Chairman of the US House Republican Conference, Mike Pence (R-Indiana), is advocating for an immediate freeze on all federal spending. (Photo: Alex Wong / AP)
Strategy problematic amid recession.
Between Monday's Fiscal Responsibility Summit and Tuesday's presidential address to Congress, the White House's economic message shifted to new territory: health care.
"To my fellow budget hawks in this room and in the rest of the country, let me be very clear," said Peter Orszag, the director of the Office of Management and Budget, at the financial summit. "Health care reform is entitlement reform. The path of fiscal responsibility must run directly through health care."
Also see below:
House O.K.s $410 Billion Spending, Reverses Bush Policies â€¢
The sudden shift caught Republicans off guard. They had girded for a health care battle, but not on these terms. House Republicans have responded with a change of subject: they have proposed a "spending freeze," a controversial idea among economists during an economic downturn. Their immediate target is the $410 omnibus spending bill that packs together nine bills, containing spending that ranges from NASA to national parks, that did not get a vote in the last Congress. It's a double-down bet on spending austerity and opposition to "wasteful spending" as the message that can bring the party victory in the 2010 mid-term elections.
"We're advocating that Congress freeze all federal spending immediately," said Rep. Mike Pence (R-Ind.), the chairman of the House Republican Conference, during a Tuesday luncheon at the conservative Heritage Foundation. "People out there are hurting, and they understand what you do when times are tough. You make hard choices. Today House Republicans are urging the Democrats to do the same. We think it's time that the Democrats put our money where their mouth is."
The strategy - in its very early stages - presents problems for Republicans who have not received any measurable uptick in support from their opposition to the economic stimulus package. Most of the party's leadership is on record having supported Bush-era spending packages that grew the deficit. With the exception of a shrinking number of moderate Republicans from the northeast, all of the party's members of Congress support further tax cuts, which would lead to revenue shortfalls. And while Republicans argue that voters are on their side and opposed to further spending, there are few polls that back this up.
Pence's argument for a spending freeze is widely accepted within the Republican conference. On Monday, House Minority Leader John Boehner (R-Ohio) asked Democrats to "abandon their plans" to push through an omnibus bill "and instead pass a clean bill that freezes spending at current levels." Gov. Mark Sanford (R-S.C.) has decried the economic stimulus package because, in his words, "when times go south you cut spending." In a conversation on Monday, freshman Rep. Jason Chaffetz (R-Utah) concurred with party leaders.
"We've already done TARP, we've already done the stimulus, and we've already spent $3 trillion," said Chaffetz. "Can't we freeze it at that point? We already have a $3.1 trillion budget, and the majority asked for, and got, an additional $2 trillion. It's just time to say, 'time for a freeze.'"
This is a controversial stance: an economic downturn is not generally seen by economists as the right time to cut back on government spending. "They're about as wrong as it's possible to be," said Robert Reich, Bill Clinton's first secretary of labor, when asked about the Republicans' statements on Monday. Bruce Bartlett, a conservative economist who wrote a book critical of George W. Bush's spending, could not name many peers who believe that smaller deficits and less spending are the way to combat economic downturns. "It's a total double-standard," said Bartlett. "Republicans deficits stimulate, Democratic deficits don't."
Brian Riedl, the lead budget analyst for the Heritage Foundation, disagreed that the economics of deficit spending were quite this simple. "Is the assumption that expanding government is good for economic growth?" asked Riedl. "If that worked, France and Germany would have spent the last 25 years as the strongest economies in the world, instead of watching the United States grow at a faster rate."
Republicans have taken this view of recession economics and laid some of the groundwork for an anti-deficit, anti-spending argument on "fiscal responsibility." As Byron York reported in the Washington Examiner, Senate Minority Leader Mitch McConnell is one of several Republicans attempting to "connect the dots" between various spending bills and inform voters of the overall sum. Sen. McConnell, for example, pointed out that $1 trillion was more than $1 million every day since the birth of Jesus Christ. Two weeks later, a conservative political group, the American Issues Project, recycled Sen. McConnell's attack for an anti-spending TV ad.
