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Obama’s Insults Mask Fear of Boehner’s Ideas

by Gormack on September 12th, 2010

Bloomberg Opinion by Keven Hassett, September 12, 2010

In Washington, it’s often a compliment when your opponents start to attack you. It means they think you are dangerous.

Democrats unleashed a barrage against House Minority Leader John Boehner in recent weeks, which raises the question — what are they afraid of?

President Barack Obama personally delivered one of the broadsides at Boehner, using a Sept. 9 speech outside Cleveland to accuse the Ohio Republican of obstructing efforts to revive the economy.

Referring to a speech Boehner had given a few weeks earlier, Obama said: “There were no new policies from Mr. Boehner. There were no new ideas. There was just the same philosophy that we had already tried during the decade that they were in power — the same philosophy that led to this mess in the first place: Cut more taxes for millionaires and cut more rules for corporations.”

Obama sarcastically said Republicans oppose his spending programs only until “showing up at the ribbon-cuttings, trying to take credit.”

The Boehner of Obama’s speech is a partisan rube pitching the same old Republican snake oil. Of course, if that were true, then the man would be no threat at all, and Democrats wouldn’t need to send the president out to attack him.

A look at Boehner’s recent speeches and proposals suggests that he has been reshaping the Republican Party in a manner that should make it much more attractive to middle-of-the-road voters, and doing so with, yes, some new ideas. No wonder Obama is scared.

Five Points

In the very speech that Obama mocked — Boehner’s Aug. 24 address in Cleveland — Boehner outlined a five-point plan to restore the American economy.

First, he proposed extending George W. Bush’s tax cuts for all, not just for those making less than $250,000 per year, as Obama prefers. Nothing new there.

But since then, Boehner has indicated a willingness to compromise by extending the tax cuts for two years and then, presumably, debating the issue again under less-dire economic circumstances.

Boehner’s small shift brought him within range of the view of Obama’s former budget director, Peter Orszag, who says the tax cuts in full should be continued for two years, then permitted to expire. Boehner, not surprisingly, hasn’t committed to the second part, but it’s significant to see him and Orszag agree that higher taxes now would harm an already weak economy.

Reasonable Republican

Fighting to extend the tax cuts for only two years is a big concession for a Republican, a departure from the tax-cuts-at- all-cost attitude of the past. Boehner took his reasonableness to a new level yesterday by declaring he would vote for the more limited tax-cut extension if that is the only option that could get enacted.

Second, Boehner highlighted the damaging effect that economic uncertainty is having, and he called on Obama to veto any legislation a lame-duck Congress might produce on union organizing, limits to industrial emissions or any other topic that would harm businesses.

Boehner grasps that reducing policy uncertainty is an overriding challenge for lawmakers. It isn’t just that firms worry Obama might enact policies that will harm them; they are also hamstrung by all of the policies that seem to be up for grabs every year because of budget tricks. Perhaps Boehner would seek to end the legislative patching and extending that has made business planning more and more difficult over the past decade.

Paperwork Threat

Third, Boehner said Democrats should permit the repeal of the provision in the health-care law that requires business to submit Form 1099 paperwork to the Internal Revenue Service for every supplier from which they purchase more than $600 of goods each year. Most small businesses don’t have the bookkeeping resources necessary for this level of detailed reporting and will needlessly have to spend capital to conform.

Fourth, Boehner suggested that non-defense discretionary spending — that is, spending on domestic programs ranging from housing assistance and education to transportation and space flight — be immediately cut to its 2008 level.

While Keynesians might think such a cut would harm economic growth, Boehner makes the case that reducing government spending could have near-term positive stimulus effects because of its influence on sentiment. As he put it in June, “Listen, the Democrat spending spree is scaring the hell out of the American people and it’s hurting our economy.”

Backed by Studies

Ample academic literature backs Boehner in concluding that spending cuts that restore budget discipline can stimulate the economy, even in the short-run. Boehner might not be using phrases such as “the non-Keynesian effects of fiscal consolidations,” but he’s on the right track nonetheless.

The reduction in spending that Boehner calls for — even exempting seniors, veterans and national-security programs, as he proposes — could be the largest in U.S. history. Government spending in 2008 was a bit less than $3 trillion. It is projected to be almost $3.7 trillion in 2011. A $700 billion cut would steer the budget back toward balance, since the Congressional Budget Office foresees the deficit falling below $700 billion in 2012 even without such a dramatic step. And then, of course, permanent extension of the Bush tax cuts becomes plausible.

Finally, Boehner called on Obama to fire his top economic advisers, Timothy Geithner and Larry Summers. OK, maybe this isn’t a new idea — just a good one.

Taken as a whole, Boehner’s plan represents a major departure from the compassionate conservatism spend-a-thon under Bush and former House Speaker Dennis Hastert. Gone is the Republican Party that seeks to buy off citizens with juicy benefits and pork. Good riddance.

Boehner could probably say nothing between now and the Nov. 2 election and still become the next House speaker in a Republican rout. The fact that he’s proposing anything at all should win him admiration, at least enough to offset a president’s scorn.

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