With the November 5 contests in New Jersey and Virginia behind us, we are now one full political year past the re-election of Barack Obama. Much has transpired in those 12 months.
A year ago the establishment media was quick to explain that Obama’s re-election was the down payment on the Democrats’ inevitable, inexorable, demographically guaranteed lock on power in America. As annoying as Mitt Romney’s defeat was, the left’s bravado rang a tad hollow, like the super-villain who pauses in the penultimate scene of the movie to explain to James Bond that he has now won and will soon run the world.
Except: The 2012 election also resulted in a Republican majority in the House of Representatives, 233 to 200. Thanks to strong candidates and the wonders of modern redistricting, this majority should stand for the next decade. At the state level there were 30 Republican to 20 Democrat governors, and a Republican majority of both state senators (1,038 to 878) and state representatives (2,937 to 2,441). Most importantly, that left 25 states under total Republican control, where the GOP held the governorship and both houses of the legislature. Those 25 states had 165 million citizens—more than half of the nation. Democrats had full party control of only 13 states with combined populations of 81 million citizens.
But if those numbers provided some comfort, Republicans were soon plunged into despair. Only 56 days after that “unsatisfactory” election day, the nation approached the so-called fiscal cliff of January 1, 2013, at which point a number of Bush-era temporary tax cuts would expire automatically unless the House, Senate, and president agreed to continue some or all of them. The automatic tax increase would be $500 billion in 2013 and $5 trillion over the next 10 years—the largest tax hike in world history, and all Obama had to do was…nothing. The Republican majority in the House dutifully and impotently passed a bill to make all the Bush-era tax cuts permanent. The Senate ignored it. The president said he would veto it if it ever reached his desk.
Then Republican luck changed. President Obama made a mistake that altered the correlation of forces for the rest of his presidency. After he let the full fiscal cliff tax increase take place, he signed legislation that made 85 percent of the Bush tax cuts permanent. Republicans were furious that taxes increased on the “top one percent” of Americans, which they correctly pointed out were largely businesses operating through the personal income tax code. But Obama’s supposed triumph gives new meaning to the term Pyrrhic victory. Had the president simply done what he did two years earlier—extend the tax cuts for two years—he would have held the power to unilaterally raise taxes by trillions. But he threw that away. Imagine how different the field of play might have been: Obama could could have demanded changes to the sequester, changes to save Obamacare, and votes to raise the debt ceiling, while wielding in his whip hand the power to raise taxes through inaction.
It’s no use memorizing Saul Alinsky if one is clueless about Sun Tzu: In the August 2011 Budget Control Act (BCA), Obama wanted a $2.5 trillion debt ceiling hike and agreed to a $1 trillion cut in future spending with caps to enforce the same, and then in addition a $1.2 trillion sequester that further reduced future spending and enforced it in law—unless a supercommittee came up with an alternative to the sequester cuts that were balanced equally between Pentagon spending and domestic discretionary spending.
Since January 2011, with congressional power divided, House Republicans and Senate Democrats have been in stalemate, two sumo wrestlers, each unable to push the other out of the ring. The only way for one side to gain a permanent advantage is for the other to make a mistake.
Obama made a mistake in signing the sequester. He believed that Republicans could not stomach any cuts in Pentagon spending. He was sure they would instead accept tax increases to be recommended by the supercommittee. Senator John Kerry—Obama’s lead negotiator—told me at the time that he believed he could win the following deal: a $1.4 trillion tax hike to pay for a $400 billion “Stimulus 3.0” in exchange for a concession of some $200 billion in reduced spending over a decade. After some whining, the GOP said, “Hell no.”
Obama then tried to convince Congress to undo the sequester in March 2013 by canceling White House tours and blaming these pathetic actions on sequester spending cuts. Boehner refused to be bullied, opened the Capitol to tourists, and the sequester continued.
For the next 10 years there is a legal cap on much of domestic discretionary spending. This does not fix our long-term unfunded entitlement liabilities of some $64 trillion (present value). But it has dropped total government spending as a percentage of GDP from 24 percent in 2010 to 22 percent today. In constant dollar terms, discretionary spending today is at $3.5 trillion compared to $3.7 trillion in 2010. And Obama and the Democrats in Congress are powerless to change this.
In September 2013, during the negotiations over a debt ceiling hike and a continuing resolution to fund the government, some Republicans demanded the repeal of Obamacare. Democrats replied that Obamacare is the “law of the land” and refused. Now the Democrats desperately want the sequester limits busted so they can spend more. Republicans politely respond, “The sequester is the ‘law of the land,’ so thank you, but no.” This power advantage can only be lost if Republicans make a mistake as costly as Obama’s two blunders and poke a permanent hole in the sequester.
So what did we learn from election night 2013? In New Jersey, Chris Christie faced a Democrat State Assembly and Senate. Since winning office, he has singlehandedly been at war with the local teachers union for four years without being tarred as anti-teacher or anti-union. Christie won a $130 billion cut in unfunded pension liabilities for government workers in New Jersey, rolled back a millionaires’ tax, and stopped further Democrat tax hikes. Yet he was re-elected 60 percent to 38 percent, earning 21 percent of the African-American vote and 51 percent of the Hispanic vote. In Virginia, where Democrat Terry McAuliffe outspent Ken Cuccinelli $35 million to $18 million, McAuliffe limped to a narrow 47.74 percent to 45.25 percent win. And despite Democrat firebrand and ex-governor Howard Dean pouring cash into an effort to take the Virginia House of Delegates, the GOP lost only one seat and retained a 67 to 33 majority.
One other piece of political intelligence can be found in Colorado, supposedly a newly minted blue state. There a collection of billionaires and teachers unions put on the November ballot a set of income tax rate increases amounting to $1 billion each year. Higher taxes on “the rich” for “education” lost 65 percent to 35 percent: This in supposedly true blue Colorado.
It has been a bumpy ride these past 12 months. The year began depressingly. But unforced errors by Obama and a GOP focus on fighting spending across the board has put conservatives in a good place to begin the fight for November 4, 2014, less than one year away.