Decrying high taxes, high unemployment and high deficits is in every legislator’s job description. So there is nothing wrong with Jim DeMint bemoaning each of those economic problems. What is wrong is for the junior Senator from South Carolina and Tea Party Grandee to assert that all three can be reduced simultaneously. Wrong because he knows that it cannot be done and wrong because he is disingenuous about which problem is his real priority.
Here is the economic policy dilemma. Dealing with one of these three problems nearly always has implications for the other two. Reducing deficits means higher taxes and unemployment because of public sector job losses and slack demand. Reducing taxes means larger deficits and higher unemployment because of public sector job losses and slack demand only partially ameliorated by private sector job gains. Reducing unemployment means larger deficits only partially compensated by additional payroll tax revenues. Although it has never stopped politicians from advertising one, there is no such thing as a free lunch.
The free lunch DeMint promises can be discerned from statements he made about the public debt, tax revenues and jobs over the past year. In March, DeMint warned that Federal budget deficits were unsustainable, which he expressed as the fear that “China will dump our debt.”[i] There is reason to be concerned but not panic-stricken. Today, Federal debt relative to total U.S. GDP is approximately what it was during the 1950s. That seemed a lot less then because the country was coming off the astounding record debt/GDP ratios of the Second World War. Something else that is different now is that approximately one-half of our debt is owed to foreigners, almost one-half of that to the Japanese and the Chinese. That difference means that a serious fiscal crisis might be precipitated by their loss of confidence in our willingness to meet debt obligations.
The size of the deficit must have seemed less ominous in July because DeMint proposed to permanently eliminate the estate tax. That would have been a boon to the wealthiest but a burden to the other 99.97% of us by adding a trillion dollars to the deficit. Then in August, DeMint attributed rising unemployment to the increasing Federal debt.[ii] The opposite is plainly true. Public borrowing and spending create jobs. Perhaps not the sort of jobs the Senator and his class appreciate, but jobs nonetheless. That the debt and unemployment have risen together during the current economic downturn is evidence not of a direct causal relationship between them but of the severity of the economic mess that the Bush administration handed off to the Obama administration.
A month later DeMint was focused on taxes again. The same politician who was so exercised about the Federal debt and unemployment became a politician who demanded that Congress extend the trillion dollar package of tax cuts that it had adopted in 2001 and 2003 and are set to expire on January 1, 2011.[iii] The problem is not that he described the sunset expiration of those tax cuts as the “Obama Tax Hike.” Egregious to be sure but nothing more than the sort of mendacity Americans have come to expect of Republicans. The problem is that extending those tax cuts would increase the size of the deficit and/or increase the unemployment rate. The junior senator from South Carolina likes to complain about Congressional earmarks but eliminating every pet project would barely dent the deficit. Actually balancing the budget would require a lot fewer government paychecks, radically reduced levels of public services and shutting off much of the demand that has kept the private sector afloat. That, in turn, would further reduce tax revenues.
Jim DeMint is too smart to believe that taxes, unemployment and the deficit can be reduced simultaneously. So what explains the rhetorical recklessness? The answer is less mysterious than the source of Alvin Greene’s $10,440 filing fee. DeMint is not going to face reelection to the Senate again until 2016. That’s if he changes his mind and decides to run for another term. Plenty of time for the working people of South Carolina to forget or discount anything that he said way back in 2010 or 2011. Economic history suggests that some sort of economic recovery will take place between 2010 and 2016. We emerged from the previous recession of 2001 because of public borrowing to finance the wars in Afghanistan and Iraq and massive private borrowing to finance the real estate bubble that was never going to end. DeMint and his fellow Republicans are probably counting on something similar to pull us out of this downturn: perhaps public borrowing for the war against Iran that figures in so many conservative fantasies and maybe some new bubble of private borrowing and speculation.
In the meantime, DeMint’s priorities are easily discerned. Unless the unemployment rate slides south of fifteen percent he can be confident that most white working class voters in the Palmetto state will continue to express their resentments in the language of conservatism. The victims will continue to mistake their victimizers for fellow victims. All those temper tantrum throwing middle class white Republicans who re-branded themselves as the Tea Party Movement for the 2010 midterm elections pose little more of a problem. They already agree with DeMint and his class about taxes, and they can be fobbed off with cheap promises about the deficit. As his estate tax and income tax cut proposals show, his actual economic priority is shifting the tax burden from the classes to the masses. What he seeks is plutocracy that no longer needs to wear disguises.
 “DC Conversations—Sen. Jim DeMint on Unsustainable Federal Deficits.” Accuracy in Media. March 19, 2009.
[ii] Jim DeMint. “The Pelosi-Reid Economy.” Bloomberg News. August 3, 2010.
[iii] United States Senator Jim DeMint. “Report: Obama’s 2011 Tax Hikes Will Result in Lost SC Jobs, Income.” September 21, 2010.