Opinion Editorial | |
| Wednesday, October 6, 1999 | |
Arbitrary Budget Caps Led Republicans To Propose Tax Credit |
"Fanaticism consists in redoubling your efforts when you have forgotten your aim." So said philosopher George Santayana. It would seem to be an apt description for the lemming-like behavior of congressional Republicans as they seek to reduce spending for the Earned Income Tax Credit (EITC). Although they are not, in fact, cutting benefits at all, it was inevitable that the accounting changes they are trying to institute would be portrayed as a cut in aid for the poor. The absurdity of it all is that they are bringing enormous -- if unjustified -- criticism upon themselves for no purpose whatsoever.
Republicans knew that they had a problem back in the Spring, when they adopted their thoroughly dishonest budget blueprint for the year. They thought they could force Bill Clinton to break the spending caps, while they would be the defenders of the Social Security surplus, the annual excess of Social Security taxes over Social Security benefits. They reasoned that as long as they could say that the Social Security surplus was preserved in an unbreakable "lockbox" they would be safe politically, while Clinton would take the fall for what they intended to do all along: break the caps.
This was a very unwise strategy because the Social Security surplus is utterly meaningless as far as it pertains to the certitude of retirees receiving their benefits. All current retirees will receive every penny that has been promised to them regardless of whether there is a Social Security surplus or not. The Social Security Trust Fund is nothing but an accounting device, with no meaningful impact on benefits.
Nevertheless, Republicans staked their future on the sanctity of preserving the Social Security surplus at all cost. The effect was to elevate a mere accounting issue of no special importance to the level of a moral principle. The only way the plan could succeed was if everything worked perfectly. If it didn't, and even one penny of the Social Security surplus was needed to make the fiscal year 2000 budget numbers fit together, then Republicans in Congress in effect would be responsible for gutting Social Security.
This brings us back to the EITC. In order to meet some extremely arbitrary budget targets, congressional Republicans found themselves in a situation where they either needed to cut spending for popular programs significantly -- despite a large budget surplus -- or dip into Social Security. They chose the former, but hoped to finesse the issue by accounting slight-of- hand -- moving some of the EITC from fiscal year 2000 into fiscal year 2001. No benefits would actually be cut, but close to $9 billion would be saved in the 2000 budget, thus allowing Republicans to meet their budget targets without using Social Security.
It was a plan too clever by half and hence doomed to fail. The substance is irrelevant. Even the most novice politician should have known that Republicans would be seen as cutting benefits for the poor and that this misperception would be hammered home incessantly by Clinton and his Democrat allies in Congress and the press. No wonder, then, that presumptive Republican presidential nominee George W. Bush cut his losses and abandoned congressional Republicans, denouncing their plans to cut aid to the poor.
The Republican EITC plan may in fact be good policy. But it was the wrong time and place to try and reform a program almost universally hailed as the greatest thing since sliced bread. But the true source of this debacle lays with the misguided "lockbox" plan. That is what made today's political defeat for Republicans inevitable. Will they never learn?
Source: Bruce Bartlett, senior fellow, National Center for Policy Analysis, October 6, 1999.
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