Sunday, January 17, 2010

James Kwak: Deficit Hawkoprite Watch: The Debt Ceiling and America's two political parties

"Sometime this spring, Congress is going to have to raise the debt ceiling
or the federal government will face default.

Republicans are going to demand many, many pounds of flesh in exchange,
ranging from cuts in discretionary spending to rethinking of entitlement programs...

...Democrats are probably going to give in to at least some Republican demands...

...The deficit problem was created by Congress,
through its many votes to increase spending and decrease revenues
(otherwise known as taxes).

“One of the peculiar embarrassments of the American political process
is the fact that Congress votes separately on the deficit and debt,
as if they were two different decisions. . . .

“A politician who votes for the spending and tax measures
that produced the deficit but against a debt ceiling...
,,,is deliberately wasting taxpayer dollars for no purpose
other than to grandstand before voters as a ‘fiscal conservative’.

Anyone playing such a game
has complete contempt for the intelligence of their constituents.”

James Hamilton

...I picked five major bills in the past decade that have significantly increased the national debt:
the 2001 tax cut, the 2003 tax cut, the 2003 Medicare prescription drug benefit, the 2009 stimulus,
and the 2010 tax cut.

...Then, for each of those bills, I looked up the CBO budget impact estimate made at the time.

Their costs, as projected at the time (and hence as knowable by members of Congress), were as follows.

The first number is the ten-year cost;
the number in parentheses is the portion of that cost through fiscal year 2011.

Numbers are in billions.

2001 tax cut: $1,346 ($1,346)

2003 tax cut: $350 ($354 — the cut has a tiny deficit-reducing impact in its final years)

Medicare Part D: $395 ($271).
Note that I am not including the fact that the cost of this bill
was almost immediately reestimated after it passed to be significantly higher,
since that was not knowable to members of Congress when they voted.

2009 stimulus: $838 ($793)

2010 tax cut: $858 ($374)

That’s a total of $3.8 trillion — $3.1 trillion of it hitting the national debt by this year,
and hence contributing directly to the need to raise the debt ceiling.

Then I looked up how current senators voted on these bills...

For each senator, I added up how much of the current (2011) debt he could have voted for,
and how many he did vote for.

...current Democratic senators (including Sanders and Lieberman)
had the opportunity to vote on $127 trillion of additional debt,
and voted for $64 trillion, or 50 percent;

...current Republican senators had the opportunity to vote on $104 trillion of debt
and voted for $70 trillion, or 67 percent.

...Of current senators, the proportion in each party voting for each bill is as follows:

2001 tax cut: Democrats 18%, Republicans 93%

2003 tax cut: D 3%, R 94%

Medicare Part D: D 17%, R 88%

2009 stimulus: D 100%, R 5%

2010 tax cut: D 77%, R 87%

So the typical Democratic vote
...would mean voting for 37 percent of the total debt produced by these bills...

...The typical Republican vote[d] for 75 percent of the total debt.

...[Some of] the Republicans who will be railing against fiscal irresponsibility
and threatening to block a raise in the debt limit [may be] the irresponsible ones themselves
who created the need to raise that debt limit.

...the only people who can claim not to be responsible for the national debt
— at least not via any of these five bills —
are the newly elected members (except Rob Portman and Pat Toomey,
who voted down the line to increase the debt as Congressmen) and Tom Coburn,
who joined the Senate in 2005 and voted against both the stimulus and the 2010 tax cut.

By contrast, Republican leaders Mitch McConnell and Jon Kyl
ach voted for $2.3 trillion of debt (75 percent),
yet will somehow try to argue that the need to raise the debt ceiling is not their fault.

On the flip side, the...people who voted for all $3.1 trillion of debt
are Ben Nelson (D-NE) and Susan Collins (R-ME)...

...Following Nelson and Collins, at $2.8 trillion, are Max Baucus (D-MT), Dianne Feinstein (D-CA),
Mary Landrieu (D-LA), and Olympia Snowe (R-ME)...

...the December tax cut is Exhibit A in the problem with bipartisan compromise,
at least from the perspective of the deficit.

...The ...substantive issue of whether, in fact, [they] created the national debt in the first place
and should behave accordingly.’s a spreadsheet with all the data. (Source)

James Kwak

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