Think Progress

Deficit Peacock Newt Gingrich Doesn’t Recognize His Own Feathers

Last month, Center for American Progress Associate Director for Tax and Budget Policy Michael Linden released a report on “how to spot a deficit peacock,” which he described as people who like to “preen and call attention to themselves” as deficit hawks “but are not sincerely interested in taking the difficult but necessary steps toward a balanced budget.” Linden wrote that those who “say that the solution is to simply freeze discretionary spending, are just peddling fiscal snake oil.” Critics across the political spectrum have since used the “deficit peacock” phrase to criticize the Obama administration’s proposed freeze. OMB Director Peter Orszag has pushed back against that characterization of the Obama plan, arguing that the freeze is “only one step” the administration is taking.

In his Human Events column today, former House Speaker Newt Gingrich embraces the term, claiming that it was created to describe “Washington liberals posing as budget cutters.” In fact, if Gingrich actually paid attention to what Linden wrote, he would realize that he fits the definition perfectly of a deficit peacock who prefers “scoring political points to solving problems. According to Linden, the number one way to tell that someone “isn’t taking our budget problems seriously” is if “they never mention revenues”:

Increasing revenues is going to have to be part of the solution for meeting the fiscal challenge. Any suggestion that we can solve this problem solely by cutting spending reveals an utter misunderstanding or ignorance of the budget numbers. Balancing the budget without raising any additional revenue 10 years from now would require cutting every program in the entire budget by more than 25 percent, including all defense spending, Social Security and Medicare benefits, air-traffic-control funding, veterans’ benefits, aid to schools, job training programs, agriculture subsidies, highway maintenance, and everything else.

In his column, Gingrich explicitly denounces “tax increases” to “pay for all that spending” in the federal budget and calls for spending cuts only. Linden also notes that deficit peacocks “support policies that make the long-term deficit problem worse.” In January, Gingrich released a “jobs first” plan consisting almost completely of proposals that would hurt the long-term deficit:

– Immediate Payroll Tax Relief. Allow workers and employers to keep more of their hard earned money through an immediate, two-year, 50% reduction of the payroll tax. [...]

– Incentives for Small Business Investment. Allow small businesses to expense 100% of new equipment purchases each year to help them invest in new, more productive technologies. [...]

– Abolish Taxes on Capital Gains. Match the Chinese capital gains rate of zero. [...]

– Reduce the Business Tax Rate. America has the second highest business tax rate in the world. We should match the Irish business tax rate of 12.5%. [...]

– Abolish the Death Tax. Inheritance is the most powerful accumulator of capital.

In an analysis of an early variation of Gingrich’s plan, the Wonk Room’s Pat Garofalo concluded that the tax changes would add trillions to the deficit over the next decade while “throwing money to mainly the well-off and hoping that it will have some positive effects.” In the January plan, Gingrich also called for balancing the budget by simply reducing spending and reforming government.

Deficit Peacock Evan Bayh Hits ‘Far Left-Wing Blogs’ For Criticizing Obama’s Spending Freeze As Too ‘Austere’

Sen. Evan Bayh (D-IN), appearing on Fox News Sunday, attacked “far left-wing blogs” for criticizing President Obama’s proposed non-security discretionary spending freeze. Bayh burnished his anti-spending credentials by noting his opposition to recent omnibus spending bills, although he supported the much larger American Reinvestment and Recovery Act, and has repeatedly promoted the federal spending for creating thousands of jobs in his state. Speaking to Fox’s Chris Wallace, Bayh sided with Rep. Paul Ryan (R-WI), the ranking Republican on the House Budget Committee, and an advocate of draconian spending cuts during the recession:

If you look, I suspect Paul does not, but if you look at the far left-wing blogs and that kind of thing they’re severely criticizing the president for being too fiscally austere. My own take on this, Paul is right. Domestic discretionary spending increased last year. I voted against the omnibus, I voted against the “minibus” and that’s last year. the question is where do we go now? The freeze is important. He identified $20 billion if you aggregate over the next ten years is $250 billion less spending. Does it solve all our problems? No. But it’s a step in the right direction.