The problem is that spending austerity is not - as it was in the early months of 1993, for example - very high on voters' minds, or even high on the list of reasons why voters remain cool on Republicans. In his response to the president's State of the Union speech, Gov. Bobby Jindal (R-La.) argued that voters had "rightly" rejected the GOP because the party "got away from its principles" and "went along with earmarks and big government spending in Washington," repeating an argument that Sen. John McCain made during the presidential campaign.
There is little polling to bolster this argument. Voters did not list government spending, or earmarks, or deficits, in their top concerns in the 2006 or 2008 national exit polls. The current Washington Post/ABC News poll puts support for Democratic plans at 64 percent. Indeed, the closest any pollster has come to nailing down public opinion on earmarks conducted by the Club for Growth, the free market, anti-tax, and anti-spending political group, known as a "527," that funds like-minded Republicans and primary challengers. In a 2006 poll conducted across 15 swing districts - where the vote for George W. Bush over John Kerry was, on average, 2 percent higher than the 2004 results - the Club asked voters whether they'd be more likely to support "a candidate who wants to reduce overall federal spending, even if that includes cutting some money that would come to your district; or, a candidate who is willing to increase overall spending on federal programs and grow the federal budget, in order to get more federal spending and projects for your district?" By a 57-28 margin voters supported "cutting spending." But the issue has not placed high enough in voters' priorities to be tested in major polls since 2006.
As Republicans push for spending cuts or spending freezes, they continue to propose tax cuts. That unsettles even some economists who agree with the thrust of Republicans' arguments. "I would probably not support supply-side tax cuts right now," said Lee Ohanian, an economics professor at the University of California-Los Angeles who co-wrote a much-cited study arguing that the New Deal lengthened the great depression. "There's no tax reform being discussed right now that would expand the tax base and increase revenues."
In Tuesday's address to Congress, President Obama furthered the argument that "fiscal responsibility" would mean reforming health care by the end of 2009. Republicans, conspicuously, gave the president a standing ovation when he spoke of a "responsibility to ensure that we do not pass on to them a debt they cannot pay." But there is something like unanimity among Republicans that they can respond to the deficit by attacking spending, and not by engaging on what they expect to be expansions of health care coverage.
"What you saw percolate up, with that vote on the spending package, was a reaffirmation that we didn't just lose our majorities in the last elections," said Pence on Tuesday. "We lost our way. Americans long for the Republican party to return to discipline and reform. This is a new House Republican party, and the other side had better get used to it."
House O.K.s $410 Billion Spending, Reverses Bush Policies
Thursday 26 February 2009
by: David Espo, The Associated Press
Washington - The Democratic-controlled House pushed through a $410 billion measure Wednesday that boosted domestic programs, bristled with earmarks and chipped away at policies left behind by the Bush administration.
The vote was 245-178, largely along party lines.
Republicans assailed the measure as too costly - particularly on the heels of a $787 billion stimulus bill that President Barack Obama signed last week. But Democrats jabbed back.
"The same people who drove the economy into the ditch are now complaining about the size of the tow truck," said Rep. James McGovern, D-Mass., pointing out the large increase in deficits that President George W. Bush and GOP-controlled Congresses amassed.
From the GOP side, Rep. Jeb Hensarling of Texas said the legislation was "going to grow the government 8.3 percent ... but the family budget which has to pay for the federal budget only grew at 1.3 percent last year."
The debate occurred one day after Obama told Congress in a prime time television address that he intends to cut deficits in half over the next four years, and one day before he was submitting tax and spending plans for the coming year.
Officials said the president's first budget would call for a permanent tax cut of $400 for lower- and middle-class workers and $800 for families, a break modeled after the temporary provision in the economic stimulus legislation.
He also will seek $634 billion over 10 years as a down payment on health care reform, the start of an effort aimed at providing coverage for an estimated 48 million uninsured people. Achieving that goal could cost much more.
