Posted on Monday, November 8, 2010
Republicans are mapping an agenda for the new Congress that calls for a radical reduction in government spending, a hard-line stance against new taxes and a "sustained" battle against federal regulators - all aimed at easing the concerns of voters desperate for jobs and anxious about the soaring national debt.
The path charted in the party's "Pledge to America" and in a new blueprint released this week by Rep. Eric Cantor (R-Va.), the No. 2 Republican in the House, is certain to provoke clashes with the White House. It is already stirring dissension among Republicans who say it doesn't go far enough. Less certain is its ability to make progress on the nation's top economic priorities, particularly job creation.
On Friday, the Labor Department reported that the unemployment rate was stuck at 9.6 percent for the third month in a row, although job growth accelerated in October. Employers added a total of 151,000 jobs - more than double analysts' expectations. Gains were concentrated in the private sector, where 159,000 new jobs offset the loss of 8,000 government positions.
It was the strongest job growth since May, and a welcome sign that the recovery may finally be strengthening. Still, many economists see the need for further government spending to bring down unemployment. This week, the Federal Reserve announced plans to pump $600 billion into the economy through massive purchases of Treasury bonds to fuel the recovery.
Republicans reject the notion that government spending can spur prosperity. Instead, they favor keeping tax rates steady by extending Bush-administration tax breaks that are set to expire this year and repealing President Obama's health overhaul. Republicans also want to restrain government regulators and are looking to require congressional approval for any new regulation that imposes costs on the private sector in excess of $100 million a year.
On Friday, Cantor even rejected President Obama's call for additional tax breaks to spur hiring, such as a proposal to let businesses deduct their expenses more quickly.
Republicans offer "a disciplined approach to removing uncertainty and to allowing the private sector to regain its footing and begin to grow again," Cantor said in an interview. "Trying to prod business to do what Washington wants is not what is needed. We need to rein in this desire of Washington to tell business how to grow."
That hands-off strategy - combined with GOP plans for an immediate and dramatic reduction in government spending - would do more harm than good, said Bill Gale, a senior fellow in economics studies at the Brookings Institution.
"I don't get what they think they're doing to stimulate the economy right now," Gale said. "I can understand that people are angry or upset about the economy. But I can't understand how that anger and anxiety has turned into this set of legislative proposals."
To make good on their campaign pledge to reduce the size of government, Republicans say they are planning a series of quick moves to slash spending soon after they take control of the House in January. Among the likely options: a massive rescissions package that aides said would slice 20 percent from most domestic agency budgets and enact $160 billion in additional cuts endorsed by visitors to Cantor's "YouCut" Web site.
Such a package would trim more than $260 billion from this year's $1.1 trillion budget for most government operations - the biggest one-year reduction at least since the military drawdown after World War II, budget experts said.
Because Republicans propose to exempt the Pentagon, veterans programs and homeland security from these cuts, liberal analysts said the reductions would decimate education funding, the National Park Service and other worthy programs.
Conservatives, meanwhile, dismissed the proposal as too puny to satisfy a public fed up with three years of bailouts, deficit-spending and other far-reaching government programs.
"This is a good start, but Congress can do much more," said Brian Riedl, lead budget analyst for the Heritage Foundation, who recently put out a list of $343 billion in cuts for congressional perusal. "Government has expanded by $727 billion over the last three years. Congress should be able to cut at least half of it."
Such a rescissions package would come nowhere near balancing the budget and would barely dent the $1.4 trillion deficit the White House projects for this year. That means Treasury Department borrowing will continue apace, setting the stage for a showdown sometime next spring when Republican leaders will have to rally their troops to support an increase in the legal limit on government debt - or force the nation into default.
Congress routinely votes to raise the federal debt limit and last did so in February.
But conservatives such as Rep. Jim Jordan (R-Ohio), incoming chairman of the Republican Study Committee, are already lining up to demand even deeper cuts in exchange for their vote to permit the national debt to keep climbing past the current limit of $14.3 trillion.
"They really need to tie it to full extension of the Bush tax cuts or major spending cuts," said Ryan Hecker, the Houston attorney behind the tea-party inspired "Contract from America," which was signed by dozens of GOP candidates. "If they're going to raise the debt limit, we would need to see some real economic conservativism in return."
Republican leaders recognize that such an approach could prompt a dangerous game of chicken with President Obama and congressional Democrats - with the fate of the global financial system hanging in the balance. In an interview Thursday with ABC News, Speaker-in-waiting John A. Boehner (R-Ohio) declined to answer a question about how he plans to handle the vote. Cantor did as well.
"A vote on either side of that issue has really tremendous consequences. We've got at least three months until that vote takes place," Cantor said. Until then, he said, "we have to demonstrate a regular commitment, week in and week out, that we're serious about addressing the country's fiscal problem by cutting spending."
Cantor acknowledged that any effort to solve the nation's budget problems "is going to have to deal with entitlements" - big, popular programs such as Social Security and Medicare. But in his blueprint, Cantor said that real entitlement reform is probably off the table so long as Obama is in the White House because Democrats want higher taxes to support benefits at their current levels. "I cannot go along with such a deal," Cantor wrote.
Instead, he is urging his party to "immediately start a conversation with the nation about the kind of entitlement changes necessary for us to keep the promises made to seniors" while holding down the debt burden that will be passed along to "young workers and our children."
As of Friday, the national debt stood at $13.7 trillion. Treasury officials say they expect to hit the $14.3 trillion cap sometime during the first half of next year.
"Congress has never failed to increase the debt limit when necessary," Treasury spokesman Steve Adamske said. "And we are confident Congress will act in 2011 to ensure that the full faith and credit of the United States is protected."
By Lori Montgomery
Washington Post Staff Writer