On Math and Muggles: The GOP's Post 2012 Challenge

The intellectual decay of the modern GOP was on full display yesterday.  In a 16 minute segment on Morning Joe, House Majority Leader Eric Cantor repeatedly made the following argument:

We need more revenue.  We should create more revenue from growth.  Growth comes from lower taxes.  Thus to raise more revenue we need to cut taxes, not raise them. 

See for yourself. And, if I am wrong, let me know. 

What is remarkable about this argument - theological?ideological? - is that it's been so clearly debunked by the experience of our own economy over the past 20 years.  Bill Clinton raised taxes on wealthy people, the economy boomed, jobs were created, the market soared, deficits became surpluses, poverty declined, medium incomes went up.  Bush cut taxes on wealthy people and we experienced our worst economy in 70 years.  Barack Obama has cut taxes repeatedly since in office, and the economy has not taken off.  Given the complexity of our economy, and the limited role government plays in it, it really doesn't make sense for the party of limited government to exaggerate the role government tax revenue plays in the complex, dynamic economy of the United States.  Lower taxes simply aren't a sufficient condition to guarantee growth.  What Eric Cantor repeated yesterday again and again simply isnt true, and yet it is the foundation of current GOP economy orthodoxy (as we all have been reminded of late, the modern GOP just isn't very good at math).  

So how does one negotiate with this argument?  Not going to be easy.  My read of the Cantor interview is the vast majority of House Republicans are not going to go along with any fiscal cliff compromise.  It is an ideological bridge too far.  There is no fallback position, no explanation of why they can in any circumstance accept an increase in taxes, whether increase in rates or capping deductions.  Cantor explained the logic - we put additional revenues on the table, and the way we get there is through cutting taxes, or keeping them low, not raising them. Allows him in his own mind to "buck Grover" but oppose the President.  My gut is that this is where the overwhelming majority of House Republicans end up.  

And I am a bit mystified by all this attention to Grover and his pledge.  This low tax, anti government approach is not an ideology foisted on unwitting politicians by a modern day Svengali.  It is the core economic argument of the modern right, the intellectual foundation of their entire domestic and economic agenda.  Consider that Mitt Romney, the GOP's 2012 nominee, embraced an extreme and almost cartoonish version of this philosophy, calling for a 20 percent across the board tax cut, an increase in defense spending all while arguing he would balance the budget.  For good measure he attacked President Obama for reforming Medicare, something the Republicans now claim is an essential part of any fiscal cliff deal.  The President rightly pointed out that due to the embrace of radical tax cuts Governor Romney's plan would actually increase the deficit by trillions of dollars.  Grover Norquist should be seen as a manifestation of this ideology, not its cause.

While I am optimistic everyone wants a deal on the budget getting there in the next few weeks, and then again over the next few years, it is not going to be easy.  The Republicans have staked out such extreme positions on fiscal matters that moving to a place of reasonableness is going to take a great deal of leadership and patience.  We start from the place held by Romney, Ryan and Cantor - saying their plan would reduce the deficit when in fact it would increase it.  Pure magical thinking, of course, ripped right from the respected and increasingly influential Harry Potter School of Economics.  The reason that Romney's plan, and other current Republican plans would not actually reduce the deficit is that they have been publically opposed to doing the three things we have to do to attack the deficit - raising revenue, cutting defense, reforming Medicare and other health care programs (repeal Obamacare, restore $716b in Medicare spending).  The President on the other hand is for all three of these things, and already showed he was willing to cut domestic spending to the tune of $1 trillion over 10 years, something he agreed to as part of the debt ceiling deal in the summer of 2011.

As we enter the next phase of this public debate about our fiscal future, it is important to understand that it is President Obama who has shown a willingness to compromise, and do the hard things to attack the deficit.  The same cannot be said of the Republicans, which is why the burden now is on them to make the next move and return to the land of math and Muggles.

Update: Discussed all this on Fox News today.  Was a fun segment.  And got to debate these issues again on Thursday on Megyn Kelly's show.  Been remarkable to watch the right deny the reality of what the Dems have already done on spending and entitlement reform, and what they are willing to do now. 

Friday Update - Please sure to review this major magazine article I wrote recently on the need for the GOP to modernize, and how hard it will be for them to do so.