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10 September 1999

Our current howler (part II): Surplus chatter

Synopsis: Dick Armey avoided the basics on Meet the Press. A guest host showed no sign of knowing.

Commentary by Jeffrey Birnbaum, Brit Hume, Juan Williams
Special Report with Brit Hume, Fox News Channel, 8/23/99

Commentary by Rep. Dick Armey (R-TX), Stone Phillips
Meet the Press, NBC, 8/29/99

GOP tax cuts would hurt entitlements, Clinton warns
Bill Sammon and John Godfrey, The Washington Times, 8/26/99

Clinton takes tax offensive
George Hager, The Washington Post, 8/26/99

Clinton: Big tax cut would gut programs
William Welch and Richard Benedetto, USA Today, 8/26/99

Why can't big scribes explain basic concepts? Maybe it's because they spend so much time gossiping. Late in August, President Clinton publicly described how he had fallen in love with Mrs. Clinton in law school. In response, on the August 23 Special Report, Brit Hume had a little fun up his sleeve:

HUME: The picture he paints of Mrs. Clinton is of a sort of a femme fatale. Now [posting a picture] that's about what she looked like then and one can't help but wonder about this.

Apparently, the old photo didn't look enough like Pamela Lee, so the boys enjoyed a good hearty laugh. After several minutes of gossip about how the Clintons get along, they returned to that decades-old photo:

JUAN WILLIAMS: The problem is that nobody can believe, one, that she was this beautiful woman in college—anyone who's seen the pictures—and, two, who can believe that she didn't know that this guy was a skirt-chaser all along?

JEFFREY BIRNBAUM: Well, I should point out, about the love-in-college part, that love is blind [laughter]. But that also—

HUME: Well, he never said she was beautiful. He said she was compelling looking. And that she may well have been.

When major journalists are willing to engage in conversations like this, is it really surprising when they can't explain the simplest concepts in their areas of specialty? (See THE DAILY HOWLER, 9/9/99, for our review of Birnbaum-on-lockbox.)

But inability to explain simple fiscal matters is a long-established trait of the press corps. In 1995 and 1996, for two solid years, the press corps completely failed to clarify simple concepts in the seminal Medicare discourse (see THE DAILY HOWLER, 8/18/99, 8/19/99, and 8/20/99 with links to position papers). And current discussions of tax cut proposals now swim in a similar stew. Case in point: on August 29, Rep. Dick Armey appeared on NBC's Meet the Press. Guesting for Tim Russert, Stone Phillips quoted a letter President Clinton had sent to Dennis Hastert on August 25:

PHILLIPS: The president took a little time off from his vacation this week to send a letter to House leader Hastert. Let me read a part of it to you. Quote: [Text as posted on screen] "The [Republican] tax bill would spend 100 percent of the non-Social Security surplus, creating an impossible budgeting problem. It would require nearly 50 percent cuts in essential government functions, everything from education to air traffic controllers to the Federal Bureau of Investigation...If your tax cuts became law, it would leave America permanently in debt." Your response? [All edits by Phillips]

For the record, there were parts of what Phillips quoted that didn't seem to make sense on face. For example, even if the GOP tax cuts did return the entire non-SS surplus, why should that force any spending cuts at all? A "surplus" is money over and above what will be spent; if a surplus were returned in the form of tax cuts, that wouldn't seem to affect spending at all. Surely Phillips was ready to deal with this matter. Indeed, Armey feigned total bewilderment:

REP. ARMEY: ...We have $1 trillion of non-Social Security surpluses outside of the income taxes. The president wants to spend it. We take 792 billion of that and we say, "Give it back in the form of a tax cut"...The president and many others on the other side want to spend the money. The fact is there will not be the reduction in spending that he's talking about. I don't know where he gets that kind of projection.

It was interesting that Armey didn't know the source of Clinton's projection, because virtually every major paper had explained the matter on Thursday, August 26. As it turns out, the White House had written the letter to Hastert, and released a position paper as well. Here's how the Washington Times explained the projection on spending cuts:

SAMMON AND GODFREY: The program cuts would be required under budget laws created during Congress' decades-long battle to reduce the federal deficit. The laws require that any tax cuts be matched either with a tax increase or cuts to entitlement programs. Failing to meet that requirement would trigger an across-the-board cut to most federal programs.

