JONATHAN CHAIT APRIL 15, 2011
The Republican pose toward deficit projections under the Obama administration is one of pure hysteria -- we face an existential civilizational crisis that requires us to remake our welfare state. Ten years ago, the Republican pose was surplus hysteria. The surplus is huge, we must eliminate it it lest the government pay off the entire national debt and start buying up private industry. As part of this argument, conservative Republicans were fervently insisting that the Congressional Budget Office was underestimating surpluses over the next decade. Here, via Nexis, is a Robert Novak column from 2001 conveying the fashionable conservative view of the time:
The most enthusiastic congressional supporters of President Bush's proposed tax cut consider it much too small, but that's not all. They have reason to believe that government estimators, in both the administration and Congress, are up to their old tricks and badly underestimating tax revenue.
Lawrence Hunter, chief economist of the Empower America think tank, has made calculations that lead him to believe that the Congressional Budget Office has lowballed its estimated 10-year surplus of $ 5.6 trillion. He figures the realistic number is at least $ 1 trillion higher and probably another $ 1 trillion above that. Those numbers not only would permit a considerably larger tax cut than Bush's, estimated to lose $ 1.6 trillion in revenue, but in fact would mandate it.
There are senior Bush policymakers who privately admit that Hunter and his allies in Congress have a point. But these officials claim they cannot change the rules in the middle of the game. Nor can they adjust unrealistic methods that bloat the revenue loss from Bush's cuts. Thus, Washington's high-tax establishment is able to use underestimated surplus projections and overestimated tax losses to claim the country cannot afford the president's program.
"It's too small," Rep. Paul Ryan of Wisconsin, the most junior member of the Ways and Means Committee but a leading House supply-sider, told me. "It's not big enough to fit all the policy we want."
Ryan has refashioned his image from "supply-sider" to "serious budget hawk," but there's not much evidence his worldview has changed. He still favors enormous tax cuts for the rich far beyond those passed into law by George W. Bush, only this time he promises to pay for them via closing unspecified deductions.
Of course, Ryan now takes an extremely dire view of thing government's long-term fiscal position, as opposed to the wildly optimistic view he took under Bush. I'm sure events have played a role here. But there's also a clear partisan tint. Republicans dismissed any concerns about the debt under Bush, which allowed their side to freely push fiscal policy in their direction and boost their own popularity by avoiding difficult trade-offs. As soon as Obama took office, they reversed themselves and successfully made fiscal conservatism a powerful constraining force on Obama's agenda.
The argument for a bipartisan debt implicitly assumes that such an arrangement would hold, and it would constrain both parties in the future. But who's to say Republicans would abide it? I think it's far more likely that, as soon as Republicans gain simultaneous control of Congress and the White House, they'll resume their wildly Panglossian stance on the fiscal outlook and push through more debt-financed tax cuts. Indeed, I'll further bet Ryan will be leading the charge -- his endorsement will be especially powerful because he'll have "credibility" on the budget. He's a serious budget hawk, you know.