The Republican Brain (35 page)

The fundamental point, demonstrated eloquently by these figures, is that annual deficits—which steadily increase our national debt—by definition arise from an imbalance between spending and revenue, where the former exceeds the latter. That means they can be reduced
either
through cuts in spending or increases in revenue. But today's Republicans will not countenance the latter, even though major revenue decreases (under Bush) are a key factor underlying current deficits.

To square their circle, Republicans therefore have to engage in intense motivated reasoning about taxes and deficits. Here's how Bartlett recently explained it, in his admirably neat and factual tone:

Simple common sense tells anyone who examines the data that tax cuts are responsible for a substantial proportion of the budget deficit and the increase in debt since 2001. Therefore, it is not unreasonable for tax increases to play a role in getting the nation's finances on a sustainable basis. The Republican position that the Bush tax cuts had nothing to do with our current fiscal crisis is incorrect.

Thus far, I've really only touched on economic falsehoods involving the legacy of the George W. Bush administration, and how that legacy affects where we stand today. For conservatives, these play a very important psychological role. They help to defend a Republican president (the team) and an orthodoxy—that tax cuts are always good.

But when President Obama took office, the dynamic rapidly shifted from in-group bolstering to out-group denigration. At this point, the economic falsehoods arguably became even more intense, and many new ones sprang up—because many conservatives thought pretty much everything Obama (the “socialist”) did was wrong.

Take the Tea Party response to the 2009 economic stimulus bill (technically the American Recovery and Reinvestment Act), hastily passed at the beginning of the Obama presidency to save the crashing economy from tumbling into a full blown depression. According to an early 2010 analysis by the Congressional Budget Office, the law added “between 1.0 million and 2.1 million to the number of workers employed in the United States” during the last 3 months of 2009 alone, reducing unemployment by as much as 1.1 percent.

But as the 2010 election campaign heated up, Republicans began attacking the stimulus virulently—and some even went so far as to claim it had failed outright to create jobs. The Tea Party-linked advocacy group Americans for Prosperity, as well as numerous GOP candidates and campaign ads, baldly asserted that the stimulus bill did not create jobs; that it was a “jobless stimulus,” did “nothing to reduce employment,” and so on. GOP presidential candidate Rick Perry also repeated this claim in a September 2011 primary debate, asserting that the stimulus created “zero jobs”—a claim for which he quickly drew a PolitiFact “pants on fire” rating.

The real assessment of the stimulus is far more complex and, naturally, nuanced: In a dramatic recession, many more jobs were lost than the stimulus was able to save. So even though it likely created or saved a few million jobs, the bill merely softened a very hard economic landing. There's an extremely strong argument that a much bigger stimulus was needed; but that doesn't make the one that passed worthless, or prove that it didn't work. It did—just not enough.

Counterfactual attacks on the stimulus bill were just a beginning. By 2010, just one year into Obama's term, the Tea Party had fashioned yet another big lie about the president's economic policies—the notion that President Obama had raised their taxes.

This has been quite the tax-cutting administration. The stimulus bill, for instance, contained a variety of tax cuts that lowered rates for 98 percent of working families and individuals alike, according to Citizens for Tax Justice. The cuts came through the “Making Work Pay” tax credit, changes to the alternative minimum tax (AMT) and earned income tax credit, and other modifications.

Yet by early 2010, surveys showed that Tea Party supporters thought Obama had
raised
their taxes. For instance, in April of 2010, after the stimulus bill tax cuts had already taken effect, a
New York Times/
CBS poll found that 64 percent of Tea Partiers thought the president had increased taxes for most Americans, while only 34 percent of the general public held the same misconception. (Ninety-two percent of Tea Partiers in the same poll believed Barack Obama was moving the U.S. toward socialism.)

Meanwhile, in the real world, the tax cuts continued. At the end of 2010, President Obama and the Republican Congress agreed to extend George W. Bush's tax cuts, preventing what would otherwise have been a tax “increase” when they expired. In this negotiation, the Obama administration also secured a payroll tax cut, lowering the amount that workers paid out for Social Security. As a consequence, concludes PolitiFact, “a majority of Americans have seen reduced taxes under President Obama.”

But if the fact checkers are getting involved, that means that demonstrably false claims are being circulated. And as usual, they're coming from the political right, where there remains a concerted effort to depict President Obama as a tax
raiser
. The Heritage Foundation in particular has denounced the president on this front—based largely on a variety of provisions in his health care bill, which do indeed raise selected taxes in certain situations, for certain people. “Obamacare and New Taxes: Destroying Jobs and the Economy,” reads one of their headlines. It's dated January 20, 2011—only about a month after the deal between the president and congressional Republicans to keep taxes
low
by ensuring the Bush tax cuts did not expire.

It's certainly true that even as he has slashed income taxes, President Obama has presided over some selected tax increases that will affect certain people—increased taxes on cigarettes, for instance. The health care reform bill, too, contained targeted taxes: on indoor tanning salons, those who don't buy health insurance (to get them to do so), and increased Medicare taxes on the wealthy. But this is surely not what most people—including Tea Party members—are thinking when they claim that Obama raised their taxes.

And then, of course, there's the logical consequence of wrongly exonerating President Bush for current deficits—which is to say, wrongly blaming them on President Obama. To give just one example, Rep. Michele Bachmann has repeatedly displayed a chart in which two towering blue deficit column are shown for the years 2009 and 2010 (representing President Obama's first two years in office), and a series of small red deficit columns are shown for 2002–2008 (representing Bush's presidency). The suggestion is that in the years 2009 and 2010, deficits and debt suddenly ballooned—and this is President Obama's fault, as it happened on his watch.

