At the precipice

Four years ago, with total aplomb, George W. Bush faced the nation and argued that if he were not reelected, all notions of “fiscal sanity” would be gone in Washington, DC. The notion of this president as the boy who held his finger in the fiscal dike would be comical if it were not so tragic.

One need only walk around New York City and see townhouses for sale with prices in dollars and euros to realize how far the mighty have fallen. One need only travel in foreign capitals to realize that while our infrastructure falls into disrepair, other nations are robustly investing in their future. Only a fool can argue as our debt burden grows and the dollar slides that we are not standing at a precipice.

Still, with an economic plan that offers more and deeper tax cuts, and no grasp of the consequences of continuing down the same path, John McCain is proving that the Republican Brand endures.

Republican: Balanced budgets. Small government. Individual liberty.

Not since George H.W. Bush almost thirty years ago attacked Ronald Reagan’s proposed tax cuts as Voodoo Economics has a national Republican leader stood up for the most basic tenets of Republican doctrine. Or what once was Republican doctrine.

In the 1980 contest between Bush and Reagan, the Republican Party formally turned away from any substantive commitment to fiscal responsibility because, as Grover Norquist—the founder of American’s for Tax Reform and one of the architects of the contemporary Republican coalition—likes to point out, the constituency that votes on the basis of balanced budgets is small—generally the old money and Wall Street set—and can be bought by a commitment to cutting taxes.

When Ronald Reagan took office, the public debt stood at $712 billion. Twelve years later, it had increased more than four-fold to $3.2 trillion. Under Bill Clinton’s watch, the increase was a mere $70 billion in eight years, or 2%. When George W. Bush took office, the public debt stood at $3.3 trillion. This year, it stands at $5.4 trillion, and increase of 64%.

Still today, Republicans claim the principles of fiscal responsibility as their own, and decry Democratic profligacy. But what data are they looking at? Coca Cola was once sold as a health elixir, but the evidence would prove otherwise. Where is the truth in advertising that adheres to the most basic areas of civic choice?

Today, any semblance of the historic identity of the Republican Party has been sundered. Based on Concord Coalition data, the total fiscal burden—including public debt and future unfunded entitlements—on each American totals $175,000, or $455,000 on each household. Eight years ago, these amounts were $72,500 per person, or $188,750 on each household. Therefore, the price of the past eight years—of tax cuts and massive increases in spending—has been over $100,000 per person, or $265,000 per family.

$265,000 per family. Enough to put four kids through the average public university, but instead just a burden on America's future.

Compare these numbers to per capita income of $33,250 and median family income of just over $50,000. Consider the real struggle that most families face to put kids through college, and the ease with which this new $265,000 obligation has been foisted on those same families.

This is not a theoretical debt burden, but rather the real cost of our current liabilities. It is the real world manifestation of Republican icon Milton Friedman’s wisdom—offered to contradict the economic hocus pocus of supply-siders—that a fiscal deficit is simply a commitment to raise taxes in the future. Deficit spending, as true Republicans easily grasped, is simply evidence of political opportunism and moral weakness.

The simple fact is that in 1982 the Republican Party walked away from fiscal responsibility, as it fell prey to—in the words of long-time Republican wise man Pete Peterson—the unholy alliance of tax-cutting and big spending Republicans, and their grip on the Party is as tight as ever.

Where is John McCain's political courage today? How is he putting the Country First today when he trades away his once-valued integrity for votes, even as his plans will foist an ever greater fiscal burden on the country's future?

This issue is manifest in the debate in the Presidential race over extending the 2001 and 2003 tax cuts. These tax cuts—which John McCain opposed when they were originally enacted for being skewed to the rich and inappropriate as the nation went to war—were approved in a manner of unmatched cynicism as they were set to expire within a ten-year timeframe to create a pretense of being “revenue-neutral,” even as the intention from inception was to characterize efforts to oppose extending them as a tax increase.

Today, John McCain proposes new cuts in corporate tax rates in addition to extending the 2001 and 2003 legislation as it expires. The Office of Management and Budget projects the cost of an extension of the 2001 and 2003 tax cuts, without regard to the additional corporate tax cuts, at $2 trillion. Meanwhile, McCain proposes to pay this cost through eliminating Congressional earmarks, which according to Citizens Against Government Waste peaked in 2005 at a cost of $27 billion. Therefore, even if all earmarks are eliminated, at their peak they would barely pay for one-third of the interest cost alone of extending the tax cuts.

In contrast, in 1993, Bill Clinton took the Democrat Party in the opposite direction, as he moved the party away from its roots, and embraced the very principles that the Republicans eschewed. As Bill Clinton declaimed early in his presidency, "We're all Eisenhower Republicans now. We stand for lower deficits and free trade and the bond market.” Today, Democrats propose to shift the tax burden toward the wealthiest Americans in favor of the middle class—much McCain advocated at the time of the 2001 and 2003 tax cuts—while adhering to the revenue neutral principle that was once claimed by Republicans.

Over the weeks to come, John McCain will pull the old horse out of the barn for one more run around the track. He will claim the Republican mantle of fiscal responsibility with the full-throated enthusiasm of either a naïf or a craven opportunist.

But will people notice that the horse is dead? Will the depth of the Republican brand still have enough juice to offer the voters succor one last time?

As Americans sit around the kitchen table, will they understand that the $265,000 that they have taken on in the last eight years is the price they will have to pay for failing to challenge those who prey on their optimism and their patriotism?

Will they understand that every tax cut and war and entitlement comes with a price and that none of the goodies that they are offered are ultimately paid for by anyone but themselves?

And will they understand that unless they stop accepting the easy answers, the price tag the next time around is only going to be higher?