Deal Or No Deal On the Debt Ceiling?

This will be the first and last post I produce on the ongoing negotiations over the debt ceiling. That’s not to say that I might not have some thoughts on the eventual deal (there will be one) but the level of bloviation has reached levels that are beginning to annoy me.

Case in point are articles by David Brooks and Megan McArdle. Mr. Brooks asserts that the Republicans have driven the Democrats to the point of almost complete capitulation and are on the verge of snatching defeat from the jaws of victory by digging in their heels on tax increases. In his view the Republican party has become a captive of radicals who can’t spell compromise, worship slavishly at the altar of tax reduction and indeed have “…no sense of moral decency.” In the end, they may be dooming their party:

The struggles of the next few weeks are about what sort of party the G.O.P. is — a normal conservative party or an odd protest movement that has separated itself from normal governance, the normal rules of evidence and the ancient habits of our nation.

If the debt ceiling talks fail, independents voters will see that Democrats were willing to compromise but Republicans were not. If responsible Republicans don’t take control, independents will conclude that Republican fanaticism caused this default. They will conclude that Republicans are not fit to govern.

And they will be right.

McArdle manages a somewhat more nuanced analysis for at least a paragraph or two, noting that the Democrats have been fairly adept in previous negotiations at offering up phony savings and then gloating about it, thus prompting the Republicans insistence on real cuts immediately. McArdle, though, is pretty clearly on record as being in favor of increasing government revenues and slides pretty quickly back into this mode in her article. Quickly she comes around to the Brooks proposition that if the Republicans take this beyond the brink then they will have hell to pay politically:

The political logic is infantile.  The American public does not want you to cut Medicare, Medicaid, or Social Security.  There is no monopartisan substitute for persuading people to agree with you.  Just as the Democrats spent way too much time reading their own press releases on ObamaCare, only to find that their cherished legislation was instantly at risk of dismemberment by legislative and court challenges.   Imagine that the GOP forces through an all-cuts deal–or forces the country into default?  What’s the next logical step?

Why, probably that an angry nation sends more Democrats to Congress (and Obama back to the White House), where they happily “restore” the programs that “brutal” Republicans tried to “gut” with “draconian” cuts.  Those Democrats will probably get elected to office by lying about the possibilities for closing the budget deficit via nothing but tax increases on the “rich”.  So what?  Their GOP predecessors got there by spinning fairy tales about the massive dynamic effects of changes in tax policy.

This is why the budget deals that have succeeded generally had bipartisan support.  If one party tries to do things all their own way, well, the other party will promptly be elected to undo some of those changes.  I can admire someone who’s willing to be a one-term congressman in order to do something big and important.  But what’s the point if your big, important legislation doesn’t live much longer than your political career?

If the GOP doesn’t cut a deal sometime pretty soon, we’re either going to default on our debt (hello, financial crisis, unemployment spike, substantial and immediate drop in GDP, followed by an angry mob of voters descending on their polling places with pitchforks), or we’re going to cut a bunch of programs that beneficiaries are very attached to. (Hello, angry mob of seniors descending on their representatives with machetes.)  There is no deal that they can cut which does not include raising more revenue; the Democrats aren’t going to be the only people offering compromise, and I don’t blame them.

Now, maybe Brooks and I have this all wrong, and the GOP is just putting on one hell of a show for negotiating purposes.  I sure hope that’s true.  But I very much fear it isn’t.

Running through the analyses of Brooks and McArdle is the presumption that a bipartisan deal has to be reached. As McArdle points out, most budget deals are done on a bipartisan basis and if not the other party demagogues the deal that was forced on them and changes things when they succeed in swaying the electorate to their side. Sound history but it ignores the fact that we are up against some rather nasty realities at this point in time. One might argue that Brooks rant about “moral decency” is misdirected. Ultimately morality and decency might require the sort of principled stand that says we can no longer go down the same road, now is when the hard decisions must be made.

Arnold Kling has pointed out (here and here) that the problem the Republicans ultimately face is that they have not won elections that carry a mandate for the sort of radical surgery they propose. Specifically, ratcheting spending down to its historical share of GDP requires cuts in Medicare and Social Security which the electorate has not agreed to. He suggests that they settle for a Simpson-Bowles sort of solution.

Now I doubt the Republican leadership is going to listen to me but that won’t stop me from offering my thoughts. Don’t do any deal other than increasing the debt limit. Kling is right, you don’t have the mandate – yet – to restructure the federal budget including entitlements but you moved a long way in that direction in the 2010 elections. Don’t lose the momentum. Make educating the public about the realities of the budget, taxes and spending the centerpiece of the 2012 campaign.

A deal is going to turn down the flame at the wrong time. Democrats will pronounce the problem solved and move on to fight another day. Take the threat of imminent default off the table, note that the Democrats were unwilling to move towards the sort of meaningful reform that our strained resources require and reconfirm the party’s intent to pursue fiscally sane policies. Then go out and sell reality, the Ryan Plan and Republicans’ ability to put things right to an electorate that is probably more willing to listen and make hard choices than the political operatives would have you believe.

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