Felcia Muftic " GOP offers a ‘U-Turn back to the future’
April 5, 2009
There is a memorable scene in the movie/Broadway musical “Amadeus.” Young Amadeus Mozart is wowing the imperial court in Vienna and his jealous rival, Antonio Salieri, offers a criticism of Mozart’s piece as just having “too many notes.” The emperor joins in agreement. Mozart delivers a puzzled stare at them both.
A couple of weeks ago the Republicans presented a budget without any numbers, and they contended that the Obama financial plans, stimulus and budget and bailouts, were just” too big, “resulting in too much debt, too high taxes and too many new programs. They proposed to roll it all back to the Bush era. My reaction was similar to Mozart’s. How much are too many notes? What is too big? What makes better music?
CNBC’s Jim Cramer last week declared the “depression over” because there were enough economic indicators the economy had bottomed out and it was on the upswing. If that is the case, we’ll look back at the Republican proposal to roll back the stimulus as quaint. But, while the Republican alternative was DOA in Congress, the concepts will live on in the tongues of talk show folks, so it still deserves our scrutiny.
The Republicans finally attached some numbers to their budget last week. Pardon the excess of metaphors, but now it is clear that they are asking you to ride a Trojan horse over a bridge to nowhere and then make a U-turn back to the future. Furthermore, the bridge is held up by supports that have failed in the past.
The rationale spurring on the Republican proposal? “We are swimming in an ocean of red ink.” Their plan would result in an increase in the national debt, too, they admit under questioning, but it is a smaller ocean than Obama’s economic policies would cause, they claim.
Like “too many notes,” the “ocean of red” sounds impressive. However, we need to hold both theirs and Obama’s plan up to a quantifiable measure that has more meaning than just a bunch of zeros following a number. That correct measure is the ratio of the national debt to Gross Domestic Product (GDP) in 10 years. The size of GDP depends upon the amount of economic growth. If the economy grows, the amount of debt becomes a smaller percentage of the GDP and vice-versa. See my blog or Web site for a more detailed explanation of this. The question then becomes: Which plan is more likely to spur that growth?
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The Republicans aim for a deficit of 3 percent of GDP, but their projections for the growth of GDP and budget savings are based on trickle down economic theories that have failed to generate economic growth in the past eight years. There would be no savings at all if the economy failed to re-flate.
By contrast, the Obama plans takes us to 5-6 percent of GDP. While less than ideal, it would be low enough to avoid the dire predictions of swimming in a sea of red. Its bridge lies on more soundly acceptable economic principles than “trickle down,” given the current circumstances.
Nearly every economist on the right and the left has touted the need for government stimulus. Government is the only entity with enough money to spend and increase the demand side in a deflationary cycle that we are in now.
Here is the Trojan Horse: The way the Republicans plan to reach their economic nirvana is to overturn everything passed by Congress since Obama came to power … the stimulus and the budget, leaving intact only unemployment insurance, military, and veterans spending.
The glitz they dangle in their plan is a simplification the tax structure (always a worthy concept), but they also continue the Bush tax cuts for the rich forever and they lower the taxes on those making more than $100,000 per year to 25 percent.
Here’s what is inside the Trojan Horse, or rather what is not in it. The Republicans gut the Obama plan to nothing. Gone are Pell grants to get our kids to college and money to help rebuild our schools and retain teachers and cops. Our children would have the same educational opportunities in 10 years as they do now, which puts us even farther behind the rest of a world that is already forging ahead of us. Gone is health care reform, replaced with a voucher system similar to the one proposed by McCain and rejected by voters. Gone is energy independence, which they replace by opening up all federal lands to drilling. As T Boone Pickens said, we cannot drill ourselves to energy independence; we just don’t have enough.
Gone, then, is the reduction in military spending, as we are forced to protect our oil sources in the Middle East. Gone is development of a new economy based upon manufacturing of the future.
In short, what tune the Republicans offer you is the same you got from Bush. It is what the majority of voters rejected in November and then some. It is a U-turn back to the future of the Bush years.
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