THE NOVEMBER 2, 2010, ELECTION RESULTS gave America an
opportunity to make a U-turn on the Road to Serfdom.
Republicans gained 63 congressmen and six senators in
Washington, and nationally won seven governors, more than 680 state
legislators, and control of 21 state legislative bodies — all of
which will help in redistricting to strengthen the GOP in Congress
and the states for the next 10 years.
While these gains are important and encouraging, the most
significant change in American politics in 2010 was the
introduction of government spending as a vote-moving issue in
elections, and Republicans’ acceptance of the issue as a new
addition to the Reagan Republican list of non-negotiables.
Prior to the 2009 and 2010 elections, government spending was
like the weather — everyone talked about it, but no one did
anything about it. Opposition to government spending was
rhetorically part of the Reagan Coalition, but operationally it was
missing.
The political power of the Reagan Republican coalition flows
from vote-moving issues backed up by identifiable political
structures that inform and motivate voters. The Second Amendment is
powerful because the National Rifle Association has 4 million
members and an annual budget of more than $200 million. The tax
issue has teeth because Americans for Tax Reform has 235 House
members and 41 senators who have signed the Taxpayer Protection
Pledge to oppose any and all tax hikes. Voters know who has kept or
broken the pledge. The life issue is buttressed by the National
Right to Life Committee and the Susan B. Anthony List-not debating
societies, but real live political machines that move votes. The 2
million Americans who home school are organized and protected by
the Home School Legal Defense Association and the Parental Rights
Organization.
George W. Bush was very careful never to cross those
well-defended lines. But there was no identifiable, organized
opposition to growing total government spending. So Bush would cut
taxes, and spend too much. Leave your guns alone, and spend too
much. Protect life, and spend too much.
The overspending of the Bush years led to some grumbling, but no
one threw anything heavy or walked out of the room. If some voters
did walk away unhappy about spend-too-much, they did so as
unheralded individual voters. There was no recognition in the media
or in the halls of power that a voting bloc was breaking off.
The Tea Party movement changed all that in 2010. Now there was a
visible, palpable single-issue voting bloc motivated by the size of
government. The Tea Party movement had rallies and marches. One
could count attendance. They were seen, counted, and felt at the
August town hall meetings that solidified the Republican commitment
to total opposition to Obamacare and cap and trade energy
taxes.
Because the spending issue was front and center, independents
who had voted 60/40 against Bush’s party in 2006 and 2008 voted
60/40 for Republican candidates in 2010.
It is clear why the spending issue is a powerful winner for
Republicans. If the focus is on reducing government spending as a
percentage of the economy there are only two solutions. One: spend
less. Two: grow the entire economy so that the same size government
is less burdensome. Republicans own both issues.
The Democrats have no ability to compete in a conversation about
spending less. All their ideas are about spending more. Stimulus
one. Stimulus two. It is harder for Democrats to cut the budget
because so much of the government spending over the past 80 years
has been structured to create and pay off Democrat
constituencies.
Republicans have an entire arsenal of ways to grow the economy.
Cut the capital gains tax. Cut income tax rates on individuals and
business. Reduce regulation. Throttle the trial lawyers. Expand
free trade.
Democrats have no proposals that lead to higher rates of
economic growth. They have only their Keynesian theories that
government spending creates growth. This failure of ideas is
exactly what created the Tea Party movement.
THE DEMOCRATS HAVE ONE HOPE: to fool Republicans into shifting
their focus from spending to “the deficit.” The establishment
recognizes two “equally valid” ways to reduce the deficit: spend
less or tax more. Democrats can do “tax more.” This shift of focus
would allow Democrats back on the playing field.
If Democrats fool Republicans into defining the problem as “the
deficit” rather than spending, then all bipartisan compromises will
contain both tax hikes and spending restraint (incidentally, a
fatal mix for the 95 percent of Republicans who have signed the
Taxpayer Protection Pledge to oppose all tax hikes).
Can Obama fool the Republicans into abandoning the political
high ground of fighting for less spending? It has happened
before.
In 1982, Democrats talked Ronald Reagan into a bipartisan
compromise to cut spending three dollars for every dollar of tax
increases. Taxes were raised by a total of $215 billion in the
following five years. According to the terms of the deal, spending
should have been reduced by three times that much: $645 billion.
Instead, adjusting for inflation, total spending rose by $177
billion more than it would have without the deficit reduction
agreement. In other words, a promised cut of $647 billion turned
into a spending hike of $177 billion. (Republicans then lost House
seats in the fall election.)
In 1990, Democrats lured George Herbert Walker Bush into an
ambush at Andrews Air Force Base where he was promised two (not
three) dollars of spending cuts for every dollar of tax increases
he conceded (he was a cheaper date). Tax rates were hiked.
Twenty-six different tax hikes were permanently imposed that
increased taxes over the following five years by $137 billion. The
Democrats’ promise would suggest spending cuts of $274 billion.
Instead, spending rose $23 billion more than the projected baseline
(and Bush won only 38 percent of the presidential vote two years
later).
Obama has studied under the great political strategist Lucy, who
teaches that if Charlie Brown has fallen for the
I’ll-hold-the-football trick in the past, he will do so again.
LAST YEAR OBAMA CREATED another deficit commission headed by
Clinton operative Erskine Bowles and former Wyoming senator and
Reliably Reasonable Republican Alan Simpson. They released a
“compromise” to cut spending by four (not three or two) dollars for
every dollar of tax increase. They claim their plan cuts spending
by 3 trillion dollars and raises taxes by 1 trillion dollars over
the next decade. Congressman Paul Ryan (R-WI), who served on the
commission and voted against the plan, argues that the plan really
raises taxes by 2 trillion dollars. The Heritage Foundation
calculates at least 3 trillion in higher taxes. And on the spending
side? Americans for Tax Reform polled every Democratic congressman
and senator, asking if they would support the supposed spending
cuts in the proposal. None would.
Yet Charlie Brown lives and learned nothing. Two Republican
senators did vote for the Obama commission’s plan to raise taxes by
2 or 3 trillion dollars in return for promises on spending. Neither
were in Congress in 1982 or 1990 to watch the “disappearing
spending cut” trick performed live.
Tax hikes are not part of a deficit reduction solution. Spending
cuts and pro-growth tax cuts reduce the deficit. Tax hikes are what
politicians do in place of spending reduction. Tax hikes only
enable more spending.
Nor are spending-only plans somehow unattainable. For instance,
New Jersey governor Chris Christie removed $2.6 billion dollars
from the Democratic legislature’s budget, but only by refusing to
consider any tax increases.
There are cheerful signs relating to the current deficit
commission. Boehner and McConnell have learned the lessons of 1982
and 1990. After the Tea Party election of November 2010, they led
their caucuses to kill the earmark-laden omnibus bill in December,
banned future earmarks, and stopped the Democrats’ planned tax hike
by extending the lower rates established in 2001 and 2003 under
Bush.
But the Washington establishment has great rewards for
politicians who “grow in office” — who abandon their written
commitments to voters to oppose tax increases and who abandon
spending discipline for bipartisan talks on so-called deficit
reduction.
The Sirens of bipartisan agreements to reduce the deficit
(rather than spending) remain. So do the rocks.
