Say what you will about the contemporary Republican Party, its national representation does stand on principle. It seems they’ll sacrifice anything to those principles, their own agenda included. If there is to be an increase in the Federal debt limit before a disastrous and unprecedented failure of the Federal Government to pay its bills starting August 3rd, it looks increasingly like it will be coupled with $1.5 trillion in cuts to Federal spending over a 10-year period. This $1.5 trillion represents the least-controversial aspects of $2.4 trillbion in deficit reductions sought by Democratic and Republican negotiators on Vice President Joseph Biden’s deficit-reduction group. This of course comes out to an annualized average of about $150 billion in cuts to Federal spending, which when combined with the mostly-superficial budget cuts of $37.8 billion from the FY 2011 Federal budget last April, means the Federal Government would spend about $187.8 billion less per year. This constitutes a major accomplishment for the Republican House majority, especially considering House Speaker John Boehner (R-OH)’s “Pledge to America” promised only about $100 billion in budget cuts; however, this figure also represents roughly half the volume of spending cuts recommended by the President’s Deficit Commission back in its December report.
Maybe Congressional Republicans thought that they could simply wait-out the Senate Democrats and President Obama, using the President’s and Treasury Secretary’s repeated warnings that the question of raising the Federal debt limit is not a game to showcase their seriousness to their base and to press the Senate and Executive Branch into a massive commitment to shrink the Federal Government over the next decade. Congressional Republicans seem to have verified their Conservative credentials, but at the cost of blowing their best offer and having to settle for a consolation prize. This is going to hurt more than they think.
New York Times op-ed columnist Ross Douthat had a thought-provoking op-ed about this on Monday, though he is not the 1st to say that House Republicans held out for too much without making concessions with a smaller deal and diminished respectability as their reward. That credit, to my knowledge, goes to Ezra Klein, who wrote earlier and even prognosticated about Eric Cantor’s preference for a $2 trillion deficit-reduction deal with no tax increase over a $4 trillion plan with $800 billion in closed tax loopholes and higher tax rates on the rich as a likely harbinger of the sacrifice of a goal in favor of the letter of a principle.
President Obama appears genuinely disappointed at the prospect that he won’t be able to get a major deficit-reduction deal (say, a plan big-enough to balance the Federal budget in the long term); the Liberal Ironist can live with the failure of the 112th Congress to work-out a deal with the President to essentially restructure the Federal Government and reconstitute its priorities. The President is taking an intermediate-term game while the long-term game, while fraught with some risks, should still be compelling. If, say, the President gains a $2.5 trillion increase in the Federal debt limit while Republicans secure about $1.5 trillion in budget cuts over a 10-year period–including cuts to Defense Department advanced weapons systems and farm subsidies many Republicans had hoped to protect–this outcome probably allows him to simultaneously mitigate criticism from the right and the left more than either his hoped-for “grand bargain” or the status quo would have. House Republicans have already secured a reputation for intransigence, and even if we are able to move forward with a debt limit increase we will likely take stock of damage already wrought to anxious markets. If President Obama wins re-election, the strength of the Tea Party message will already be called into question; the very reasonable and professional manner in which House Budget Committee Chairman Paul Ryan (R-WI) proposed conversion of Medicare into vouchers for senior citizens to buy health insurance may yet prove more-damaging to Republican electoral prospects than House Majority Leader Eric Cantor (R-VA)’s brinksmanship, which Senate Majority Leader Harry Reid dismissed as childish buffoonery. In any case, in bearing their fangs the new Republican House majority has expended their pretense of representing widely-held sentiments, failed to achieve any of their really radical goals, and (if the $1.5 trillion in 10-year budget cuts pass, particularly following the $37.8 billion in cuts to the 2011 Federal budget this spring) inured President Obama to much Republican criticism that he is beholden to some kind of radical left or that Federal spending is “out of control.”
Far from being “1995 all over again,” Year 1 of the new Republican House majority has been its own story, with very different players playing the same game with very-different endowments–the importance of which isn’t fully grasped by either party. What hasn’t changed is that an opposition Republican House majority will cut off its nose to spite its face, even with numerous portents that they risked doing so.