Obama also intends to ask lawmakers to approve a new cap-and-trade system of limits and pollution allowances, especially for industries such as utilities with coal burning power plants. The program would help reduce greenhouse gas emissions while generating revenue that could help finance other elements of an ambitious agenda that includes health care and education reform.
The spending bill that cleared the House drew the support of 229 Democrats and 16 Republicans. There were 159 Republicans and 20 Democrats opposed.
In a symbolic bow to the recession, Democrats included in the spending measure a prohibition on a cost-of-living increase for members of Congress for the year.
Overall, the legislation would provided increases of roughly 8 percent for the federal agencies it covered, about $32 billion more than last year.
The bill is intended to allow smooth functioning of the government through the Sept. 30 end of the fiscal year. The Senate has yet to vote on its version.
After persuading lawmakers to keep earmarks off the stimulus bill, Obama made no such attempt on the first non-emergency spending measure of his presidency. The result was that lawmakers claimed billions in federal funds for pet projects - a total of 8,570 earmarks at a cost of $7.7 billion, according to Taxpayers for Common Sense. Majority Democrats declined to provide a number of earmarks, but said the cost was far smaller, $3.8 billion, 5 percent less than a year ago.
Among the earmarks was one sponsored by Rep. Howard Berman, D-Calif., who secured $200,000 for a "tattoo removal violence outreach program" in Los Angeles. Aides said the money would pay for a tattoo removal machine that could help gang members or others shed visible signs of their past, and anyone benefiting would be required to perform community service.
Rep. Mark Kirk, R-Ill., said the bill included at least a dozen earmarks for clients of PMA Group, a lobbying company now at the center of a federal corruption investigation.
"It's simply not responsible to allow a soon-to-be-criminally indicted lobbying firm to win funding, all borrowed, in this bill," he said. No charges have been filed against the firm or its principals, although the company's offices were raided earlier this month, and it has announced plans to disband by the end of the month.
Federal prosecutors are investigating PMA Group's founder and president, Paul Magliochetti, who is a former top aide to Rep. John Murtha, D-Pa., chairman of the House Appropriations subcommittee that funds defense programs.
In remarks on the House floor, Republican leader John Boehner urged Obama to veto the legislation, citing earmarks.
At the White House, press secretary Robert Gibbs responded only in general terms whether that was possible.
"There is great concern in this building and by the president about earmarks," Gibbs said. "Without having looked specifically at a piece of legislation, I'm hesitant to throw out that four-letter word, `Veto.'"
After eight years without control of the White House, congressional Democrats also used the legislation to target several policies of former President Bush.
Under the bill, Mexican-licensed trucks are banned from operating outside commercial zones along the border with the United States. The Teamsters union, which supported Obama's election last year, had sought the move. The Bush administration backed a pilot program to permit up to 500 trucks from 100 Mexican motor carriers access to U.S. roads.
Bush administration restrictions on travel to Cuba were loosened in the legislation, to permit more frequent visits and expand the list of family members permitted to make trips to see relatives on the Communist nation-island.
Rep. Doc Hastings, R-Wash., took aim at a provision that he said would vastly broaden the government's ability to invoke the threat of climate change to halt economic development. "Most all of the shovel-ready projects on the trillion-dollar stimulus bill would in fact be at risk," he said.
Nominally, the provision halts implementation of Bush-era regulations that reduce the input of federal scientists in endangered species decisions and block the law from being used to fight global warming. One of the regulations would allow oil and gas drilling to continue near the habitat of polar bears - a threatened species - without increased protections.
Rep. David Obey, D-Wis., and chairman of the House Appropriations Committee, said the legislation would merely give the new administration 60 days to decide the fate of the two regulations.
Democrats also inserted a provision into the bill to end a program that allows students in the District of Columbia to use federal funds to attend private schools of their choice. Boehner, who helped establish the program as part of a political bargain several years ago, called the move "hideous."
Associated Press writers Ben Feller and Andrew Taylor contributed to this story.