Paul Krugman unwittingly fulfills fiscal fantasies for Republicans

Looting the Treasury for handouts to the already rich has been the number one job for the Republican Party since Ronald Reagan. President Trump’s “tax reform” proposal delivers in all the tired predictable ways of eliminating the estate tax and slashing corporate rates. Republicans, after lecturing President Obama about fiscal responsibility for eight years, are eagerly reverting to form, breezily disregarding the half trillion plus deficit we are already slated to run in 2017 as they prepare pile billions in new debt on the backs of their fellow Americans.

If the plutocrats are looking to thank someone for this new wave of taxpayer-funded largesse, they should start with the celebrated liberal economist Paul Krugman. For nearly a decade, Krugman has been laying the intellectual foundation on which the Trump tax plan rests, championing the unrestrained expansion of the national debt and deriding “deficit scolds” who have urged fiscal restraint. Under his intellectual spell, many Democrats, who 17 years ago under President Clinton were proudly touting balanced budgets as a means of safeguarding the social net, have improbably been transformed into deficit cheerleaders.

{mosads}Let the economists fight over whether deficits suppress growth or cause other fiscal problems. The greatest cost of deficits is political, as bad policy choices can only be made when money is no object. The Trump tax plan is a perfect example. It is hard to think of a group of people in all of human history who have been in less need of government assistance than the billionaires who will overwhelmingly consume the benefits of the proposed estate tax elimination. Moreover, corporate profits are at an all-time high. America needs many things, but one of them is not a big corporate tax cut.

Such proposals would be politically impossible in the sort of balanced budget environment that existed as recently as 2000. Defying Krugman’s announcement in 2013 that the budget deficit is a “problem that is already, to a large degree, solved,” the actual deficit, according to the nonpartisan Congressional Budget Office, currently exceeds the entire defense budget and is slated to rise inexorably to add $6.8 trillion to the national debt over the next decade. That should make tax cuts a non-starter.

Yet the recently passed House version of the Trump plan would add an additional $1.7 trillion to the debt. Paying for just this new handout with offsetting budget cuts would require unprecedented measures for which Americans have shown no appetite, such as cutting all domestic discretionary spending by nearly a quarter. President Trump’s tax giveaway is only feasible in the current deficit-fueled political fantasyland that Krugman has so energetically promoted, where nothing ever has to be paid for and such choices never have to be made.

Deficits have become a form of political Novocain, anesthetizing Americans so they don’t feel the Republicans cutting their legs out from under them. Politicians as diverse as Vice President Mike Pence and former Vice President Joe Biden have spoken eloquently about the value of budgets as moral documents that allow us to express our national priorities. But that process is entirely undermined when the people and their elected representatives are lulled into the habit of never having to decide what government they actually are willing to pay for.

Working Americans are often criticized for voting against their economic interests, but in the current climate can you blame them? Why not cast your vote based on the Benghazi hearings when the political class implicitly assures you that your Medicare and Social Security and all the rest will be unaffected? Because, in Krugman’s words, our government “literally can’t run out of money.”

The bad choices we are making now are just the tip of the iceberg. Wait until interest rates rise and the Baby Boomers retire and money really gets tight. Even Krugman admits that this day will come, conceding that the “aging population” will cause our fiscal situation to inevitably “deteriorate.” Krugman’s greatest delusion is that at that point in our misty future, our leaders will all of a sudden have religion and address our fiscal situation in ways that are fair and equitable.

Unless you have been living under a rock for the past 30 years, you know that there is a much more likely scenario. It won’t be the well-connected beneficiaries of all the tax cuts who bear the burden of “hard choices” when they can be put off no longer. No, it will be those without lobbyists, such as the senior relying on Medicare or the disabled veteran, who will be asked to sacrifice services that we “can no longer afford.”

Think that can’t happen? Just ask the workers who have seen their pensions systematically stripped in recent decades through elimination of cost-of-living adjustments and similar cuts. All justified because their pensions “ran out of money” after years of irresponsible underfunding. That’s why it should surprise no one that Republicans are always willing to kick fiscal restraint to the curb when they have enough votes for another tax cut. At the end of the day, systemic deficits ensure that the conservative dream of a shrunken, emasculated government is achieved.

This is already happening as the Congressional Budget Office estimates that with rising rates, just the interest on our debt will almost double by 2022, sucking up almost half a trillion dollars annually. That’s enough money to easily fund such priorities as the free college proposal of Bernie Sanders, all paid instead to our creditors. As interest payments grow, the debt is increasingly operating like a giant meat grinder, consuming ever-growing portions of our national muscle. How bemused the Koch Brothers and their allies must be to have an acclaimed liberal economist so eagerly turning the crank.

Mike Stewart is chairman of the House Democratic Caucus in the Tennessee State Legislature.