Scot Lehigh

Selective budget logic

House Majority Leader Eric Cantor House Majority Leader Eric Cantor (Getty Images)
By Scot Lehigh
Globe Columnist / July 20, 2011

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SOMETIMES AN erroneous assertion is made so often and with such certitude that you find yourself wondering how the people repeating it reached their incorrect conclusion.

That’s the case with the Republican insistence that Washington doesn’t have a revenue problem, it has a spending problem. That specious formulation is a favorite of House Majority Leader Eric Cantor. Cantor’s adamant anti-revenue stance is a matter worth exploring, since it helped scotch a possible compromise around doing 75 to 80 percent of the deficit reduction on the spending side, and 20 to 25 percent though new revenues.

So where did the Virginia congressman come by that notion? Fiscal experts, after all, say both overspending and tax cuts - plus, of course, the coming wave of retiring, Medicare-using, baby boomers - have fueled our budgetary woes.

And does he have any fiscal studies to backstop his assertion?

Last week, I put those questions to Brad Dayspring, his spokesman.

Dayspring didn’t cite any studies in our initial exchange. Could it be the House majority leader is simply misinformed? Doubtful, but just in case, I sent his spokesman some detailed analyses about the deficit problem.

One was a study by the nonpartisan Pew Fiscal Analysis Initiative saying that tax cuts accounted for 27 percent of the swing from the large accumulated surpluses once projected by 2011 to the deep deficits we’ve seen. Another was a report by the progressive Center on Budget and Policy Priorities estimating that the tax cuts and the wars in Iraq and Afghanistan, plus associated interest costs, accounted for more than $500 billion of 2009’s $1.4 trillion deficit, and that by 2019, “these two policies will account for almost half - nearly $10 trillion - of the $20 trillion in debt that will be owed under current policies.’’

I also e-mailed a study by the conservative Heritage Foundation estimating that the tax cuts were responsible for 14 percent of the 2002 to 2011 swing from projected surplus to deficits. Heritage doesn’t include the debt service associated with the tax cuts in their cost because the foundation thinks the stimulative effects of the tax cuts offset the interest costs. However, if you include debt service, the price tag increases significantly; over the next decade, the cost of the tax cuts goes up by more than 40 percent, according to CBPP figures. But even at face value, the Heritage analysis also suggests that spending alone didn’t lead to the deterioration in our fiscal position.

Yesterday, Dayspring emailed to say that Cantor “had reviewed literature’’ on how other developed countries have dealt with their deficits and that “the data shows that efforts focused almost entirely on spending reductions are far more likely to produce meaningful consolidations than those that focus on increasing taxes.’’

He sent along an American Enterprise Institute analysis of deficit-reduction efforts elsewhere, plus a Heritage report predicting (predictably) that tax increases on upper earners would trigger the same kind of economic consequences conservatives wrongly insisted would accompany President Clinton’s 1993 tax increases.

As for the interesting AEI paper, it devotes only one paragraph to the causes of our deficits, saying the current imbalance results mostly from “recession-induced reduction in revenues and increases in discretionary government expenditures,’’ while the long-term deficit is caused mostly by Social Security, Medicare, and Medicaid commitments.

Still, I wish Cantor had reviewed the AEI study more carefully. If only he had focused on Table 6, where the authors note that in deficit packages they “and the literature’’ - that is, other evaluators - judged successful, an average of 80 percent of the deficit reduction had come through spending cuts, while 20 percent had resulted from new revenues.

Or that he’d taken seriously the deficit-reduction plan proposed by the three AEI authors themselves. They call for accomplishing 85 percent of the deficit reduction on the spending side, but doing 15 percent on the revenue side. How? Through a 2.5 percent payroll tax on all earned income.

That’s right: The principal document Cantor’s office produced to backstop his cuts-only approach actually calls for more revenues.

It doesn’t get much more revealing than that.

Scot Lehigh can be reached at