Friday, September 4 , 2015, 9:19 pm | Fair 70.0º




Larry Kudlow: Without Deep Spending Cuts, Republicans Lose the House in 2014

By Lawrence Kudlow | @larry_kudlow |

OK, it’s official. According to the Treasury Department, the U.S. debt jumped to $16.1 trillion in 2012 from $14.8 trillion in 2011. That’s a $1.3 trillion deficit for the last year. Remarkable. During President Barack Obama’s first term, the federal debt rose by roughly $6 trillion.

Now, if they are bold, House Republicans will take advantage of these dismal numbers. Bold means bold spending cuts, as in cut spending like there’s no tomorrow. Bold means implementing the $1.2 trillion spending sequester. Bold means an absolute rock-solid commitment to spending cuts.

A new Rasmussen survey shows that 62 percent of Americans favor across-the-board spending cuts. That includes every program of the federal government, according to the survey.

So Republicans can persuade the public about bold spending cuts. They can make it their key message and central marketing strategy. If they don’t, they risk losing the House in 2014.

Voters are smart. Another Rasmussen poll shows that 68 percent of Americans say cutting government spending is the solution to our economic problems. Support for cutting government spending has generally remained in the high 60s to low 70s over the past couple of years. Voters realize full well that a private, free-enterprise economy that holds on to more of its hard-earned money while the government share of the economy shrinks is pro-growth. Limited government is a tax cut.

Unlike the recent fiscal-cliff tax-hike deal, we need to let successful earners, investors and risk-takers keep more of what they earn as an incentive to remain the activists who drive the economy. Of course, Obama wants another $1 trillion in taxes. But Republicans must just say no. (While they’re at it, the GOP should cut tax rates for large and small businesses to 25 percent.)

As an extension to this hardline spending message, the GOP must make it clear that spending cuts equal economic growth. Think Friedrich Hayek, Milton Friedman and James Buchanan — all Nobel Prize winners who argued that less spending means more growth.

And the GOP should stop paying people not to work as part of their spending-cut campaign. With unemployment falling modestly in the last couple of years, food stamps have exploded by 7.2 million recipients. That’s 10,000 per day, according to Ohio University professor Richard Vedder, even in an expanding economy. Social Security disability payments also have exploded. So have long-term extended-unemployment benefits.

It’s this simple: If you pay people not to work, they won’t work. And if they won’t work, the economy won’t grow.

This is part of the spending-cut message. The GOP has to repeat this message again and again.

Now, we know Obama is against spending cuts. In his debt-ceiling speech last week, all he did was demonize the Republican Party, saying the GOP is making America a deadbeat nation. Obama continues to blame Republicans for throwing old folks, young people, military troops and others under the bus. Sheer demagoguery. Awful, divisive, non-compromising, non-leadership rhetoric.

But the GOP can make hay on this with a strong spending-cut, shrink-the-government message. With no gimmicks, please.

It’s OK to extend the debt-ceiling increase for another three months (as announced by Paul Ryan and the Republican leadership in Williamsburg, Va., last week). It’s also OK to use a continuing resolution to force short-term spending cuts, and maybe even get some long-term spending-cut plans going. Perhaps even the Democrats, who haven’t passed a budget in 1,360 days, will finally put one out in response to these Republican House measures.

But the idea of allowing the borrowing limit to expire, and using some kind of prioritization of payments while the government runs out of money, will not only damage the current economy, it will absolutely sink the Republican Party for the 2014 midterm elections.

The Bipartisan Policy Center projects that on March 1, the U.S. government will receive $20 billion in revenues to cover $84 billion in committed spending to obligations like Social Security, Medicare, Medicaid, veterans’ benefits, military pay, and so forth and so on. Sure, we can cover the interest on the debt, which is only about $20 billion a month. But what about these other commitments? And how would such a dysfunctional approach look to world financial markets and credit-rating agencies?

That’s why gimmicks like this should not be used. They will snatch political defeat from the jaws of a potential spending-cut victory.

But the moral of this story is that congressional Republicans must develop an effective spending-cut message. And that message should be linked to economic growth and job creation. If they do that, they will help the economy and their political futures. If they don’t, they’re going to lose the House and undermine the economy.

I think it’s that simple.

Larry Kudlow is economics editor at National Review Online, host of CNBC’s The Kudlow Report, and author of the daily web blog Kudlow’s Money Politic$. Click here to contact him, follow him on Twitter: @larry_kudlow, or click here to read previous columns. The opinions expressed are his own.




comments powered by Disqus

» on 01.22.13 @ 05:19 PM

What a load of bull - not one mention of the elephants in the room: ridiculously and historically low taxes on the wealthy, not to mention extravagant social welfare programs for mega corporations and wealthy investors who have the front groups like ALEC and lobbyists in state capitols and Washington DC to ensure that the publicly-funded giveaways continue, and the accountants and lawyers to figure out how to hide their income overseas. John Douglas

» on 01.24.13 @ 03:55 PM

Kudlow is an odd duck.

Most of the Obama Debt run-up came from cleaning up the Greenspan-Cheney-
Bush catastrophes Obama inherited. And Kudlow had supported most of those
disasters when they were going down.

Tax cuts, with no new revenue to compensate? Check.

Two foreign wars (one totally unrelated to 9/11), funded off-Budget? Check.

Medicare donut hole rate cut, with no new revenue to compensate? Check.

Prioritizing federal lending to get “every possible family into their own home”?
Check.

De-regulating, spaying, neutering federal financial watchdog agencies at the
time when the riskiest, complicated, avaricious investment and lending practices
were inflating the financial bubble? Check.

Now that the national hangover from the Bush era is subsiding, Kudlow wants
to take another run at the same issues and ideology that have made the Party
of NO! public opinion rating for the House of Representatives the lowest since
modern polling began.

What is he thinking?

Most Americans have other, higher priorities than Kudlow’s debt-ratio doctrine.

Most Americans want Congress, including those who main-line Tea, to try to
work together, to solve real-world problems that we all grapple with.

Ideological purity may work well for a Malkin, Kudlow, Hightower. But in the real
world, balance, perspective, being open to other viewpoints, is essential for any
kind of success.

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