[Lay impressions on the week’s politics for the benefit of hypothetical GOP leaders looking to know whether and how the week’s political messaging went over. More information about this series can be found here. Other posts in the series can be found here.]
Reactions to this week’s political messaging, and lack thereof with respect to messaging from House Republican leadership:
The Debt Ceiling “Cliff”
Last week, Byron York reported that Republicans knew they didn’t have the public with them on taxing the rich, so they tabled entitlement reforms during the debt-cliff negotiations until they’d have public support on fiscal responsibility during the debt-ceiling negotiations.
The Republican strategy is more than just positioning. It’s the right thing to do. Everybody knows Obama’s tax increases will do little to reduce deficits in coming years; they’ll add about $60 billion in revenue a year, turning a $1.2 trillion deficit into a $1.14 trillion deficit. And everybody knows entitlement spending is on its way to eating the entire federal budget. It has to be reduced or disaster awaits.
Actually, the $62 billion in revenues reportedly are offset by $67.7 billion in tax credits for favored businesses. There’s a difference of opinion on how quickly entitlement spending will increase, and whether and when we will enter the “red zone.” But the basic message is unassailable: Spending is getting away from us. To waive it off as no biggie would require a level of faith in leftist economics that cannot fairly be presumed to enjoy consensus. In the “back room deals,” the president reportedly became irritated with the Speaker’s insistence that we “have a very serious spending problem,” replying “I’m getting tired of hearing you say that.” It’s still too early in the debate over austerity vs. stimulus to be tired. (California’s experiment with raising taxes already isn’t working out as planned.)
What is needed to help bring us out of the “red zone” is to signal the markets that we will increase the debt limit, but at the same time, we have to bend the cost curve down. Social Security can be fixed, but Medicare is in serious trouble as we only pay one-third of the total benefit that we receive. The program cannot be fixed through minor adjustments. Even Paul Ryan’s plan, unpopular with the left for its strident changes to Medicare, was also unpopular with conservatives who felt that a ten-year time horizon to solvency fell short of the signal markets needed to see to restore their trust in our fiscal responsibility. (The realistic political problem here, as Hewitt points out, is Americans’ attention span: “It just gets so doggone boring talking about Medicare all the time.")
Rep. John Campbell spent two hours on Hugh Hewitt’s show early in the week explaining in very rough terms how a debt crisis could happen. When the tread is wearing thin—e.g., when you’re talking seriously about printing trillion dollar coins to avoid default and spending cuts and—investors tend to get nervous when they see lots of selling they don’t understand. This could cause them to start dumping stock, which may cause another to do the same. Computerized trading, which may pick up the trend, could add to the snowball effect, until very quickly there is a rush on the markets and the inception of a crisis. We are in the “red zone,” Campbell says. And to fix the problem with tax increases only would require every federal tax across the board to increase by a staggering 30%. Tax increases aren’t going to do the trick. Not even close.
This messaging is critical in light of this observation from The Economist:
The latest twist is a poll showing that Americans also oppose allowing the government to raise its debt ceiling in order to borrow the money to pay for the goodies it has bought for them, in the absence of taxes. By deductive reasoning, we might conclude that Americans want the government to steal things from contractors and not pay for them. But the more likely conclusion, as Jonathan Bernstein argues, is that Americans don’t yet understand that "do not raise the debt ceiling" means "default on America’s debts, stop cutting Social Security and Medicare checks, don’t pay contractors for work performed, and crash the stock market". As the media explains this over the next month or two, public views on this question are likely to shift.
Harry Reid also opposed increasing the debt ceiling in 2006, in fact. Now he’s urging the president to raise it even without Congressional approval! So much for Republicans being uniquely guilty of partisan gamesmanship. And it turns out that the public is in favor of lower tax rates, even for the rich, than those that existed even before the fiscal cliff deal.
The iron was hot this week, GOP leaders! Time to strike with a proposal for sensible and necessary entitlement reforms! Public opinion on the debt ceiling is yours to lose. Cement it with any one of a number of decent messages. We have just until February 15 to get a deal—not a lot of time.
