The only thing that let Gov. Rick Perry get away, temporarily, with claims of a surplus was the fact that Texas enacts budgets only once every two years, and the last budget was put in place before the depth of the economic downturn was clear. Now the next budget must be passed — and Texas may have a $25 billion hole to fill. Now what? Krugman
Texas has been the economic conservative pillar of good budgeting governance. I’ve heard and read a lot on just how awesome the state’s budget structure was, and how it can be traced back to low taxes and low union rates. But that’s because Texas only budgets once every two years. How did the media miss this? Talk about running with an idea.
And then Krugman comes in for the kill. Bam!
Right now, triumphant conservatives in Washington are declaring that they can cut taxes and still balance the budget by slashing spending. Yet they haven’t been able to do that even in Texas, which is willing both to impose great pain (by its stinginess on health care) and to shortchange the future (by neglecting education). How are they supposed to pull it off nationally, especially when the incoming Republicans have declared Medicare, Social Security and defense off limits?
There isn’t enough spending to cut under the Republicans own math, unless you know, you want your kids to be educated in buildings with roofs and chalk boards. So in a reasonable political party, that would make tax increases necessary. However, unrestrained tax cuts will only leave Republican ideology when they are utterly defeated over multiple election cycles, or in a more frightening scenario, when they force the US into bankruptcy.
Up until Reagan, Republicans were balanced budget types, who believed in spending cuts and tax increases as equal tools to keep the budget balanced. Then Reaganonomics, tax cuts and deregulated finance, happened. It was a political success, merging the interests of Big Business and the newly financially-empowered elite-rich with a historically weak Republican Party who used the low tax rates and status quo spending increases as giveaways for increasing their political power. It was a much more successful political model than balanced budget Republicanism. In the 20th century, Republicans rarely controlled Congress before Reagonomics, but have for many years afterward. Besides Eisenhower who had two great terms (in my opinion he was the second best president of the 20th century), balanced budget Republican presidents hadn’t been that successful. Nixon resigned, Ford was defeated, Hoover disgraced.
After Reaganomics, there has been a large uptick in Republican success. Reagan got two terms and is only one step lower than Jesus to Republicans, Bush Sr got one term for raising taxes, Bush Jr got two terms for his tax cuts despite failing spectacularly in foreign and domestic policies after 9/11. Congressional Republicans have had two barnstorms in fifteen years and controlled the House from 1994-2006, the longest uninterrupted period of Republican control in the 20th century. That never happened when Republicans were espousing the virtues of balanced budgets.
So, the political calculus is pretty clear I think. Tax Cut Champion Republicans who cut taxes stand a better chance at getting elected even if these Republicans are ineffectual at every other aspect of governing like Bush Jr. They won’t give it up until they’re forced to, like when the US is bankrupt or the national citizenry sees the light.