Deficit Reduction: A Political Line in the Sand for Republicans

The Democratic strategy is to split the Tea Party supporters from the Republican Party leaders and thus depress support for the Republican Party at the congressional level and at the Presidential level in the run-up to the 2012 elections. But by refusing to contemplate a shut down, in fact ruling one out completely, the Republican leadership has caved into the Democratic insistence that of course it will always be the Republican fault if the government isn’t funded and there is a shut-down. The Democrats know this and thus the White House has no incentive to negotiate–thus the tepid proposals of a few billions in cuts.

On the other hand, the Tea Party folks and talk radio suffer from Republican Party betrayal syndrome. They are terrified that any compromise is an abandonment of deficit reduction of any real magnitude and thus they insist that the full $61 billion cut must be pushed even if the government shuts down as a result. This is a macho thing as well as a loyalty thing. Hannity, Ingraham, Rush, Levin and other talk radio greats are making this a litmus test of whether the Republican Party is serious about deficit reduction or not. They insist that if the Republican party cannot take a stand to cut an additional $28B from the budget, (the difference between $61 billion and the $33 billion being offered by Senator Reid), then how can the American people believe they are serious about deficit reduction in the trillions which Congressman Ryan is going to propose for the FY12 budget and beyond?

Senator Reid believes moral victories (a Republican compromise

on deficit reduction) will lead to political victories in 2012.

But if the FY2011 budget is where they want to fight, then fight everything on the FY11 budget including entitlements and welfare, albeit time is very short and the failure of the Democrats to even pass one appropriations bill in the last year is why we are in this mess. But republicans hold the House and thus we are in the game.

Let us put this in context, the big picture. Both Investors Business Daily and the Wall Street Journal note that the changes pushed by the administration on Medicaid alone will add some $200 billion annually to the Federal-State Medicaid bill for a total of $900 billion annually. If 5% of the US population is here illegally (say 16 million out of 310 million people), then roughly $45 billion a year of Medicaid is being spent on illegal alien health care if all illegal aliens qualify for Medicaid assistance–as it now includes people within 133% of the poverty level. Projected over a decade and we are talking of nearly one-half trillion being spent on health care for people with no business being in this country.

And the states are going broke because of this as Medicaid is becoming the second largest element in their budgets, ranking just below education spending. So thanks to the Democrats and their new health care monstrosity, states are either going to have to raise taxes, (by at least $16 billion last year alone), or lay off workers.

But think. Thanks to La Raza, Maldef and Azlatan, the radical hate-America groups founded and funded by such clowns as the Ford Foundation, we now have a virtual open border, spurred on by multiculturalists and diversity specialists as they seek to bring in millions of new illegal immigrants to eventually change into voters who will pull the Democratic lever two to one. In this milieu, shariah law and other misogynist philosophies will also find fertile ground. So we get millions of illiterate, poorly skilled workers which push down wages, work off the books, and cost us health care and education benefits which they do not come anywhere near paying for. And Americans who want to do these jobs are pushed aside, while Americans who should be taking these jobs collect welfare, join gangs, deal drugs and have children out of wedlock. Great system the Democrats designed!

In short, the budget fight over FY2011 is simply a microcosm of the fight over how the Democrats want to continue to misgovern the nation. And that means sending trillions to their favored friends, especially unions that give 99% of their contributions to Democratic candidates, or corporations like General Electric that support them and their crazy cap and trade energy schemes, while paying no Federal corporate tax, or interest groups such as ACORN that are wholly-owned subsidiaries of either the Democratic Party or George Soros.

Thus, given the constitutional issues at stake, the Republicans ought to be willing to draw a line in the sand and say very simply, serious deficit reduction and job creation policies must be debated and voted on now. That may require we use the FY2011 budget fight to do so. Or it can be pushed to the FY2012 debate which will start in a few weeks anyway with the release of the Ryan budget proposals. One criterion is that a quick resolution to the FY2011 budget fight would allow the US Department of Defense to get a full-up budget and thus avoid very serious problems with this year’s contracting and policy guidance which is now becoming a deadly serious problem for DOD.

But whatever is done, we have to change the terms of debate–to growth and jobs and investment and the major point: if you grow the US government you cannot grow the private economy. The great sucking sound is the loss of private economic growth as it is being vacuumed up by the enormous maw at the Federal budget trough.

The Republican leadership needs to explain: we kept tax rates from soaring and we are cutting spending. Finally, the economy is showing some life by creating 200,000 jobs this past month. That is not a coincidence.

Did not the Democrats claim that budget cuts and tax cuts already enacted (which they initially opposed) would cost thousands of jobs? What happened? We went from creating a measly ten thousand to now creating two hundred thousand jobs is just a few months since the conclusion of the 2010 elections and the subsequent passage of the tax rate reductions now in place and the spending reductions. Looks to me as the Republican narrative has been vindicated: Grow the private sector and jobs will be created. Slow the growth of the government and private jobs will expand.

But Senator Reid and others believe they have the Republicans in a box–anything short of the $61 billion cut for FY2011 spending is going to be portrayed as a victory for the administration and a major defeat for the “Tea Party,” and thus also a betrayal by the Republican Party of the trust put in them by the “Tea Party.” And in their view, the leadership in the House is playing right into the hands of the Democrats and could not make it a more beneficial playing field.

Unless the Republican leadership and the “Tea Party” folks transform the debate in two directions simultaneously: (1) a long term deficit reduction which is both serious and consequential and (2) a pro-growth, job creating, entrepreneurial impetus and investment plan—they will lose the debate. A $33 billion cut is indeed a very small step in the right direction–but it is a 3% cut in discretionary spending—should that be what is adopted. Remember, for the Democratic leadership in the Senate, the numbers are immaterial. The key is to portray the Tea Party and their supporters as radical and extremists and therefore not worthy of support. In this way Senator Schumer and others can beat their chest and claim hero status for “standing up” to these evil folks who of course they were deriding as inconsequential and simply “tea baggers” prior to the 2010 elections in which these very same Americans gave the Democrats a swift, hard kick off their smug political pedestals.

The debate must be about what the future governing philosophy of the United States will be–the socialist, heavy-handed, nanny-state, “Mommy May I” European Union the Democrats prefer–or a dynamic, entrepreneurial, free, investment, business and job creating dynamo that millions of Americans aspire the US to be. Eighty-five percent of the new jobs in a recovery are created by new companies. Not by old companies adding back workers. But new companies are created with risk capital, money people have earned and kept and are wiling to put into new entrepreneurial enterprises. But the current US policy discourages the very investment we need and want. Only with new companies will new workers and new consumers by the millions be created. That is what a recovery is all about for the 15 million Americans looking for work. That is what we in the Tea Party–the founders, its supporters and its friends–need to keep the focus on. The extremists, on the other hand, are those who would destroy this great experiment called America, this “last great hope of mankind” which is always about new beginnings, what we can become anew. That is what it means to be an American. The budget debate has to be about that.