We've already seen where the debt actually comes from—the Bush legacy, the recession, and finally, a few moves by President Obama to extinguish fires. And we've seen that Obama was dealt a nearly impossible hand, both by his predecessor and the recession. Blaming him for the size of ongoing deficits or the debt is unreal.

I want to emphasize that the consequence of falsehoods like these is not small. They are at the center of national economic policy, going to the very heart of our current financial plight. And
still
, it gets worse.

“It's the most monumental insanity that I can even imagine.”

As usual, Bruce Bartlett wasn't pulling any punches. Especially not when it came to the idea that the U.S. might default on its debts—drawing a credit downgrade, alarming other countries and investors about the safety of our bonds, leading them to seek havens elsewhere for their money, and causing our borrowing costs to go up . . . and many, many other terrible things to happen.

Bartlett said these words, to
Salon.com
, fully half a year before the debt ceiling crisis reached its summer peak. But then, he'd been warning about precisely this disaster since long before the November 2010 election—the Tea Party election. Even then, he could already see that Republicans were going to pick up congressional seats, and the debt limit would need to be raised so the Treasury Department could continue to pay the country's bills. And he fretted that “a growing number of conservatives have suggested that default on the debt wouldn't be such a bad thing.” As one of them had put it: “Government spending is our economy's unspoken ill, and the day a default leads to the starvation of this economy-retarding beast is the day the U.S. economy really starts to boom.”

To the contrary, Bartlett warned, a default would have devastating consequences that those advocating it “have absolutely no clue about.”

Bartlett was prescient. And as the crisis drew nearer and nearer, he became a chief debunker of the suddenly mainstream GOP doctrine of debt ceiling denial. I'll survey the (bogus) arguments in a moment, but first, we need a bit more background on the debt ceiling, and the political context in which this reality-denying fight occurred.

The debt ceiling is a troublingly oddity of U.S. law. It's a statutory limit on borrowing by the U.S. Treasury, one that has to be raised occasionally so the department can continue to pay for obligations
already incurred
by Congress and presidents. In other words, Congress votes to spend money, and then occasionally votes again to let the Treasury pay for what Congress has already committed to.

As Bartlett repeatedly emphasized, it is therefore deeply hypocritical for members of Congress to vote for spending bills on the one hand, and then oppose raising the debt ceiling to fund the consequences of those votes on the other. The Treasury Department would not need to break through debt ceilings unless Congresses and presidents had approved unbalanced budgets and deficit spending.

Coming off the 2010 election, Tea Party Republicans saw an opportunity in the looming debt ceiling vote. They could threaten to block a debt ceiling increase, and thereby extract grand budgetary concessions and shrink government. Some even actually seemed to want to let a default happen: It would lead to a kind of automatic budget balancing and government shrinkage, since the Treasury Department would be unable to pay out more money than it actually had.

To be sure, this scenario would have made for quite the harsh budget balancing—but then, as Bartlett puts it, “they like recessions. They think they're a cleansing mechanism, and you need the collapse to happen as soon as possible, because as soon as you reach the bottom you can go back up again.

“It's reasonable,” Bartlett continues, “if you think sticking a knife in your eye is a good way to deal with glaucoma.”

What came to be known as debt ceiling denial amounted to a motivated rationalization of these tactics. The first and more simple argument was that somehow a U.S. government default on its debts would be a good thing, or at least better than the alternative of continuing to have huge debts and a spendthrift government. Rep. Ron Paul, for instance, wrote that “default will be painful, but it is all but inevitable for a country as heavily indebted as the U.S.” John Tamny, the
Forbes
columnist, also epitomized this view, writing that this “starve the beast” approach would usher in an era of new productivity, since too much government spending was the real problem with the economy.

This position is certainly coherent—but also senseless, because of the massive pain it would inflict.

While it is impossible to predict exactly what would happen if the U.S. were to default, there was every reason to be gravely concerned. Reasonably foreseeable consequences included credit downgrades, a new recession, rising interest rates on future debt, and reverberations throughout the entire economy: more unemployment, greater costs on personal loans, including car loans and mortgages, and so on.

Much debt ceiling denialism was subtler and more insidious than this, though. The more sophisticated deniers acknowledged that it would be wrong and intolerable for the U.S. to default on its debts, but
simultaneously
argued that the debt ceiling didn't really need to be raised by the date (August 2, 2011) that Treasury Secretary Timothy Geithner had given as his deadline—the last possible day before his department would be unable to pay some of its obligations.

Led by Republican Senator Pat Toomey of Pennsylvania, among others, these deniers argued that Geithner could simply pay off the government's bond creditors first, and then prioritize subsequent payments. And it was claimed that this would not really be a “default”—bondholders would always get their money, so where was the risk?

It's just that, well, a lot of other somebodys wouldn't get paid under this “prioritization” scenario. Who would they be? Military contractors? Social security recipients? Medicare beneficiaries? The FBI? That was never clear, but any such choosing of winners and losers would be extremely painful and problematic. “How the Treasury will decide who gets paid and who doesn't is a complete mystery and a problem that no conservative to my knowledge has given a second's thought to,” wrote Bartlett of this disturbing idea.