It is budget time, and that will be the core of this column. But first, I need to write a few words of disappointment over how the House handled the STOCK Act.
That starts with the process — a violation of the House majority pledge to open up the House and allow amendments to significant bills.
It goes to the next level, the ironic one — a bill to deal with insider trading written behind closed doors by insiders to dilute the Senate bill. This process was driven by Majority Leader Eric Cantor (R-Va.) — but Democrats in the House went along with all of this instead of providing the votes to block the House version under suspension of the rules. An embarrassing performance for all.
But for now, the Stop Trading on Congressional Knowledge Act will take a back seat in public and pundit focus to the budget dynamics. The president’s budget is the news this week, but it is not the only fiscal story.
We have Mitt Romney’s and Rick Santorum’s speeches at the Conservative Political Action Conference that define their approaches to budgeting.
Romney said: “As president, I will not just slow the growth of government, I will cut it. I will not just freeze government’s share of the total economy, I will reduce it. And, without raising taxes or sacrificing America’s military superiority, I will finally balance the budget.”
Santorum went further, promising a fiscal plan “that says we are going to cut $5 trillion in five years, balance the budget in five years and in every year we will spend less money than the year before, year after year until … the budget is balanced.”
Start with President Barack Obama’s budget, which, as with all presidential budgets, is designed not to be enacted but to set out presidential markers.
This one, of course, is also an election-year budget, and it reflects some major changes in approach this year compared with previous years. The main one is the direct approach to taxes — a willingness to put significant tax increases right into the budget plan.
That reflects both a political calculation and a substantive reality. The political calculation is that times have changed, that Democrats can propose some kinds of tax increases — on the highest earners — and actually benefit politically, not be bludgeoned.
The substantive reality is one that all the bipartisan commissions and gangs like Simpson-Bowles reached, that significantly reducing deficits without damaging the country’s health, safety and security will require more revenues as part of the package.
But by focusing only on the upper income levels, Obama’s plan would fail to provide the level of revenues necessary to cut the debt sufficiently in the out years.
The second change, more in emphasis than approach, is that getting the economy up and moving and creating more jobs is more significant and less dangerous than reducing deficits now. Once again that reflects politics and substance, a sense that jobs trump deficits right now, and the reality that cutting back now, with a weak domestic and shaky global economy, would be disastrous.
Two other elements stick out in the Obama budget.
First, implementation of the debt limit deal means more and more whacks at a discretionary budget that overall is less than a third of total spending, with half of that coming from the domestic spending side. Already in next year’s budget, that means troubling reductions in areas such as health research, environmental protection and space exploration; other areas, including food safety and port security, can brace for their own whacks in years to come unless a comprehensive long-term deal is reached.
Second, the Obama budget does not look seriously at the major spending driver of future deficits, health care costs reflected in Medicare, Medicaid and veterans health. That is a political decision, and an unfortunate one.
The Obama budget is already being ripped by Republicans as a political document and by deficit hawks for its failure to attack the debt problem vigorously enough. But in context, it is worth a brief comparison to the Romney and Santorum visions.
The Washington Post’s Ezra Klein has put flesh on the Romney proposals’ bones. Romney, he says, “has pledged to cap federal spending at 20 percent of GDP. He has pledged to cut taxes to about 17 percent of GDP. He has pledged to a floor on defense spending at 4 percent of GDP. And he has pledged to balance the budget.” As Klein notes, Romney has pledged to cut twice as much from the budget as Rep. Paul Ryan (R-Wis.), which means, over the next 10 years, cutting more than 35 percent from every program in the nondefense budget, including Social Security and Medicare. And at the same time, taxes on the poor would go up even as the safety net he has promised to strengthen would be shredded, while taxes on the highest earners would plummet.
Santorum’s pledge, however, makes Romney’s promises look tepid by comparison. Santorum’s even more radical tax plan not only extends all the Bush tax cuts but takes an additional trillion dollars in revenue away annually by 2015 through additional tax cuts. Balancing the budget in five years would thus mean spending cuts of even more than $1 trillion a year, and since Santorum has the most aggressive approach to defense spending of all the candidates, my back-of-the-envelope calculations say that would mean immediate evisceration of every federal program — including the biggies of Social Security and Medicare — by nearly 50 percent, or cuts of 75 percent or more if Social Security and Medicare are spared for several years.
Of course, these pledges are also political — no surprise in a presidential election year. But presidents try very hard to keep their pledges. The contrasts between the detailed Obama budget and the budget outlines of Romney and Santorum, especially when they are embellished by the forthcoming Ryan plan, will frame vividly the choices facing Americans in November.
Norman Ornstein is a resident scholar at the American Enterprise Institute.