The GOP’s Plan To Avoid Defense Cuts Without Raising Taxes

Senate Republicans unveiled a proposal Thursday to avoid or delay looming, automatic cuts to defense and security programs by reducing the federal work force by five percent and freezing federal pay for two and a half years.

In a bid to recruit Democratic support for their legislation, the authors of the plan say it saves enough money to forestall automatic cuts to domestic programs, also set to kick in on January 2013. But they continue to oppose using any new tax revenues to offset any of these costs — and in so doing they exposed a contradiction at the heart of their fiscal policy. They oppose tax increases, they say, because of their impact on economic growth — yet their plan to avoid tax increases involves deliberately shrinking demand for jobs.“Let’s not let a domestic issue such as tax increases interfere…with our nation’s security,” Sen. John McCain (R-AZ) — the top Armed Services Committee Republican — told reporters at a Thursday Capitol briefing.

“We’re not going to use a millionaire tax to fix every problem around here,” Sen. Lindsey Graham (R-SC) added. “We have a problem with that because we think it’s about jobs.”

Why are the jobs that would supposedly be lost as a result of a millionaires tax better than the ones that will be lost by phasing out federal jobs? Sen. Jon Kyl (R-AZ) finessed the question.

“We’re not laying anybody off, we’re not proposing to fire anybody,” Kyl said. “We’re simply saying as people retire or quit and go to another job in the private sector or for what ever reason they leave the federal workforce, we don’t have to replace all of them — we can replace two out of every three.”

But that still shrinks the total number of jobs available to workers, reducing labor demand, forcing more people to compete for fewer openings. I asked Graham about this after the briefing.

“It’s a spot not filled in the public sector. That doesn’t mean it can’t be filled in the private sector. We believe that the growth of government has been too large…. That’s something we should do apart from defense. I would want to do that no matter if you had a defense problem.”

That’s the big reveal. The jobs the GOP wants to phase out are the kind of jobs that shrink the government when they disappear. Since raising taxes on millionaires doesn’t have that effect, they’re not so keen on it.

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