Originally published in Official Artur Davis
The notion that a reelected Barack Obama would revert to the centrist, bipartisan sounding Obama of the 2008 campaign trail was a fantasy from its conception, and the White House officially punctured it with its release of a deficit plan that resembles a Democratic wish list: the death of the Bush era tax rates for upper income earners; a bump in the estate tax; for top brackets, a return to pre 2003 treatment of dividends as ordinary income rather than capital gains; a few carve-outs from 2011’s mini stimulus bill; and amorphous, undefined cuts to farm price supports, a rare spending reduction that enthuses the Democratic base. Entitlements are virtually left alone, save for a mystery round of “savings” in Medicare, with details to be named later.
It has the aesthetics of a maneuver rather than a genuine negotiating stance. And as maneuvers go, it is a skilled one. Offer a package thick enough with proposals to keep the high ground, but make it one-sided enough that Republicans will dismiss it, while counting on the GOP congressional base to keep unraveling to the point that sometime around Christmas Eve, Republicans yield on the two points that Democrats genuinely want from this exercise: a continuation of the Bush cuts for earners below $250,000, and another short-gap extension in jobless benefits. Of course, there aren’t a lunchtable’s worth of congressmen who seriously believe that once the White House has spared Democrats the vulnerability of defending seats in 2014 in the aftermath of a middle income tax hike, that Obama will return to the table to re-open the viability of the Bush top bracket cuts.
There are all manner of reasons to wonder why congressional Republicans saddled themselves with a dead-end that was so thoroughly predictable: from overconfidence about winning in 2012, to a momentary infatuation with the notion that the all but forgotten deficit super-committee would develop a deal-making prowess Washington has not seen in several generations, to an under appreciation of how much raising upper income taxes has become a politically cost-free goal for Democrats.
The last blunder is worth dwelling on. To a degree Republicans were much too slow to realize, the political consequences around advocating for higher taxes have steadily declined over the last decade, to the point that three successive Democratic presidential campaigns have overtly favored a hike in upper income taxes. While Republicans have gamely protested that tax increases threaten job growth, Democrats have proved far more successful in fending off those claims with their own arguments that the tax code is too tilted toward the interests of top bracket earners. While the polling on the subject is partly a creature of a sample’s wording (exit polls showed a broad public preference for raising the tax burden on the “wealthy” coinciding with even stronger support for reducing the deficit primarily through spending cuts), there is virtually no evidence that a viewpoint exceedingly popular with the Democratic base has taken any electoral toll with swing voters.
Republicans are partly to blame for their own much less confident position. The closest Republicans have come to a comprehensive deficit strategy, Paul Ryan’s budget, has been only occasionally defended and its particulars remain obscure to most Americans who don’t frequent policy salons or Heritage Foundation online seminars. In fact, in an eerie echo of the Democratic play on health care reform in 2010, Republicans have invariably touted the Ryan Plan as a bold-hearted act of political courage while spending little energy on articulating its fine points. Nor have Republicans shown the strategic wherewithal to prioritize a single policy objective as dramatically and neatly defined as the Democratic aim of “making the rich pay their fair share.” Lastly, with their own rhetorical embrace of deficit reduction without the benefit of specificity, and by showing their own penchant for symbolic, but insubstantial gestures, Republicans paved the way for Democrats to wage their own disingenuous maneuver by overstating the impact of tax hikes that would only put a minor dent in the deficit.
So, what is a party to do, when it has been so constrained by its own miscalculations that it has almost no bargaining power? Assuming the administration does not have an outbreak of authentic compromise, congressional Republicans would do well to remember that their non-existent leverage will be enhanced the day sequestration takes effect and the mandatory cuts and revenue increases become a market and economic reality. With a newly strengthened hand, the onus would shift to Republicans to craft a detailed round of spending cuts, to become serious about downsizing corporate deductions, and to proffer a serious set of entitlement reforms, from partial means testing to restraining Medicare growth through a premium support based alternative. It would become an imperative for Republicans to conquer their own squeamishness about entitlements with the same nerve that has liberated Democrats from their fears about taxes.
There is a risk that the aftermath would be brutal in the short-term, at least politically. There is certainly a respectable, although debatable, proposition that Republicans should at all costs avoid the potential economic contraction from the failure to reach a deal. (although the erroneous forecasts that preceded the haphazardly constructed Troubled Assets Relief Act in 2008 are an example of why Congress should be cautious about a shot-gun resolution). To be sure, given the crisis atmosphere that would result, Republicans would certainly need to be prepared for a demonstration of seriousness and sacrifice that would inconvenience the Hill: 12 hour five day sessions, paring back the congressional staff structure to essential personnel, deploying each committee to all day hearings on prospective savings.
But the likeliest result would be not catastrophe so much as a grudging, protracted round of weekly deal-making: beginning with trading Democratic priorities on the safety net side for Republican goals on discretionary spending, then ratcheting up to an eventual tradeoff of bargaining away a slate of deductions for a genuine entitlement overhaul, and for retroactively restoring current tax rates across the board.
For all of the inevitable short-term angst over gridlock and partisanship, the messiness between the cliff occurring and the negotiated end-game would be the closest modern Washington has come to a serious re-evaluation of its policy values on both the left and right: frankly, it is the only scenario in which objectives favored by close to fifty percent of the country have a viable chance at a fair hearing. It is not the course pundits or panicked consultants would recommend, but for Republicans, holding their ground through this month and triggering that substantive free for all might be the surest demonstration that the conservative agenda has been about something more durable and compelling than just defeating Obama.