The Right Opinion

Without Deep Spending Cuts, Republicans Lose the House in 2014

By Lawrence Kudlow · Jan. 19, 2013

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 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 President Obama is against spending cuts. In his debt-ceiling speech this 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., this 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.

COPYRIGHT 2013 CREATORS.COM

9 Comments

Ct-Tom in NC said:

Larry, have you been drinking at the computer again? Voters are smart? Are you kidding? They just re-elected the worst president in living memory.

They will support cuts? In what? The only specific cuts I have heard about are very small. Even the Ryan cuts won't actually stop our slide downhill. And everybody thinks those cuts are draconian.

The huge entitlement class, not all of them poor, is going to have to hurt a great deal more before any changes get made.

Saturday, January 19, 2013 at 8:37 AM

READY4ACHANGE in ILLINOIS replied:

CT - I was thinking the same thing! If the bone-headed voters were thinking, we would have Romney in office - not that God-forsaken traitor!

Monday, January 21, 2013 at 10:33 AM

Tod the tool guy in brooklyn ny said:

At my wife's school, the liberal educators komplained that their paychecks were smaller! My beautiful bluedog replied," The checks are smaller, to pay for Obamacare & Big Government! The blind sheeple will have to feel a BIG Pinch before they relinquish their entitlement mentality! "Follow the Reagan-Friedman blueprint, and you'll see private arena growth---If growth is what you desire!"Sempre Paratus!

Saturday, January 19, 2013 at 10:35 AM

Kevin from Arkansas in USA replied:

My wife (K-teacher) got her first check for 2013 this past Friday. It was down $150 from December's check due to a combination of the payroll tax holiday expiring and an increase of medical insurance premiums. She was well aware that this would happen and was not surprised. She said a vast majority of the teachers she works with were shocked, stunned and mad at the reduction. While eating dinner last night she commented: "Were they living in caves this past year?"

Saturday, January 19, 2013 at 2:29 PM

Wayne in Hinesville, GA said:

I wish someone would explain to me what an entitlement program is. Is it Social Security or Medicare that taxpayers paid into during their working life? Is it military retirement benefits that were promised after your service? What about Veterans benefits paid for injuries suffered during active service? I am sick of every time the government gets into financial difficulties they threaten military retirees, Social Security recepients, and disabled veterans. Not once do you here them talk about reducing welfare give-aways, foreign aid, UN dues, or any of the bloated government programs. Disgusting bunch of wimpy idiots on both sides of the aisle who are too scared to do the right thing becasue it might be unpopular and hurt their chances for reelection. They no longer represent us,only themselves.

Saturday, January 19, 2013 at 11:35 AM

Mindblown in Flyover USA replied:

OS, you said it very well. I agree.

If the interest on the debt and "entitlement" spending amounts to 60% of the budget then we're borrowing 40+% for discretionary spending. How about reducing that discretionary spending black hole by 20-30% to start? I've seen many good, workable ideas out there from a 1%/yr reductions to eliminating duplicate programs and programs not directly related to the particular departmental function.

How about conservatives just telling the smelly diaper wearer in the WH NO!?!

Saturday, January 19, 2013 at 1:41 PM

Radio Randy in Colville, WA replied:

Sarge, Social Security benefits are no longer just for the hard working taxpayer who spent a lifetime contributing to the program. SS benefits are commonly paid to those who have perfected the art of "disability" through years of living on the government dole (Welfare). These are people who grew up on Welfare and when they became old enough to get a job, were able to claim a "disability" in order to abstain from practicing that four letter word. Amazingly enough, many of these disabled persons are still fully capable of reproducing, which they do with the government's blessing (and substantial amounts of taxpayer dollars). If you are older, you can file for a "learning disability" (couldn't we all). If you suffered childhood epilepsy, you can file for a disability, even though you grew out of it by the time you hit puberty. My spouse could claim multiple disabilities for arthritis, asthma, gout...you name it, but she won't do it because we retain the pride of a hard working family. So, the next time you hear DaddyO talking about budget cuts affecting entitlements, he really means the disability payments to those poor deserving folks (voters) who never had to work a day in their lives (and, thus, never contributed a single dollar to the system). One more thing...my comments are not directed to the "truly" disabled...only to those who's hardest job in life was to invent one that could pass the "silly grin" test.

Monday, January 21, 2013 at 5:15 PM

Sturmudgeon in WA said:

Mr.Kudlow: I respect what you write, BUT, must you continue promoting the false "economy improving", false unemployment numbers, and etc.,?? That is no better than our vaunted 'impartial media'.
May I suggest that you get a subscription to "shadowstats.com", Mr. Williams I believe has far more reliable and realistic "numbers". It is far past time for persons of your influence, to stop reinforcing the falsehoods.

Saturday, January 19, 2013 at 9:48 PM

William Riley in Sagebrush, Washington said:

At age 70, I collect Social Security. Since 1963, both political parties have raided the SS Trust Fund and spent the money, replacing it with Treasury IOUs. I stood by and said nothing. I am willing to take a cut if they also cut across the board, every other program equally. Raising taxes only gives them more money to spend. My kids and grandkids do not deserve to be saddled with debts my generation created.

Sunday, January 20, 2013 at 9:10 PM