Watch it:

Bayh is a “deficit peacock” — someone who likes to harp on deficits, while at the same time voting for budget-busting expenditures like a $250 billion tax cut for the heirs of wealthy families. Despite Bayh’s preening, “far left-wing” blogs haven’t been the only critics of Obama’s freeze. Additionally, part of why progressives are criticizing Obama about is not that the spending freeze is too “austere,” but that it doesn’t go after defense spending. As Center for American Progress Senior Fellow Lawrence Korb has argued, “If President Obama is serious about controlling spending, he can’t exempt the Pentagon.” And House Speaker Nancy Pelosi (D-CA) concurs, telling reporters that the entire defense budget “should not be exempted” from the freeze.

Senate Republicans Called For Commitment To PAYGO Before Voting Against It

Sens. Olympia Snowe (R-ME) and Susan Collins (R-ME)

Today, the Senate followed through, and considering all of the deficit fearmongering that has been going on in Congress, you’d think that it would have passed by a fairly wide margin. But no. Instead, the rules passed on a party line vote of 60-40.

And the blanket Republican opposition is particularly interesting considering that some Senate Republicans used to support PAYGO, even when it was opposed by their own party. For instance, in 2004, three current Senate Republicans — Sen. Olympia Snowe (R-ME), Sen. Susan Collins (R-ME), and Sen. John McCain (R-AZ) — joined 47 Democrats in adopting PAYGO, against the majority Republicans’ wishes (although the rule was ultimately scuttled when Congress failed to pass a budget). The next year, the same three senators were joined by Sen. George Voinovich (R-OH) in a failed attempt to implement the rule.

Yet all four of them opposed the rule today. Here’s what they’ve had to say in favor of PAYGO in the past:

VOINOVICH: I just don’t understand how we can continue to go this way. We’re living in a dream world. This deficit continues to grow.

COLLINS: [PAYGO is] much-needed restraint for members of Congress as we wrestle with fiscal decisions.

SNOWE: I believe now is the time for both ends of Pennsylvania Avenue to commit to pay-as-you-go rules for both revenues and spending.

Just last year, Snowe approved of Obama’s advocating for PAYGO. And in the last few weeks, all of these Republicans have voiced concerns about the deficit and spending. So what changed? And why did all the supposed deficit hawks in the Senate — like Sen. Judd Gregg (R-NH) — vote against it as well? Could it be that they’re actually deficit peacocks, who “like to preen and call attention to themselves, but are not sincerely interested” in addressing deficits?

In last night’s address, Obama chided Senate Republicans, saying that “just saying no to everything may be good short-term politics, but it’s not leadership. We were sent here to serve our citizens, not our ambitions. So let’s show the American people that we can do it together.” They’re not off to a good start.

Cross-posted at The Wonk Room. DJ Carella contributed research to this post.

Gregg Throws A Hissy Fit When Asked To Provide Specifics About Programs He Would Cut

On MSNBC this afternoon, deficit peacock Sen. Judd Gregg (R-NH) got into a heated exchange with anchors Contessa Brewer and Melissa Francis, challenging their “integrity” and calling them “irresponsible” and “duplicitous” after they tried to get him to offer specific ways he would cut spending to lower the deficit.

Asked about the money President Obama is proposing to spend on jobs and whether it should “go hand and hand with other programs that integrate job training, vocational skills and certainly educating very young people,” Gregg responded with his usual complaints about government spending and his desire to “control the rate of growth of government.” When Francis said that sounded “good in theory,” Gregg got upset, retorting, “that’s not theory. Don’t tell me that’s good in theory”:

FRANCIS: That’s good in theory, senator. How would you practically…

GREGG: It’s not theory. It’s not theory. Don’t tell me that’s good in theory.

FRANCIS: Well, how would you, tell me how to put it to work.

GREGG: No, you don’t tell me it’s good in theory.

FRANCIS: Tell me very practically…

GREGG: How do you get off saying something like that?

After Gregg calmed down and ticked off a list of the ways he thinks the Obama administration has been fiscally irresponsible, Brewer interjected that Francis was “really asking for specifics” of “which programs” he was willing to cut. “Are you willing to tell schools ‘no money for you?’” asked Brewer, setting Gregg off again:

GREGG: Well, first off, nobody’s saying no money for schools. What an absurd statement to make.

