Oopsie of the Week

By Dave Anderson:

As I was changing diapers this afternoon, I had the tv on a cable news station for some background noise.  The Senate Finance Committee had just voted out healthcare reform and the Republicans were holding an improntu press conference bitching about the fact that despite the fact that they won't take "yes" for an answer, the Democrats were actually doing something that had been a key element of several campaign seasons.

Shocking, I know.

The worst was Sen. Ensign, I think, who poopooed the value of a deficit neutral or deficit reducing CBO score with the paraphrase --- so they cut some wasteful spending and give-aways to my donors and they are raising seven different types of taxes to pay for their policies --- the nerve of them. 

Unless there is a gigantic Alien Space Bat who shits gold, platinum and Steelers season tickets, that is about the only way to pay for a program without increasing debt levels.  That is the oopsie of the week.

However, Bruce Bartlett is being a mensch and taking an own-goal oopsie of a generation as he looks at one of his life's works and realizes that removing any constraints towards responsibility produces strong incentives for idiots to be idiots.

During the George W. Bush years, however, I think SSE became distorted into something that is, frankly, nuts--the ideas that there is no economic problem that cannot be cured with more and bigger tax cuts, that all tax cuts are equally beneficial, and that all tax cuts raise revenue.

These incorrect ideas led to the enactment of many tax cuts that had no meaningful effect on economic performance. Many were just give-aways to favored Republican constituencies, little different, substantively, from government spending. What, after all, is the difference between a direct spending program and a refundable tax credit? Nothing, really, except that Republicans oppose the first because it represents Big Government while they support the latter because it is a "tax cut."

The supply-siders are to a large extent responsible for this mess, myself included. We opened Pandora's Box when we got the Republican Party to abandon the balanced budget as its signature economic policy and adopt tax cuts as its raison d'�e. In particular, the idea that tax cuts will "starve the beast" and automatically shrink the size of government is extremely pernicious.

Indeed, by destroying the balanced budget constraint, starve-the-beast theory actually opened the flood gates of spending. As I explained in a recent column, a key reason why deficits restrained spending in the past is because they led to politically unpopular tax increases. But if, as Republicans now maintain, taxes must never be increased at any time for any reason then there is never any political cost to raising spending and cutting taxes at the same time, as the Bush 43 administration and a Republican Congress did year after year.

It is this reason that I think being responsible and making every policy deficit neutral even in the short run is completely idiotic for Democrats --- it is a one way ratchet of pain delivery instead of policy goody delivery to key constiuents who may in the future be willing to take some pain if they see some value delivered as well. 

Bruce Bartlett and the supply side cranks he empowered are a major oopsie in the American political scene --- I am glad that he is doing what he can to sit on the lid of Pandora's Box, but I don't think the wonk faction of the GOP is strong enough to stop a dead kitten from punching through the coffin of Republican fiscal responsibility much less the Republican elected elite.