatives who feel guilty for not criticizing the runaway spending of the newly departed Republican president, sharply rising budget deficits, a large recessionary stimulus (complete with big business payoffs), and a new Democratic president who wants to spend even more. On the other hand, today’s conservative movement is more working-class and populist than a decade ago. The Paul Ryan wing was eclipsed by a GOP president who enthusiastically campaigned on not touching Medicare and Social Security.

And this addresses why the GOP has such difficulty reining in spending. Shrinking government is popular in the abstract, or when the Tea Party can rail against a $700 billion Wall Street bailout, an $800 billion stimulus, and a new health-care expansion. But nearly all Wall Street loans were later repaid, the vast majority of stimulus spending expired, and Obamacare is not a lead deficit driver. Instead, rapidly growing Medicare and Social Security shortfalls drive nearly 90 percent of all rising deficits between 2019 and 2030, as well as 97 percent of the $104 trillion in projected budget deficits over the next three decades.

Despite this fiscal unsustainability, a Pew poll revealed that only 15 percent of Republicans support trimming Medicare, and 10 percent support Social Security reform. (Democratic support is 5 and 3 percent, respectively.) Add in popular spending on defense and veterans and all resulting interest costs, and the Republican voter base has taken 66 percent (and growing) of all spending off the table. That leaves Medicaid and Obamacare (10 percent of all spending that the GOP Congress failed to reform in 2017), low-income programs like outlays for SNAP, EITC, and the child credit (9 percent), and domestic discretionary programs including education, health research, justice, and highways (15 percent). Good luck trying to balance the budget on the backs of these programs.

Two final points must be made.

First, much of the liberal and media criticism of Republican deficits is made in bad faith. Many liberals demanded that Republicans shoot a $3 trillion bazooka at the COVID-19 recession last spring — and continue to demand trillions more — and then attack the “Republican deficits” that result. Similarly, congressional Democrats aggressively enlarged the post-2017 discretionary-spending increases that they now include as “irresponsible GOP red ink.”

National media outlets regularly slam Republicans for not backing up their anti-deficit rhetoric — and then attack (and often flat-out misrepresent) even the most modest Republican spending-cut proposals as a mean-spirited war on programs that should be untouchable. Critics can’t have it both ways.

Finally, Republican weakness on deficits does not mean Democrats are much better. The claim that “Democratic presidents cut deficits” ignores the role of GOP lawmakers in constraining the spending appetite of Democratic presidents and often forcing budget cuts. It also ignores the business cycle. Presidents Clinton and Obama both came into office when the budget deficit had temporarily spiked owing to a recession that had either recently ended or was near its end, and then rode the automatic, rapid deficit reduction that (in President Obama’s case) was already baked into the budget baseline along with the economic recovery. President-elect Biden will likely benefit from the same business-cycle timing. (The deficit was not going to stay over $3 trillion indefinitely.) If measured instead by the cost of all legislation enacted, the debt that each of the past three presidents added over the following decade comes to at least $5 trillion.

So yes, Republicans deserve to be criticized as deficit hypocrites. But Washington is so dysfunctional that it is better to be right half the time than none of the time. And with baseline deficits heading toward $2 trillion within a decade — and the trust funds of Social Security and Medicare Part A facing insolvency in 2024 and 2031, respectively — perhaps a Democratic president and a Republican Senate is the best formula for fiscal sanity.

This piece originally appeared at National Review Online (paywall)

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Brian M. Riedl is a senior fellow at the Manhattan Institute. Follow him on Twitter here.

Photo by Chip Somodevilla/Getty Images

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