BREWER: Well, I’m asking you, what we’re…

GREGG: And what a dishonest statement to make. On its face you’re being fundamentally dishonest when you make that type of statement.

Eventually, Gregg said that he would freeze discretionary spending, “eliminate the TARP money,” “end the stimulus spending” in June, and reform entitlement spending. He then returned to complaining about Francis and Brewer’s questions, calling the question about education spending “the most irresponsible question I’ve heard probably in a month.” Watch it:

After their tempers cooled, Gregg said that “education spending isn’t going to be cut.” His outrage over the insinuation that he could cut education funding is peculiar, considering that he voted for an amendment in 1996 that “would balance the budget faster by killing the Departments of Housing and Urban Development, Education, Commerce, and Energy.”

Does Rove Think Reagan And Bush Were ‘Weak’ For Discussing The ‘Situation’ They Inherited?

In his State of the Union address last night, President Obama described the dire state of affairs he faced as he entered office a year ago. “One year ago, I took office amid two wars, an economy rocked by a severe recession, a financial system on the verge of collapse, and a government deeply in debt,” said Obama.

Conservatives, who often complain that Obama blames former President George W. Bush too much, did not appreciate Obama’s recitation of the facts. “The blaming of the past administration is pathetically unpresidential,” blogged National Review’s Kathryn Jean Lopez last night. On Fox News this morning, Brian Kilmeade asked former Bush adviser Karl Rove if it’s “good politics” to “bring up your predecessor and talk about your first year in office while looking back at his last year in office?” “No, I think it makes you look weak,” replied Rove. Watch it:

By Rove’s logic, conservative icon Ronald Reagan and his former boss George W. Bush were also “weak.” As Media Matters’ Matt Gertz noted last night, Reagan “devoted significant portions” of his 1982 State of the Union “to attacking President Carter’s administration for ‘the situation at this time last year’”:

To understand the State of the Union, we must look not only at where we are and where we’re going but where we’ve been. The situation at this time last year was truly ominous. [...]

First, we must understand what’s happening at the moment to the economy. Our current problems are not the product of the recovery program that’s only just now getting under way, as some would have you believe; they are the inheritance of decades of tax and tax, and spend and spend. [...]

The only alternative being offered to this economic program is a return to the policies that gave us a trillion-dollar debt, runaway inflation, runaway interest rates and unemployment.

Though it wasn’t technically a State of the Union address, when former President Bush first addressed a joint session of Congress in February 2001, he too cast aspersion on his predecessor’s legacy. “Last year, Government spending shot up 8 percent. That’s far more than our economy grew, far more than personal income grew, and far more than the rate of inflation,” said Bush. “We must take a different path.”

Pawlenty Falsely Claims ‘Most Credible Economists Say’ Stimulus Is ‘Not Working’

Last night on Fox News, Gov. Tim Pawlenty (R-MN) attacked President Obama’s reported proposal to freeze “non-security” discretionary spending at the FY2011 level for fiscal years 2012 and 2013. “If you want to get this country back on track,” Pawlenty said, “Don’t freeze spending, cut it. Don’t raise taxes, cut them.”

Pawlenty then offered some “great ideas” for solving the nation’s economic woes: “Allow the [Bush] tax cuts to stay in place permanently.” He said the U.S. needs more tax cuts because economists say the stimulus isn’t working:

PAWLENTY: Yes, it’s not working. It’s mostly sending money out to bureaucracies. It’s not effective. They promised that if you pass the stimulus bill, we’d have unemployment at 8 percent or lower. It’s up at 10 percent. I think most credible economists say it’s not working. So we can redeploy that money by drawing down the deficits or through tax cuts, things that would more quickly and better ignite the economy.

Watch it:

Pawlenty didn’t cite any specific economists or reports to back up his claim. But USA Today reported this week that according to a new survey of economists, the stimulus has had a positive impact on unemployment:

Unemployment would have hit 10.8% — higher than December’s 10% rate — without Obama’s $787 billion stimulus program, according to the economists’ median estimate. The difference would translate into another 1.2 million lost jobs. But almost two-thirds of the economists said the government should do more to spur job growth.

