WASHINGTON– Sen. Jim Bunning’s (R-Ky.) recent one-man stand against legislation extending unemployment benefits offered a high-profile airing of a popular GOP message: Deficit spending, in almost any form, will cause more harm than good to a fragile economy.
Standing in the way of the Republicans’ reasoning, however, has been another formidable group: budget experts. Most are urging additional, though temporary, deficit spending as the surest way to tackle the jobs crisis and prevent the economy from slipping back into recession. It hasn’t helped the GOP’s argument that a good number of them are fiscal conservatives.
Few observers, for example, would accuse David M. Walker of being a liberal spendthrift. Indeed, the former U.S. comptroller general has spent most of the last decade forging a personal crusade against deficit spending. Yet last week — on the same day that Bunning, a Hall of Fame baseball pitcher known more for his curveball than his economic insights, initiated his drive against fiscal imprudence — Walker wrote in Politico that “a focus on jobs now is consistent with addressing our deficit problems ahead.”
“A huge recession can yield a huge deficit,” Walker, now head of the Peter G. Peterson Foundation, which advocates for balanced budgets, wrote in an op-ed co-authored by Lawrence Mishel, president of the liberal Economic Policy Institute. “Though a concern, most of the recent short-term rise in the deficit is understandable. Furthermore, public spending can help compensate for the fall in private spending, and help stem the pain of substantial job losses.”
Mark Zandi, chief economist at Moody’s Economy.com, agrees. Zandi, an adviser to Sen. John McCain during the Arizona Republican’s 2008 run at the White House, has urged lawmakers in recent weeks “to be aggressive” in tackling the continuing jobs crisis, which has left nearly a fifth of the nation’s working population without a job or underemployed.
“If we have another recession, we will have no policy response,” Zandi told a House panel last week. “We have to err on the side of doing too much.”
The message from the experts is clear: If you think adding $10 billion to the deficit is dangerous to future economic growth, wait ‘til you see what happens when millions of unemployed folks, denied access to a government safety net, slash their consumption (at best) and foreclose on their homes (at worst).
No matter. On the issue of deficit spending to address the hovering downturn, Republican leaders in both chambers are all but united in opposition, as is much of their caucus. Thirty Republicans, for example, voted to block the Democrats’ $15 billion jobs package that passed the upper-chamber last week. More recently, 39 Republicans voted with Bunning against the Democrats’ plan to tap deficit spending to pay for a $10 billion temporary extension of COBRA benefits, funding for doctors who treat Medicare patients, federal highway programs and the filing deadline for unemployment insurance.
“If we can’t find $10 billion to pay for something that we all support, we will never pay for anything on the floor of this U.S. Senate,” Bunning said during his five-day stalling marathon. “We cannot keep adding to the debt.”
At issue is the distinction — many would say a failure to distinguish — between the long-term structural problems at the heart of the nation’s unsustainable spending curve, and the temporary measures the government has put in place in the past two years to address the worst economic downturn since the Great Depression. The Government Accountability Office summarized the long-term budget crisis Tuesday, issuing a report indicating what experts know too well: Federal spending threatens to swamp the nation’s economy, and the entitlement programs — particularly Medicare and Medicaid, which run on autopilot — are the predominant driving force, not recent stimulus measures.
“By 2030,” GAO warned, “there will be little room for ‘all other spending,’ which consists of what many think of as ‘government,’ including national defense, homeland security, investment in highways and mass transit and alternative energy sources.”
Walker and Mishel also stressed the importance of differentiating between short-term emergency spending and statutory obligations. The former, they argue, “and the resulting short-term deficits they cause, should not be confused with the primary deficit challenge facing our nation: structural deficits. These deficits are projected to exist in coming years — even when the country is at peace, even when the economy is growing, even when unemployment falls.”
Ironically for this debate, the legislation causing much greater strain than stimulus bills on the the country’s fiscal health are measures passed under the Bush administration with the blessing of GOP leaders in Congress. The Bush tax cuts, for example — if extended this year, as expected — stand to whisk hundreds of billions of dollars from the federal coffers over the next decade. And the Medicare prescription drug benefit — an unfunded entitlement expansion that Republicans rammed through Congress in 2003 — is estimated to add $550 billion to the debt by 2017.
Bruce Bartlett, a conservative economist and former advisor to Ronald Reagan, George H.W. Bush and Rep. Ron Paul (R-Texas), hasn’t overlooked the hypocrisy coming from GOP leaders who suddenly want to be recognized as champions of fiscal restraint.
“It astonishes me that a party enacting anything like the drug benefit would have the chutzpah to view itself as fiscally responsible in any sense of the term,” Bartlett wrote in Forbes recently. “As far as I am concerned, any Republican who voted for the Medicare drug benefit has no right to criticize anything the Democrats have done in terms of adding to the national debt.”
It hasn’t stopped Bunning. The Kentucky Republican, who voted for the drug benefit, warned Democrats that he plans to play fiscal monitor as the majority party moves ahead this month with its job-creating agenda.
“I’ll be watching them closely,” he said Tuesday, “and checking off the hypocrites one by one.”
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