The Washington Post 'splained it, too:

HAGER: The White House report that links the GOP tax cuts to Medicare cuts is the byproduct of budget rules written when the federal government was running massive budget deficits. Those rules, which are still in place despite the advent of budget surpluses, require that any tax cuts be "paid for" by raising other taxes or cutting spending.

Armey's protestations aside, it was perfectly obvious where the White House "got that kind of projection." But Phillips jumped ahead to a different question. He asked if Armey would be willing to meet Clinton in the middle, at a $500 billion cut. Armey's answer raised the basic question at the heart of the tax cut proposal:

REP. ARMEY: ...[I]f he comes back and says, "Look, Dick Armey. I will give you a dollar's worth of tax reduction for a dollar's worth of spending increase, I'm not going to talk about that. The president committed to holding to the spending limits he signed back in '97. The House and the Senate committed to it. Both the House and the Senate Republicans and Democrats budgets kept those spending limits. And the president now is coming back and saying, "I want to break those spending limits I agreed to, I signed into law."

In raising the matter of the "spending caps" that were part of the 1997 balanced budget agreement, Armey raised the basic matter at the heart of the current debate. All through the summer, one analyst after another had pointed out that these spending caps were completely unrealistic—that no one believed that either party would stick to the caps in future budgets (see THE DAILY HOWLER, 8/17/99 and 8/20/99). And indeed, the spending caps, if adhered to, would require substantial cuts in future government services. As we have seen, analysts had repeatedly argued that, if government spending merely increased at the rate of inflation, virtually all of the $996 billion ten-year "surplus" would be gone. The GOP tax cut depended entirely on adherence to serious adjustments in future spending—adjustments which a stream of analysts repeatedly said no Congress would be willing to make.

This was plainly the time for the host to ask Armey the obvious, basic question. Was he prepared to accept the reductions in future services needed to "pay for" his tax cut? This is the single key, basic question on which this entire discussion turns. It is the issue which politicians of each party should be asked to answer, whenever they talk about returning the "projected surplus" in tax cuts, or spending it on government programs.

But Phillips didn't ask the basic, key question; again, he stepped over the problem with Armey's reply, to ask about Alan Greenspan ("Why not take his advice?"). In so doing, Phillips reflected the tendency of the media, in the past month, to drop all mention of the problem with the projected surplus, a tendency we unerringly predicted (see THE DAILY HOWLER, 8/27/99). The bogus provenance of the projected surplus has totally dropped from sight. Read, for example, this formulation as USA Today discussed Clinton's letter:

WELCH AND BENEDETTO: Congressional Republicans contend they are devoting nearly three-fourths of projected federal budget surpluses over the next decade, including all that come from excess Social Security payroll taxes, to pay off national debt and thus indirectly strength Social Security. They say the non-Social Security surplus should largely be returned to taxpayers.

But that non-SS surplus is entirely based on the unrealistic spending caps. Welch had explained that in detail on July 23, but by now it has completely disappeared from his own discussions of the proposed tax cuts.

It is impossible to have a basic discussion of current tax cut proposals without discussing the spending caps—without informing the public that the "projected surplus" is based on these unrealistic spending levels. The matter is absolutely fundamental. Yet, when Armey himself raised the caps, his Meet the Press host moved on. Moments later, Armey said the projected non-SS surplus was "an overcharge against the American people." That, of course, is only true if the American people will accept future cuts. Are they prepared to accept such cuts in services? Again, Phillips failed to ask.

In 1995 and 1996, for two solid years, the press corps failed to ask a basic question—could the GOP maintain existing Medicare services at the future spending levels they had proposed. We never learned how they would have answered the question, because the question—completely basic—was never asked. Now, the press corps is up to its sad old habits, failing to ask basic questions again. This press corps shows phenomenal skill when it comes to gossip and mocking old photos. But when it comes to unraveling elementary concepts, the joke is on us, my dear friends.


Sunday, muddy Sunday: The tax cut proposal will likely be discussed on Sunday shows. See if anyone mentions the future spending cuts on which the whole project is based. Democratic spokesmen should be asked the same question. They propose a smaller tax cut, and some new spending, based on the bogus projected surplus.

Coming Monday: Fiscal omerta! No matter how worthless an argument is, this press corps will never correct it.