Moreover, as the Wonk Room’s Pat Garofalo noted, “economists have consistently found that the stimulus package is working exactly as it should, and that it is simply too small to counteract the economic crisis.”

Even economists at the right-wing American Enterprise Institute said that the stimulus boosted the U.S. economy by 4 percent.

Pawlenty also offered no plan as to how he would pay for extending the Bush tax cuts, which “not only continue to cost the government but have also increased interest payments on the national debt” and “will send the deficit higher.” In fact, the Bush tax cuts have delivered $715 billion to the wealthiest one percent over the last decade and this year alone, millionaires will get more in tax breaks than 90 percent of Americans will earn in income.

Lauer Calls Out Cantor’s Claim That The GOP Stood ‘Ready And Willing’ To Work With Obama On The Stimulus

This morning on NBC, House Minority Whip Eric Cantor (R-VA) went on the Today Show to talk about “what Republicans want to hear” in President Obama’s State of the Union address tonight. Cantor replied that he should talk about “a real commitment to putting this economy back on track” and “put the focus back on the issues that are important to people — empowering small businesses.”

Lauer then pointed out according to a new poll, the public blames congressional Republicans most for why the country is on the wrong track. Cantor tried to say that the Republicans have been “ready and willing” to work with Obama, even on the stimulus, until Lauer called him out:

CANTOR: Matt, we have stood ready and willing to work with this President since his first day in office. We were there when the stimulus discussion occurred —

LAUER: And nobody supported it —

CANTOR: — making sure — No, we had a Republican plan — making sure that we wanted to create jobs at half the cost of what the President’s plan was. I think everybody would agree now that the stimulus hasn’t worked. We’ve also proffered to the President a health care proposal. I think the American people have spoken out on that. We saw the results of the elections in Massachusetts, Virginia, and New Jersey. Clearly the people do not like this health care plan.

Watch it:

First, simply being “there” when “the stimulus discussion occurred” isn’t enough. Republicans weren’t standing “ready and willing” to do anything with the President, except block any idea he put forward. As Lauer pointed out, every single House Republican voted against the stimulus. Since then, however, Republicans — including Cantor — have been embracing, and even taking credit for, the jobs created by the stimulus funds they opposed. Additionally, economists say that the stimulus is actually helping the economy recover.

The jobs plan that Republicans put forward was actually, as Salon’s Andrew Leonard wrote, a “magic pony jobs plan.” Cantor called it “a no-cost jobs plan,” and it basically consisted of cutting regulations, freezing spending, and cutting taxes — hardly a winning prescription for creating jobs. Last month, when asked by the Economist to name a Republican “big idea” for job creation, Cantor couldn’t come up with a single idea.

On health care, voters in Massachusetts did not vote for Scott Brown as a rejection of Democratic reform proposals. Seventy percent of voters said they want Brown to work with Democrats, 52 percent said they were satisfied with Obama’s agenda, and 68 percent (including a majority of Brown voters), approve of Massachusetts’ health care program, which contains many of the same elements contained in federal proposals. Cantor and his Republican colleagues have also been far from “ready and willing” to work with Obama on this issue. In fact, when asked by NBC a few months ago about what “compromises” Republicans would be open to making with Democrats, Cantor couldn’t come up with anything.

Ford’s ‘Clueless’ Math: Balance The Budget By Doling Out Billions In Tax Cuts For The Wealthy

As part of his theatrical flirtation with a run for New York’s Senate seat, former congressman Harold Ford Jr. had an op-ed in today’s New York Times, in which he said that Democrats “need to shift attention away from health care and toward a bold effort to create jobs, improve the economy and rein in the size of government.” Ford laid out four steps that he believes “we must take immediately to put us, and the nation, on a better course”:

We can start by giving any companies that are less than five years old an exemption from payroll taxes for six months; extending the current capital gains and dividend tax rates through 2012; giving permanent tax credits for businesses that invest in research and development; and reducing the top corporate tax rate to 25 percent from 35 percent…Finally, we need to address budget deficits now rather than waiting for some ideal future economic situation…By focusing on job creation and deficit reduction, we can expand our economy and balance the budget.

