The real choice
What the 'debt limit' fight is about
There seems little doubt Iowa Republicans in Congress will vote for House Speaker Kevin McCarthy’s debt bill.
After years of rising debt, congressional Republicans are now arguing it’s time to get it under control.
This won’t do it.
Here’s why: Even if the Democrat-controlled Senate and the White House were to go along with it — which they won’t — the House Republican plan would still grow the federal debt to 106% of Gross Domestic Product by 2033, according to the deficit-fighting group, the Committee for a Responsible Federal Budget.
By contrast, under President Biden’s proposed budget, the debt would grow to 110% of GDP.
110% versus 106%
Doesn’t seem like much of a difference, does it?
Yet, Republicans say they’ll refuse to raise the debt limit if their demands aren’t met. If that happens, all sides agree it would be an economic calamity.
What’s more is this isn’t even really even a battle over the debt.
This is a fight over the Democrats’ plans to spend more money and the Republicans’ desire to cut taxes. Because that’s what’s going to happen if the GOP gains control of the White House. The next Republican president — just as Republican presidents have done for the past 40-plus years — will propose a big tax cut, with most of the benefits going to the wealthy, and GOP members of Congress will vote for it.
It happened under Ronald Reagan.
It happened under George W. Bush.
It happened under Donald Trump.
The only time it didn’t happen was when George H.W. Bush was president.
Bush paid the price for his tax apostasy, but not coincidentally, our debt levels didn’t rise as much.
So that’s what this vote is really about.
Don’t believe me?
Look at what’s happening across the country.
In Iowa, Gov. Kim Reynolds, a rising star in the GOP, is on the way to eliminating Iowa’s state income tax. Already, she’s signed a flat tax that will give the average millionaire a $67,000 tax break. The typical Iowa family making $68,000 a year will get about $600.
In Wisconsin, lawmakers are pushing a flat tax plan that would, according to one estimate, give the average millionaire a $100,000 tax cut. Democratic Gov. Tony Evers opposes the plan; instead, he’s proposing a plan that would raise taxes on millionaires and reduce them for people down the income ladder.
In Kansas, meanwhile, Gov. Laura Kelly, a Democrat, just vetoed a flat tax proposal from the Republican-controlled legislature.
This isn’t just percolating in the states. Remember, four months ago when some congressional Republicans were agitating for a plan to replace the federal income tax with a 30% national sales tax? McCarthy took it off the table after he judged it to be a political loser. Which doesn’t mean that it couldn’t come back up again or that he and other Republicans wouldn’t simply vote to slash income taxes when they get back into power.
So, yes, this vote isn’t about spending versus the debt. It’s about spending versus tax cuts.
What’s more, Republicans are proposing cuts to just a part of the federal budget. The bulk of the budget like Social Security and Medicare is too controversial to touch, so Republicans are leaving it alone for now. But because the GOP will surely insist on holding the Defense Department harmless, that means projected spending on programs like education and agriculture and the like will sustain more substantial reductions.
That’s why you see news stories that say millions of people will lose health care and food stamps and other benefits. The plan also would cut tax credits for biofuels, which could be problematic for Iowa lawmakers.
The thing is, we need to do something about our debt. We can’t just let things go the way they are.
The Committee for a Responsible Federal Budget, whose debt-to-GDP figures I cited above, says on our current track, the federal debt will hit 118% of Gross Domestic Product by 2033.
That’s far too high.
It is too bad Iowa’s congressional delegation is willing to take our economy to the brink over savings that are only modestly better than Biden’s – and that will surely disappear if they do what they’ve done for the past 40 years and enact deficit-growing tax cuts.
It would be a better idea to stop holding our economy hostage and raise the debt limit. Then, Republicans and Democrats ought to recognize the debt is a real problem that needs to be dealt with and work on a bi-partisan solution to fix the problem without making threats.
Easier said than done, I know. But a Maine congressman (a Democrat in a Trump district) has pitched a plan to blend spending cuts and tax increases to try to bring the debt under control. Meanwhile, the House Problem Solvers Caucus is proposing a bi-partisan process to try to deal with the problem, too.
Neither are perfect. But they’re better than this standoff, which will surely exact a toll on our economy, just as it did in 2011 when Republicans initiated a debt limit fight with President Obama.
Unfortunately, what we’re seeing this week is that the House is on the way to passing a dead letter with the approval of Iowa’s delegation.
Senate Democrats and the White House have already rejected it.
We’ll have to wait to see whether backers of the House plan are willing to crash the economy in response.
In the past, we’ve always stepped back from the brink. This time, I’m not so sure.
A word before you go
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Suzanna de Baca:Â Dispatches from the Heartland, Huxley
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Beth Hoffman:Â In the Dirt, Lovilla
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Robert Leonard:Â Deep Midwest: Politics and Culture, Bussey
Tar Macias, Hola Iowa, Iowa
Kurt Meyer, Showing Up
Pat Kinney, View from Cedar Valley, Waterloo
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John Naughton, My Life, in Color, Des Moines
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Barry Piatt:Â Behind the Curtain, Washington, D.C.
Macey Spensley: The Midwest Creative
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Government subsidies, welfare, Medicaid, Medicare, food stamps and social security are all programs which are demonized by Republicans as the cause of our debt issues. The argument that people who have money earned and those on the "dole" simply need to pull themselves up by their bootstraps and quit relying on the government to support themselves. While there are some who have taken advantage of our "system" most started in poverty and never got out. What Republicans won't address are the tax break the rich get that are really government handouts. The argument that the rich who own businesses create jobs is also connected to the old school "trickle down" theory which has been debunked by economist for decades. The bottom line is controlling our debt has two ingredients, the first is getting a handle on expenses and the other is increasing revenue. The revenue side can be increased by more economic activity and having the rich pay their fair share. While the Republican want to talk about the threats to America from socialism, we as a country already practice and support our programs that take care of the poor, elderly, sick, handicapped and our veterans. The next time you hear the "right" railing on our social safety programs, ask them what they are willing to give up to make the equation work that would lead to balanced budgets.