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Rand Paul: Republicans have compromised enough

By Ezra Klein,

To get a sense of the conservative mind-set heading into the fall’s budget negotiations, it’s worth reading Dustin Siggins’s interview with Kentucky Republican Sen. Rand Paul, in which Paul said, among other things:

Democrats think working with us on Social Security will bring a compromise. They think we want changes to Social Security and we will agree to bring taxes up. This is wrong-headed. We are not jumping up and down to reform entitlements; we want to fix them because they are broken.

Paul’s argument here is that entitlement cuts are not something Republicans want. They’re painful. They’re unpopular. So it’s a compromise for Republicans to simply broach the subject.

Chip Somodevilla

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Sen. Rand Paul sees very little role for taxes in the coming budget negotiations.

This is, for Republicans, an important rhetorical move. The GOP is bedeviled by an obvious problem: It has dedicated itself, at least in theory, to reducing deficits. Deficits are what you get when spending outpaces revenues. The Republicans have dedicated themselves, in other words, to a policy project that immediately and mechanically suggests higher taxes as part of a solution. But they don’t want higher taxes.

Which is why Paul, along with many other Republicans, is redefining the problem as “entitlements are broken.” If “entitlements are broken,” which is subtly different from “spending on entitlements is outpacing revenues from payroll taxes,” there’s no obvious role for taxes. And then there’s this, from the same interview:

Related, contrary to what the President says, the Bush tax cuts didn’t slow revenues. From 2003 to 2007 tax revenues matched their long-time average of 18% of GDP. Once the recession hit revenues went below 15% of GDP, but that was not because of the Bush tax cuts. That was because of the recession.

First, afrom 2003 to 2007, revenues averaged 17.3 percent of GDP. That’s below the historical average of 18 percent.

Second, even if revenues had averaged 18 percent, that would n’t prove the Bush tax cuts didn’t slow revenues. The Bush tax cuts did not apply to the “long-time average” of tax revenues but to the tax code as it existed immediately prior to the passage of the cuts. And from 1994 to 2000 — so the period between the Clinton tax increases and the Bush tax cuts — revenues averaged 19.3 percent of GDP. So it appears the Bush tax cuts did reduce revenues. And you don’t have to take my word for it: Bush’s top economists will tell you the same thing.

Finally, it’s never been clear to me why “the historical average” carries any force here. For much of our history, we didn’t have an income tax. For all of our history, we were a smaller economy than we are right now. For most of our history, we didn’t have Medicare or Medicaid or Social Security or a national highway system. For most of our history, we had more young people and fewer old people than we’re expected to have in the coming decades. So who cares what the historical average was? The question is what revenue level is consistent with the government we want to have in the future, not the government we had in the past.

But if you add up Paul’s argument here, it goes something like this: The problem is entitlement spending, not taxes. And if the problem was taxes, then tax increases still wouldn’t make sense because they don’t raise revenues. And if they did raise revenues, they’re not needed anyway because revenues are likely to return to their historical average even without them. And even if you wanted to get revenues above their historical average, it’s not politically feasible because Republicans are already compromising by taking on entitlement spending.

Paul, to his credit, is not just shooting off here: He’s actually released a budget that would cut spending so deep you wouldn’t need to raise taxes. But as my colleague Dana Milbank has pointed out, Paul’s plan would:

cut the average Social Security recipient’s benefits by nearly 40 percent, reduce defense spending by nearly $100 billion below a level the Pentagon calls “devastating,” and end the current Medicare program in two years — even for current recipients, according to the Senate Budget Committee staff. It would eliminate the education, energy, housing and commerce departments, decimate homeland security, eviscerate programs for the poor, and give the wealthy a bonanza by reducing tax rates to 17 percent and eliminating taxes on capital gains and dividends.

My hunch is that when most voters look at that, they’ll begin thinking that compromise looks pretty good.

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