Monday, December 10, 2012

Boehner should give Obama what he asks for

There are a lot of media outlets who are saying that Obama won the election, so the House should give him what he wants.  These same people had no problem with the Congress not giving Bush what he wanted on Social Security reform or Reagan what he wanted on spending reform, so I think it's a bunch of opportunism.  But that's not how I'm approaching this.

The number one classic blunder, possibly surpassing starting a land war in Asia, and certainly going against a Sicilian when death is on the line, is agreeing to closed door negotiations reported by a hostile media.  The Republican leadership should never have agreed to closed door negotiations and given their involvement should extricate themselves as quickly as possible.  As Jonah Goldberg notes, watching this budget debate is like trying to follow a cricket match based only on selective leaks to a hometown press of one of the teams coming from the players.

From a technical perspective, though, even if the whole thing happens in the open this cannot produce a good outcome from the perspective of Republicans in the House.  I don't mean by that it can't help them politically, that's unlikely too, but not where I'm going.  The perspective of the Republican leadership (which I agree with) is that the fiscal path of the United States can only be saved by massive reduction of the federal government, most especially in entitlement spending.  This is one way I'm certain that the accusations that the Republicans are trying to sabotage the economy and blame the President are false.  The Republicans really believe that tax increases will destroy the economy and that continued spending at 24% of GDP is going to cause a debt melt down.  You can tell they believe that because that's what they do if they're in control.

There are numerous reasons they can't possible get this, but most important in this context is that a failure to reach a deal will be seen as caused by intransigence on the part of the Republicans rather than the President.  If John Boehner agreed to massive tax increases written by Harry Reid in exchange for a 2% reduction in Medicare spending and the bill didn't pass the press would cover it as failing because Republicans were holding the whole thing hostage for a Medicare reduction.  The second major reason is that because of how taxation and budgeting works in Congress a tax increase will happen but a budget reduction is only a promise on the part of Congress that when they actually write the budget it will be what they promise it is now.  I'm not sure they have ever actually followed through.

So given these choices I basically see three choices for the Republicans in Congress:

  1. Negotiate strenuously, fail to get what you want, we go over "the fiscal cliff" and Republicans get blamed
  2. Negotiate strenuously, get what appears to be some set of spending reductions that we'll never actually get in exchange for tax increases we will (I'm actually doubtful this is possible.  My personal opinion is that the Democrats are currently sufficiently insulated from the consequences of a failure to reach a deal that they don't even need to agree to spending cuts they don't want that won't actually materialize).  The taxes don't bring what the Democrats say they will and Republicans get blamed for the fiscal shambles because they didn't agree to what was asked for.
  3. Get the Democrats to write a bill, have the Republicans who wanted to make a deal vote present, Tom Price and the solid conservatives can vote against it, but let it pass.  
I think, as do many Republicans, that option 3 is going to cause a near catastrophic collapse of the economy within a couple of years as we either experience massive inflation from the Fed buying all of our bonds or bonds stop selling because nobody believes we can cover the debt, which is why they don't want to do it.  But, under the Republican operating assumptions options 1 and 2 also lead to a near catastrophic collapse of the economy, they just give people an opportunity to say the reason it happened is that we didn't give the Democrats everything they wanted.

I'll note there is a problem with this plan.  I'm being extremely cynical, but I'm not sure I'm cynical enough.  Option 3 presumes the Democrats would actually put down in legislative language what they say they want.  If what they really want is to go over the fiscal cliff and blame Republicans for it they might not be willing to even put down a list of demands on paper for the Republicans to pass.  If that's the case, though, I still think Republicans can do better damage control if they start (preferably last month) vocally asking for proposals so that they can at least claim when the press starts talking about their intransigence that they would have passed anything given to them, but they didn't have anything to pass.  I don't think this would actually work, but some people might listen.

I should note, the original idea for this came from John O'Sullivan in an interview he did with Peter Robinson, but he didn't go into the depth I do here.  Maybe he did somewhere else but I haven't seen it.