But the week came and went without a peep from the House leadership. In the meantime, it is a foregone conclusion among Democrats and the media that the Republicans are anxious to drive America off another cliff. The messaging has been less than clear. Senate Minority Leader Mitch McConnell had a spotty showing on Meet the Press. He repeatedly insisted that the president had to be “dragged kicking and screaming” to the table, but he failed to address the charges that Republicans were holding the economy “ransom” in the debt ceiling negotiations. After the interview, David Gregory pointed out that, by failing to rebut the claim, he tacitly admitted it. Leader McConnell could have picked one of several responses that would have been better than ducking the question. He could have taken Rep. John Campbell’s suggestion and framed the issue in terms of a big cliff versus a little cliff. Or probably even better, take Larry Arnn and Newt Gingrich’s advice and just serve your constitutional function: Stop worrying about what the president is doing. Let the president worry about the things he has to worry about from his perspective. Stop worrying about what the other house is doing. The Senate and the House each needs to worry about itself. This is what divided government is all about: not back room secret deals that are for the removed from the people. Pass a Republican bill and let the President and the Democrats sweat over whether they want to take the heat for a cliff for a change. As Ramesh Ponnuru said this week, “For Democrats to say that no conditions should be attached to the [debt ceiling] bill is to attach a condition.” Correct. This is on the President and the Democrats as much as it is on Republicans. And the President wanted these negotiations in the first place.
Patterico is right—angry, but right:
You [Boehner] have the House. You have the spending power. Obama is blaming YOU for not exercising it wisely.
And he’s right.
So raise the debt limit. And then pass what YOU think is a defensible budget.
If the Democrat-controlled Senate and the Democrat president won’t pass it, that’s on them.
The debt ceiling is not a way to make a stand because it’s suicidal and you know it. So raise it.
And then, pass exactly what you want. If they’re going to blame you, then you vote only for a bill you feel comfortable taking FULL responsibility for.
Dammit. Take a stand for once in your life. Why are you doing this job if you’re not going to take a stand?
(Incidentally, after the debt-cliff negotiations, John Boehner said just this, that he was done with back room deals. But the message didn’t seem to carry very far.)
On Meet the Press, Carly Fiorina made a good point that, no, we don’t want to fool around with the debt ceiling, but on the other hand, if we don’t get spending in line with revenues, we may still very well face a credit downgrade. So once Republicans pass a slate of cuts that bring spending and revenues back in line, then assuming Democrats block it, they’re the ones holding our good credit “ransom” and threatening to take us over “the credit rating cliff.”
The Trillion-Dollar Coin
A cadre of lefties think it’s a plan. Don’t let Jonathan Chait hear you call it “silly”—he’s miffed over Jon Stewart’s jokes about it, and tries to rehabilitate the coin by pointing to the example of that revered, though notoriously unserious thinker, FDR. But even those who think it’s legal, like Josh Barro, seem to be pushing a message to the effect that “as dumb as you think this is, we’re only keeping the idea around in case Republicans are dumb or evil enough to take us over the cliff.” Which is a cynical and bad faith message, it seems to me. (Or it would be if the GOP put out an entitlement reform proposal already.) If we don’t get spending and revenue in line, we’re going to have serious fiscal issues, coin or no, debt ceiling or no. Again, that premise is debatable, but it’s got a pretty fair shot at carrying the day.
But Kevin Drum continues to think it’s a “horrible, lawless policy”:
Is this really the road liberals want to go down? Do we really want to be on record endorsing the idea that if a president doesn’t get his way, he should simply twist the law like a pretzel and essentially do what he wants by fiat? My recollection is that we didn’t think very highly of this kind of thing when we thought George Bush was doing it.
