THIS STORY HAS BEEN FORMATTED FOR EASY PRINTING
Scot Lehigh

GOP's fiscal hoodwink

By Scot Lehigh
Globe Columnist / February 2, 2011

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IT’S BECOME a favorite Republican refrain. This country needs to have “an adult conversation’’ about our fiscal problems. And who can argue with that?

Now, when responsible, ratiocinative grownups address a problem, they start with a basic question: What caused it?

But that’s not the approach the GOP is taking when it comes to the long-term federal budget deficit.

Consider: During the lame-duck session, Senate Republicans insisted that the Bush tax cuts be extended for everyone, including those earning more than $250,000 a year, despite the budgetary consequences.

His priorities hostage to that demand, President Obama decided to delay the battle over upper-income breaks for another day — or, more precisely, for another two years — and made a deal that gave the GOP what it wanted.

With all the tax cuts extended, Republicans are focusing on the deficit. Here’s what US Representative Paul Ryan, the House Republicans’ fiscal point man, had to say in his response to Obama’s State of the Union address:

“A few years ago, reducing spending was important. Today, it’s imperative. Here’s why. We face a crushing burden of debt. The debt will soon eclipse our entire economy, and grow to catastrophic levels in the years ahead.’’

Ryan mentioned the need to rein in federal spending at least a half-dozen times. And he’s certainly right that we need to address the spending side of the ledger. That will mean discretionary and defense cuts, as well as entitlement reform.

But what did the new House Budget Committee chairman leave out of the equation? Let’s apply the aforementioned rule of grownup problem-solving. What else contributed to our alarming long-term fiscal imbalance? Well, as any objective analyst will tell you, another significant factor was the Bush tax cuts.

To get a sense of the impact, according to the Congressional Budget Office’s most recent update, extending all the Bush tax cuts — now set to expire in 2012 — through 2021 would add $3 trillion to a 10-year deficit otherwise (unrealistically) projected at $7 trillion. (The total cost of the breaks for upper- earners is $600-$700 billion.)

“A big part of the problem is the Bush tax cuts,’’ notes Len Burman, former director of the Tax Policy Center and now a professor of public affairs at Syracuse University’s Maxwell School.

Now, make no mistake: Even if we ended all those tax cuts, it wouldn’t solve our long-range fiscal problems. But by the same token, without that revenue, spending and entitlement cuts will have to be that much deeper — and just as the baby-boomers are retiring. That’s a trade-off the American people need to understand.

And yet Ryan neglected to mention any of that.

“The talking point that you hear most often from the Republicans is that we don’t have a revenue problem, we have a spending problem,’’ notes Bob Bixby, executive director of the nonpartisan Concord Coalition, a deficit watchdog. “The truth of the matter is that what we have is a budget problem, which involves both spending and revenues. You need both on the table when you think about deficit reduction.’’

Indeed, both of the recent bipartisan deficit panels made it clear that stanching our flood-tide of red ink will require both spending cuts and increased revenues. (Ryan served on the Simpson-Bowles panel, but voted against the final report.)

It’s not just the Republicans who are guilty of deficit dissembling. As Bixby notes, Democrats tiptoe around the need to trim entitlements. Further, Obama encouraged unrealistic expectations with his 2008 promise not to raise taxes on families making less than $250,000.

But of late, the Republicans are more egregious offenders. Listening to their assertions, those unschooled in fiscal realities could easily find themselves confusing one-time anti-recessionary spending with permanent budgetary increases. Or thinking that Obama is to blame for the portion of the deficit caused by a recessionary decline in revenue.

Yet that misdirection pales in comparison to willfully ignoring the role tax cuts have played in our fiscal plight. Unless and until they acknowledge that reality, the Republicans can’t claim to be leading an adult conversation. Instead, they’ve embarked on a lamentable attempt to hoodwink the unwary.

Scot Lehigh can be reached at lehigh@globe.com.