Santorum’s Free Lunches

Bob Casey made a fool out of Rick Santorum during the national security portion of their debate on Meet the Press (even if Philly’s own Duncan Black was not impressed). Given that Casey believes in fiscal responsibility, the second half of the debate would have gone in his favor except for the fact that the fool named Tim Russert was moderating. One had to know how idiotic Russert would be as soon as he started using the unified budget rather than the General Fund deficit as his metric. After Casey promised to repeal some of Bush’s tax cuts, we got this:

MR. RUSSERT: Over 10 years.
MR. CASEY: Over 10 years, that’s right.
MR. RUSSERT: Yeah, but, but if you rolled back the top 1 percent, it’s about $56 billion in a year. Our deficit is 200…
MR. CASEY: That’s true, Tim, absolutely.
MR. RUSSERT: How you going to balance the budget? Which, which programs you going to cut?
MR. CASEY: Tim, you can’t, you can’t balance a budget in one year. They’ve put us in such a fiscal hole, it will take many years. I hope it doesn’t take 10 years, it took…
MR. RUSSERT: Well, but give me a couple ideas. Which programs would you cut?

Actually, that’s a fair question that Casey tried to answer. Alas, Russert did not hammer Santorum in the same way as he let Santorum get away with the usual GOP garbage of saying the Democrat has no plan, the Democrat’s plan (which of course does not exist) lacks specifics, and the specifics of the Democrat’s plan (which again does not exist) would somehow be bad for the economy. And then we get this bait-and-switch:

SEN. SANTORUM: Well, let me just say this. First up, I don’t know how Mr. Casey by, by, by changing the, the estate tax to provide more exemptions is going to save money. The fact of the matter is that that would cost money over, over the long term, not, not save money. The death tax snaps back to the old death tax in 2011, and if he made changes, it would cost, literally, hundreds of millions – probably $100 million just to do the changes that he suggested. So it doesn’t save money, it costs money. But that’s OK because I’m for not, not taking more people’s money when, when they die. So maybe we, maybe we agree on that. Although he said he would have voted against any changes to, to lower the death tax.

Casey’s numbers were how his middle ground position would compare to Bush’s position for a complete elimination of the Estate Tax, while Santorum’s metric was comparing Casey’s position to a return to the tax rates during the 1990’s. Last I heard – Santorum was in favor of Bush’s position. In fact, he offered no specifics on either spending cuts or reversals of Bush’s tax cuts. All Santorum did was to repeat two examples of free lunch supply-side spin such as:

SEN. SANTORUM: He wants to, he, he wants to grow the economy by increasing taxes. That’s what he says. So here, here he’s saying we have to grow the economy so we’re going to take more out of it. That’s a great way to grow the economy. In fact, what we’ve seen is that, in fact, when we give people their money, let them keep the money that they’ve worked hard to earn, they reinvest it, they create jobs, and they grow the economy just like you suggested. He provided absolutely no answer, again.

I see – giving people their money back so they can consume more. Of course, this means less national savings and hence less investment and long-term growth. Don’t believe me. This is also the view of Bush’s first two CEA chairs: Glenn Hubbard and Greg Mankiw. Andy why not? During the fiscally responsible era from the end of World War II to 1980, we average annual real GDP growth of 3.5%. We were told that the 1981 tax cut would lead to more growth but the reduction in national savings led to an average annual growth rate of only 3.0% over the next 12 years. We were told that the 1993 tax increase would cut growth but the Clinton years saw average annual growth rates of 3.7%. The Bush43 years so far? Average annual growth rates have been only 2.6%. As Russert pretends he understands these issues, he can’t ask Santorum a follow-up question?

But it got much worse when Russert turned to Social Security (calling Bob Somereby):

Social Security and Medicare and other entitlements make up 52 percent of our federal spending. It dwarfs defense and non-defense and interest on the public debt. There are 40 million people on Social Security and Medicare. There’s going to be 80 million in the next 15 years. Life expectancy is – used to be 65, it’s now approaching 80 … So, so double the people on Social Security and Medicare, and life expectancy approaches 80, and the solution is do nothing? … You didn’t have a baby boom, you didn’t have a baby boom generation in retiring.

We’ve call for the producers of Meet the Press to fire Russert – and if they are not willing to do that, to order Russert to learn something about the Social Security issue or cease his incessant babbling about it. And why couldn’t he follow-up on this:

stop the raid introduced by Jim DeMint which says take the surplus that’s coming in right now and actually put it into individual accounts so people have ownership of this surplus instead of the money being taken and raided to pay for, for current government expenditures. So number two is to stop the raid, give people their own personal accounts that, that will actually be there to pay for them down the road. And number three, give younger workers the opportunity to have personal retirement accounts. Those personal retirement accounts will grow faster and produce more than what the government, “investment in Social Security,” thus making up the difference between the two.

Someone explain to me what the difference is between Gore’s “lock box” and DeMint’s “stop the raid”. At least, Al Gore wanted to find someway to reverse the General Fund deficit fiasco whereas DeMint and Santorum can neither find a single tax increase or spending cut that they will support. As far as the “personal retirement accounts will grow faster”, we have addressed this piece of financial mendacity many times including here and here. Maybe Santorum believes the free lunch lies that the Cato Institute told George W. Bush back in 1998. If so, he is too stupid to trust with our long-run fiscal policy.