Tyler Cowen joins, and comments on the upshot for Republicans:
let’s say that — somehow — the whole thing miraculously worked out well from start to finish. The testier Republicans would in fact get exactly what they want. They would receive isolation from any negative consequences from brinksmanship, and a new narrative about how President Obama is a fascist incarnate. Keep in mind that since the coin would bear the sparkling image of Sayyid Qutb, there are even some members of the American electorate who would find such charges plausible.
(I assume the Qutb part is in jest.)
Ezra Klein has concerns that “something will go wrong” with minting the coin. In a column Thursday, he explains that the coin cliff might begin to signal that the U.S. is flirting with banana republic-style policies:
But there’s nothing benign about the platinum coin. It is a breakdown in the American system of governance, a symbol that we have become a banana republic. And perhaps we have. But the platinum coin is not the first cousin of cleanly raising the debt ceiling. It is the first cousin of defaulting on our debts.
As with true default, it proves to the financial markets that we no longer can be trusted to manage our economic affairs predictably and rationally. It’s evidence that American politics has transitioned from dysfunctional to broken and that all manner of once-ludicrous outcomes have muscled their way into the realm of possibility. As with default, it will mean our borrowing costs rise and financial markets gradually lose trust in our system, though perhaps not with the disruptive panic that default would bring.
Sadly, none of that actually is a reasonable argument against the platinum coin. The fact that we wish we were not a banana republic witnessing a full-blown meltdown of our treasured system of governance does not mean we are not, in fact, a banana republic witnessing a full-blown meltdown of our treasured system of governance.
The argument against minting the platinum coin simply is this: It makes it harder to solve the actual problem facing our country. That problem is not the debt ceiling, per se, though it manifests itself most dangerously through the debt ceiling. It’s a Republican Party that has grown extreme enough to persuade itself that stratagems like threatening default are reasonable. It’s that our two-party political system breaks down when one of the two parties comes unmoored. Minting the coin doesn’t so much solve that problem as surrender to it.
I don’t agree with his characterization of the GOP’s position that it’s “extreme enough” to believe that “threatening default [is] reasonable.” As I mentioned above, there is no basis to suggest that the president and the Senate are not just as responsible. If they reject the entitlement reforms the GOP propose (consider this your cue, House Republicans), the debt cliff is on them.
Mickey Kaus has a good suggestion for the GOP. They don’t want to flirt with the debt ceiling and all the political fallout that may bring. They’d rather cut spending in less existentially-threatening circumstances, like the looming self-inflicted budget “sequester” on March 1 and the “continuing resolution” to keep the government funded later that month. But those issues come up only after the debt ceiling has to be addressed. So it’s a no-go, it appears, until:
Come now the Democrats with just such a solution: minting a huge-denomination dollar platinum coin, a fabulous gimmick now endorsed by Paul Krugman. Depending on value of the coin, it could postpone the ceiling deadline for months or years. Republicans could then ask for their spending cuts against the less irresponsible backdrop of … other spending cuts, or a standard, non-cataclysmic government shutdown, without being branded “terrorists.”
If that failed there would always be a ceiling fight down the road. But there are reasons to think it might succeed–Obama has called for a “balanced” approach, meaning spending cuts and tax increases–and he’s gotten his tax rate increases. So … ? Time to come across with the cuts, no? When Obama can’t charge “blackmail” his rhetorical advantage will almost vanish ….
Of course, if Republicans asked for a six month postponement of the ceiling, or tried to pass it, the Dems probably wouldn’t let them have it. But if they can trick the Dems into minting the coin ….
Chris Hayes points out that “Money is nothing more than a shared illusion.” So it is. Magic coins—not only minting them, but just talking seriously about doing so—go a long way to popping that illusion.
What I don’t understand about the magic coin is this: Sure, a trillion bucks would give the government more cash to spend. But if the debt ceiling isn’t increased, it’s still statutorily prohibited from spending it, right? The only way around that is if the trillion is counted as revenue. Is it? Wikipedia is stumped, too.
I’ve read a lot of insistence that the sudden appearance of $1 T will have no inflationary effect. Amazing! Unbelievable, in fact. Anyway, Peter Schiff has an interesting video segment on inflation and how CPI is underestimating the actual rise in prices in recent years.
