The National Review allows Grover Norquist to enhance its position as the dumbest outlet for punditry ever:
Fast forward to 1990 when George Herbert Walker Bush also made the deal Gokhale recommends we repeat. Taxes were raised $125.4 billion over four years. Spending increased $208.8 billion during that period.
Nominal Federal revenues were $1081.5 in 1990 and were $1320.8 billion in 1994, while expenditures were $1253.5 billion in 1990 and were 1533.1 billion in 1994. In other words, the nominal increases were even larger than Norquist suggests. In percentage terms, both increased by 22%. Norquist fails to inform his readers than prices rose by 10.6% over this same period so the real increases in Federal spending and taxes were approximately 10.5%. Since real GDP also rose during this period, we should note that the increase in nominal GDP was 21.9% so Federal spending and revenues as a share of GDP did not rise appreciably. It’s also interesting that Norquist fails to discuss what happened to the Federal deficit for the rest of the decade.
Since Norquist recommends not negotiating on the tax side, let’s see where he would cut Federal spending:
We can and must reform the government to lower levels of spending. Social Security and government pensions provide the most obvious examples. Only by moving these “pay as you go” defined-benefit plans to fully funded, portable, individually-owned defined-contribution plans (like IRAs or 40l(k)s) can we end the escalating unfunded liabilities that correctly worry Gokhale and others.
Let me see if I understand this recommendation. Let’s imagine we go for complete privatization of Social Security by doing the following: (a) eliminate all future benefit checks; (b) eliminate all payroll contributions; and (c) take the Federal bonds in the Trust Fund and refund them to us elders who paid into the system over the past generation. If we did this – the General Fund deficit would still be around $600 billion a year. So where else would Norquist cut spending? He doesn’t say.
This is not meant to criticize either the National Review or Mr. Norquist. It turns out that none of the free-lunch supply-side crowd in the Republican Party has a better answer as to how to end the fiscal insanity that has existed over the past five years.
Update: Michael Powell relays a report on an American Prospect breakfast where Grover Norquist revealed his hopes for destroying Social Security:
“I believe that when there are 60 Republican senators we will move Social Security from the present Ponzi scheme to a fully funded, individually held system.”
Of course, the Social Security Trust Fund is not a Ponzi scheme – but it’s pretty clear that Norquist is hoping for a sizeable GOP majority so they can cut your Social Security benefits by more than they cut your payroll contributions. After all – this backdoor employment tax increase is how they plan to reduce the massive General Fund deficit created by reductions in taxes on capital income.