As Paul Krugman pointed out, the economic vision Ford outlines “has to set some kind of new standard for cluelessness.” Indeed, Ford’s op-ed is based on a total contradiction: he advocates a slew of supply-side tax cuts (including a big cut in the corporate tax rate) that would balloon the deficit, while laying out nothing in terms of real steps toward deficit reduction, beyond paying lip service to a commission that would recommend some spending cuts.

The cost of the corporate tax cut alone would be about $1 trillion over ten years, or $100 billion per year. As for extending the current capital gains and dividends rates, which are a product of the Bush tax cuts, a similar move in 2008 (which extended the rates through 2010) cost about $51 billion, with more than half of the benefit going to the richest 0.2 percent of households.

As Matthew Yglesias put it, “to make the deficit smaller, you can’t also make revenues smaller. The math isn’t difficult.” Mark Thoma, meanwhile, labeled Ford’s job-creation ideas the “same old tired set of supply side tax cuts that we always hear, most of which only work in the long-run if they work at all”:

To the extent that there would be any job creation effects from these tax cut policies, and some types of tax cuts could help a bit, they are likely to be more than offset by the deficit reduction and his other policy recommendations that work in the opposite direction. Does [Ford] really think voters will reward Democrats for making unemployment worse through deficit reduction? With friends like these, who needs Republicans?

Ford is yet another “deficit peacock,” professing his concerns about the deficit while not advocating any serious steps to get long-term deficits under control. As Michael Linden wrote, “peacocks prefer scoring political points to solving problems.” And an attempt to score political points is all that Ford’s op-ed amounts to.

Cross-posted on The Wonk Room.

Bayh Claims ‘There’s A Fighting Chance’ Obama Will Call For A Spending Freeze

In an interview yesterday with Bloomberg’s Al Hunt, Sen. Evan Bayh (D-IN) — who met with members of the administration’s economic team this week — said that he believes there’s a “fighting chance” that President Obama will call for a freeze on discretionary spending in his next budget:

We can do something right here, right now, starting next week. The President can say in his State of the Union address, ‘I’m going to include in my budget a freeze on discretionary spending, I’m drawing the line in the sand, and I’m willing to use my veto pen to enforce that’…I think there’s a fighting chance that he will. That’s what I’m looking for.

Watch it:

Bayh is the signature model of a “deficit peacock”: someone who likes to harp on deficits, while at the same time voting for budget-busting expenditures like a $250 billion tax cut for the heirs of wealthy families. So his approval of a spending freeze fits right in.

What’s more troubling is that the administration might take this seriously. This all stems from Office of Management and Budget Director Peter Orszag asking every executive department to submit three budget proposals, including one that freezes spending and one that reduces spending by five percent. The administration has also made other noise about serious deficit reduction in fiscal year 2010 being under consideration.

There’s obviously something to be said for identifying programs that don’t work or that overlap with other programs. But a straight spending freeze is a blunt instrument that has no place in responsible budgeting. When the Republicans proposed various versions of a spending freeze during the debate over Obama’s first budget (and when Sen. John McCain (R-AZ) had the same idea during the presidential campaign), they were correctly regarded as being in right-wing fantasy land.

Not only is a freeze a poor way to budget that doesn’t take into account priorities or the effectiveness of a particular program, but it will also have an anti-stimulative effect while the economy is still struggling through a middling recovery. Bayh analogizes the federal budget to a family’s checkbook, but the truth is that there is a lack of demand in the economy — an output gap between what the country could produce and what is is actually producing — that only the government can fill. “We cannot invite a W-shaped recession, or an M-shaped recession,” said Rep. John Olver (D-MA), when asked about a spending freeze.

“Do you think we could have a 5 percent reduction in [Low-Income Home Energy Assistance]?” asked Rep. Robert Andrews (D-NJ). “Do you think we could have a 5 percent reduction in food stamps?” The real long-term issues in the budget have little to do with discretionary spending and everything to do with health care costs, entitlements, and plummeting tax revenue in the wake of an economic crisis. A blunt spending freeze sounds nice, but only real reform in those other areas tackles the actual problems with the federal budget.

Cross-posted at The Wonk Room.