Obama says we need “urgent and immediate action.” But why? To “curb” mass shootings that are already in decline?
Piers Morgan and Ben Shapiro had it out the other night. Shapiro takes the “doomsday provision” approach, but I don’t know if I was thrilled the way it was presented in Shaprio’s truncated, 200-words-a-minute delivery. But he is a very sharp advocate, and I think he clearly got the better of Morgan, who wouldn’t even answer Shapiro’s question whether he advocates banning all guns—he waited until Shapiro was off-camera before admitting he does.
Sam Harris has some interesting comments on gun control—excerpts via Andrew Stuttaford.
I don’t know if I like requiring gun owners to buy insurance, but I do like to focus on individual liability. Why isn’t the GOP coming up with ideas like this?
The Hagel Nomination
He’s relatively tepid on Israel and wants to talk with people some Republicans don’t think we should be talking to, doesn’t take a hardline on Iran’s acquisition of nukes, and wants to cut the military budget. Sounds like the kind of nominee Obama would pick. I think Republicans would be much less upset if Hagel weren’t a Republican, since Obama probably thinks, probably correctly, that this will give him a lot of extra leeway. Republicans are going to lose political points opposing him.
The Lew Nomination
Jack Lew seems more natural to oppose—he’s a hardened partisan who can’t even get Bernie Sanders’ support. He made $2 million during the financial crisis, including a $945,000 bonus from Citigroup after its $45 billion taxpayer bailout. Speaker Boehner reportedly found Lew extreme, unwilling to get to yes. The Lew nomination begins to challenge Obama’s reputation as a moderate.
The administration wants to get rid of all of the rich people except for a few who behave badly. The administration can use the remaining rich people as scapegoats so the poor citizens have someone to envy and the politician has someone to blame for the unbelievably large government debt.
This reminded me of a passage from Luigi Zingales’ new book, A Capitalism for the People:
In response to the uncertainty stemming from today’s populist backlash, companies have begun to demand special privileges and investment guarantees. Witness the Public-Private Investment Program announced in March 2009 by Treasury secretary Timothy Geithner, in which major private investors essentially received a subsidy of $2 for every dollar they put in. Such privileges and guarantees stoke the public anger that generated the populist backlash in the first place by confirming the sense that government and large-market players are cooperating at the expense of the taxpayers and the small investors. Then, to avoid being linked in the public mind with the companies they are trying to help, politicians encourage and even take part in the populist assault. No longer certain they can count on contracts and the rule of law, legitimate investors then grow scarce. This, in turn, leaves troubled businesses little recourse but to seek government assistance, thereby reinforcing crony capitalism. I saw this happen in Italy: a vicious cycle from which it is difficult to escape.
Conservatives on Incarceration Policy
An encouraging report on the non-“extremist” wing of the GOP’s evolving views on incarceration in America:
Take Newt Gingrich, who made a promise of more incarceration an item of his 1994 Contract with America. Seventeen years later, he had changed his tune. “There is an urgent need to address the astronomical growth in the prison population, with its huge costs in dollars and lost human potential,” Gingrich wrote in 2011. “The criminal-justice system is broken, and conservatives must lead the way in fixing it.”
None of Gingrich’s rivals in the vicious Republican presidential primary exploited these statements. If anything, his position is approaching party orthodoxy. The 2012 Republican platform declares, “Prisons should do more than punish; they should attempt to rehabilitate and institute proven prisoner reentry systems to reduce recidivism and future victimization.” What’s more, a rogue’s gallery of conservative crime warriors have joined Gingrich’s call for Americans to rethink their incarceration reflex. They include Ed Meese, Asa Hutchinson, William Bennett—even the now-infamous American Legislative Exchange Council. Most importantly, more than a dozen states have launched serious criminal justice reform efforts in recent years, with conservatives often in the lead.
Postscript: This project clearly is getting away from me. Future installments will be far less exhaustive.
Enjoy the weekend!