Budget games we’ll never win

BY ERNEST F. HOLLINGS

Believe it or not, Congress used to budget responsibly. Congress paid for all its wars, recessions and depressions, and it took 200 years before accumulating a national debt of $1 trillion in 1981. Lyndon Johnson paid for the Great Society and the Vietnam War and gave Richard Nixon a surplus. When Nixon started running deficits we instituted the budget process in 1974, and in 1981 increased taxes on Social Security to balance its budget. Graham-Rudman-Hollings cut spending in 1985, and in 1990 Congress, with the support of President George H.W. Bush, increased taxes to balance the budget.

In 1993, Congress cut spending by $250 billion and increased taxes $250 billion — without a single Republican vote.

Then the games began!

In 1996, House Speaker Newt Gingrich attempted to close down the government.

In 2001, President George W. Bush took a balanced budget, cut taxes, waged wars, added prescription drugs to Medicare, and engaged in stimulation and bailouts without paying for them.

Since the Republicans refused to help the Democrats pay for government in 1993, the Democrats weren’t about to help the Republicans pay for government. Bush increased the debt by $5 trillion in eight years. President Barack Obama has increased the debt $5 trillion in four years.

Both play the game of “deficits don’t matter.”

We add 200 years of debt to the national debt each year. Both parties play the game of growth. As long as economists call for growth, Congress never has to pay for government. It just submits plans for later Congresses to pay.

Paul Ryan was a staffer for Wisconsin Sen. Robert Kasten on the Senate Budget Committee. He knows what he is doing.

He has no idea of paying for government. His Path to Prosperity is not a budget. As Bloomberg Businessweek recently reported: “The CBO estimated the estimates, agency by agency, and concluded that Ryan’s plan would raise the public debt to 70 percent of the GDP by 2022 — a little worse than if Congress were to do nothing.”

Former Florida Republican Congressman Joe Scarborough said recently on his “Morning Joe” show on MSNBC that the Ryan budget doesn’t balance until the 2040s. Rep. Ryan never would have submitted a budget to Sen. Kasten that took 30 years to balance.

President Obama’s budget is no better. The Democrats refused to call it for consideration. The Republicans put it to a vote in both the House and Senate and no one voted for the president’s budget.

Everybody plays the game of closing loopholes for more revenues or “tax reform.”

We had three tax reforms in my 38 years in the U.S. Senate: 1976, 1986 and 2001 — each time ending up with less revenue.

Then there is the game of globalization, which is a fancy word for a trade war with production looking for a country where it’s cheaper to produce. Wall Street, the big banks and Corporate America are not on our side in this war.

The United States was founded in a trade war — the Boston Tea Party. The Founders rejected David Ricardo’s free trade Doctrine of Comparative Advantage in agriculture, and for manufacture enacted the Tariff Act of 1787 — two years before the Constitution.

This industrial policy worked so well that historian Edmund Morris observed (“Theodore Rex,” page 20) that in 100 years the former colonies were “twenty-five billion dollars” richer than the Mother Country.

In globalization, Corporate America is bound to offshore production for more profit. President Obama must develop an industrial policy like the Founders to attract enough investment in the U.S. for a strong economy.

We have the makings of an industrial policy in our trade laws. We wouldn’t be begging Russia for helicopters for Afghanistan if President Obama enforced the Defense Production Act of 1950.

Corporate America must know its investment is protected against predatory practices. If President Obama protected steel, motor vehicles, computers and machine tools like President Reagan, we would have 5.1 percent unemployment instead of 8.1 percent.

Running $1 trillion deficits each year, Corporate America knows taxes are going up. Corporate America sits on trillions to invest, awaiting the president and Congress to determine the increase. Ten-year plans instead of budgets are of no help.

President Obama and Congress are for jobs, tax cuts and looking for billions to pay for government. They could do all these things by replacing the 35 percent corporate income tax with a 7 percent value added tax. One hundred and fifty countries compete in globalization with a VAT.

The president and Congress refuse to compete in globalization but compete in the worst game of all: contributions before country.

Wall Street, the big banks and Corporate America want to keep the China profits flowing and oppose this VAT tax cut. They contribute to the president and Congress to do nothing.

And the president and Congress do nothing.

Ernest F. “Fritz” Hollings, a Democrat, served as governor of South Carolina from 1959-63 and in the U.S. Senate from 1966-2005.