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Flaws in GOP’s pledge to balance budget
By Edward Luce
Published: September 29 2010 18:41 | Last updated: September 29 2010
18:41
In the build-up to the UK election in May, David Cameron’s
Conservative party made little bones about the fact that Britain was
heading into an “age of austerity”. In his “contract with voters” that
Mr Cameron issued before polling day, he observed: “We know how
unhappy you are and how doubtful you are that anyone will achieve
anything or change anything.”

The contrast with the Pledge to America the Republicans issued last
week as the basis for their midterm election campaign could not be
sharper. One party offered the 21st century equivalent of “blood,
sweat and tears” – admittedly watered down as polling day approached.
The other parodied Pangloss’s hope that “all will be for the best in
the best of all possible worlds”.

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Nowhere in the Republican pledge was there acknowledgement of the
painful decisions that all Americans must confront to avert disaster.
Nor was there even a hint of admission that Republicans bore at least
equal responsibility for the low regard in which all politicians are
held in America, as they are in Britain. Instead of medicine, there
was sugar.

This is how the pledge begins: “With this document, we pledge to
dedicate ourselves to the task of reconnecting our highest aspirations
to the permanent truths of our founding by keeping faith with the
values our nation was founded on, the principles we stand for, and the
priorities of our people.”

Such was the mood music. But the real contrast was in the substance.
Although Mr Cameron’s Conservatives fudged the extent of spending cuts
as the election approached, they stuck firmly to the line that there
could be no tax cuts if Britain were to restore its budget to balance.

In contrast, John Boehner, the Republican leader in the House of
Representatives, flanked by the “Young Guns”, only one of whom is
younger than Mr Cameron, promised to maintain all the tax cuts that
George W. Bush instituted, never raise any taxes again in any shape or
form, and do all this while restoring America’s budget to balance.

All of which might have been plausible were it to have spelt out the
draconian spending cuts that would therefore be necessary to bring the
budget back to surplus. But it declined to do so. Instead it ring-
fenced more than three-quarters of the US federal budget – social
security, Medicare and defence spending – and promised to impose caps
on the remaining, “discretionary” portion of it.

In numerical terms, the $320bn the party has specified in spending
cuts over the next decade is dwarfed by the $4,000bn in tax cuts that
it promises – all on top of the current double digit budget deficit.

Simon Rosenberg of the NDN, formerly known as the New Democratic
Network, says the idea that this would result in a budget surplus
comes from the “Harry Potter school of economics”.

If implemented, the pledge would bring about a crisis in US sovereign
creditworthiness. In the name of the founding fathers it would
jeopardise the dollar. Which leads us to one of two conclusions.
Either the Republican Party believes what it is saying, in which case
it has no further useful intellectual contribution to make. Or else it
thinks the US electorate is intellectually challenged and will mistake
this fantasy for a plan.

The latter cannot be discounted. If the polls are right, the
Republicans are on course to capture the House on November 2. At their
head are leaders who voted for every spending measure George W. Bush
requested, including the unfunded $600bn expansion of prescription
drugs for seniors, which was probably the most egregious instance of
corporate welfare in modern US history, as well as the unfunded $260bn
highways bill that included the infamous “bridge to nowhere”.

These are the same lawmakers who inherited the largest budget surplus
in modern US history, when Mr Bush came to office in 2001, and
bequeathed the largest ever peacetime deficit to Barack Obama in 2009.
Like the Bourbons, they appear to have learnt nothing and forgotten
nothing. For the sake of America’s economic future, and everyone
else’s, friends of the US must hope its voters have not forgotten
their recent history.