Republicans were once married to balanced budgets and conservative money management, but now they have run off with something new: the seduction of tax cuts and budget deficits. They try to cover up the truth about their new relationship by cooking the books. Kansas’ own Dwight Eisenhower would be appalled.
Eisenhower presided over the last period when the U.S. ran budget surpluses for several years in a row. To fund this, the top tax rate for some high-earning Americans exceeded 90%. When President Kennedy backed legislation to drop that rate to around 70%, Eisenhower spoke against it, arguing that it would explode the deficit. A few decades later, President Reagan commissioned the W.R. Grace Commission Report, the first of a long series of warnings, reminding Americans to prepare for the impending (now current) retirement of the Baby Boomer generation, which would create (is creating) a demographic bulge straining Social Security, Medicare, Medicaid--particularly long-term care--and the nation’s overall health care system.
Then, Republicans ditched predictable old deficit-reduction policies for the sexy appeal of tax cuts and deficits: the real priority of Reagan, the second President Bush, and many Congressional Republicans from the 1980s onward.
Since Sam Brownback was elected Governor in 2010, they have brought their new love to Kansas. Once, moderate Republicans like Robert Bennett, Mike Hayden, and Bill Graves proudly presided over conservatively managed, balanced budgets. Today, Kansas’ budget is balanced in name only: trust funds have been drained, future payments leveraged, and highway bonds misused to create the illusion of a balanced budget that may technically pass legal muster, but will spell disaster down the road. Honestly, the thrill is gone.
Now President Trump proposes massive public works projects (including the border wall), plus cuts to top tax rates. Trump’s signature phrase perfectly describes the accompanying deficit increase: it is going to be huge.
Some economists like Arthur Laffer argue that tax cuts stimulate enough economic growth to pay for themselves: lower rates on a broadening base produce more revenue than higher rates on a small base. Alas, this only works when taxes are particularly high beforehand, as with the Kennedy-era cut. When they are not, disaster ensues, as we have learned in Kansas.
Critics counter by stating, “We have a spending problem, not a taxing problem.” Granted, dollar-for-dollar, government spending keeps rising, but this is misleading. Most federal dollars are already committed to entitlement programs like Social Security and Medicare, or to interest on the national debt. At the state level resides another pernicious problem: the costs of providing government services increase each year.
Teachers and other government employees are not receiving more generous benefits. Rather, the cost of providing the same benefits goes up substantially each year, mainly due to those increasing health care and retirement costs. This has not been a problem until recently-- budget estimates factoring in these rising costs are readily available from the Legislature's own nonpartisan staff (but legislators may ignore them).
The anti-Brownback Republicans elected in 2016 are sounding some rather Eisenhower-like talk about a return to responsible budgeting. But, can they give up their party’s love affair with deficit spending?
— Michael A. Smith is Professor of Political Science at Emporia State University. He writes for the Insight Kansas column series, syndicated columns on Kansas politics by political scientists in Kansas.