Stockman unlikely rescuer for Democrats

Aug 4 2010 - 9:16am

Just when Democrats seemed in certain peril, with their polls plummeting and their former voters sounding fed up with their handling of all things foreign and domestic, along comes the unlikeliest of rescuers.

It's the Republicans! And they seem clearly hell-bent on saving the Democrats from their certain political fate!

No, not the Grand Old Party of yesteryear. Not the philosophically uncomplicated congressional party led by Everett Dirksen and Jerry Ford that proudly proclaimed their one-note-fits-all, anti-deficit refrain while lambasting LBJ's "Great Society" Democrats as shameless big spenders.

We're talking about the 21st Century Republicans headed by Mitch McConnell and John Boehner. They were given the gift of a win-win bonanza -- a Democratic president and Congress that produced what voters see as unpopular bailouts, a jobless recovery, a nightmarishly unwinnable war -- and Democratic House and Senate leaders who are late-night punch lines.

What the Republican leaders did with it was to re-gift the Democrats. They did what decades of Democratic message scripters couldn't do. The Republicans recycled their own, old "party-of-the-rich" label and pinned the tale on their own elephant.

On a recent Fox News Sunday show, Senate Republican Whip John Kyl, R-Ariz., supported extending the Bush era tax cuts for the wealthiest Americans -- and also ending unemployment benefits for the unluckiest Americans who have played by the rules but became victims of the recession and still cannot find work. Senate Minority Leader McConnell, R-Ky., quickly endorsed the idea.

Also, Kyl and McConnell, leaders of a GOP that has championed pay-as-you-go policies, refused to say what expenditures they want to cut to pay for continuing tax breaks for the top brackets -- which will cost an estimated $678 billion over 10 years. Kyl even said it is okay to increase the deficit to pay for the tax break for the wealthiest -- but not to pay for benefits for the unluckiest who are unemployed.

The background on this is that President George W. Bush's tax cuts are all due to expire at the end of this year. President Obama has proposed ending the tax cuts for the wealthiest Americans (couples earning $250,000 a year, individuals earning $200,000), but continuing tax breaks for middle and lower bracket taxpayers. Obama also wants to extend unemployment benefits.

Republicans justify their position with the old trickle-down argument: That cutting taxes for the wealthiest will hurt job creation in the recovering economy. But wait. Economists agree that the wealthiest don't pump most of the tax cut dollars they receive back into the economy. But virtually all of the unemployed shovel their benefits back into the economy, just to pay for food and housing and so on. It is far more effective way to stimulate job creation.

But the trickle-down argument, when sounded by today's Republican leaders, was punctured most effectively this past weekend by the man who in the 1980s was selling us Reaganomics as trickle-down brilliance. We are talking about David Stockman, the Reagan director of Office of Management and Budget, who was a true believer up until he suddenly discovered the guiding principle of supply side Reaganomics was really more trickle-on than trickle-down.

In a devastating op-ed column in Sunday's New York Times -- sub-headline: "How my G.O.P. destroyed the U.S. economy" -- Stockman called McConnell's position "unseemly." The onetime Reagan disciple whose policies once grew the deficit to nearly three times what it was on Inauguration Day 1981, called today's Republican position "vulgar Keynesianism robed in ideological vestments of the prosperous class."

Here's a solution: Former Federal Reserve Board vice chairman, Alan S. Blinder has called for ending the tax break for the top brackets for at least two years -- a savings of $75 billion over two years -- and using that money not to reduce the deficit but to pay for unemployment insurance and food stamp benefits.

Economist Mark Zandi of Moody's Analytics, told a House Budget Committee hearing his economic model estimated that extending unemployment benefits would provide almost five times the "bang for the buck" as the Bush tax breaks. That would be a smart way to start.

Martin Schram writes political analysis for Scripps Howard News Service. E-mail him at martin.schram@gmail.com.

From Around the Web

  +