To understand what’s really happening, it helps to discard the usual Republican and Democrat labels and realize that there are several different camps in Congress, none of which has the ability to push through policy measures without help from at least one other group..
The hard-left ideologues: This group of congressional crazies shares the views of the Obama administration, Paul Krugman, and the Occupy Wall Street crowd. They want much bigger government with no real entitlement reform and lots of class-warfare tax hikes. Think Greece.The rational Left
: This is the most accurate description of the Gang of Six, Simpson-Bowles, and Domenici-Rivlin. They accept bigger government, but are willing to at least tinker with entitlements and also want to raise taxes in ways that don’t do as much damage. Think Sweden.
The big-government Republicans: These are the so-called compassionate conservatives, who side with the rational Left if they get some political cover but sometimes will support smaller government if they get pressure. Think England.
The Reaganites: Mostly the members of the House Republican Study Committee and Senate Steering Committee, they support fiscal restraint, entitlement reform, and lower taxes. Think Hong Kong.
In this admittedly oversimplified analysis, every group is willing in certain situations to join forces with the adjoining group. This is why some of the tax-hike plans pose a clear and present danger. There are plenty of big-government Republicans, for instance, who are willing to ally themselves with the rational Left and support a big tax hike. Fortunately, Obama and the hard Left are saving us from that fate.
While this seems like a very discouraging situation for fiscal conservatives, the 2012 elections almost surely will bring in more Reaganites. This doesn’t preclude an alliance of the rational Left and big-government Republicans, but it does make it more difficult (thank God for Grover’s tax pledge).
Shifting from theory to reality, the real challenge for fiscal conservatives is figuring out how to adopt something akin to the Ryan budget. That means no tax increases, genuine spending cuts, and real entitlement reforms (i.e., not the policies promoted by the rational Left, such as unsustainable price controls or back-door tax hikes via means testing).
Sadly, there is no way for such a budget to be enacted in 2011 or 2012. And it may not happen in the four years after that. That would be both frustrating and worrisome — particularly since every year of delay brings us closer to European-style fiscal chaos.
But for fiscal conservatives there is no possible compromise with either the hard Left or the rational Left. Both of those camps want bigger government. Both want higher taxes. And both oppose real entitlement reform. The only real debate on the Left is how quickly to race in the wrong direction.
— Daniel J. Mitchell is a senior fellow at the Cato Institute.