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.