Two Cheers for the Boehner Compromise

by Michael J. New

Like many NRO contributors, I am on largely board with Speaker Boehner’s compromise debt-ceiling plan. Politics is the art of the possible, and this plan avoids a government shutdown while offering some spending cuts with no real tax hikes. As most NRO readers know, the long-term fiscal health of this country depends largely on entitlement reform. Unfortunately, the Obama administration never really proposed anything serious in this regard.

On the good side, the spending limits are a positive development. Spending limits can be useful at reinforcing a broad consensus to limit the growth of government. Furthermore, when budget deficits are a salient political issue, Congress has shown the ability to limit non-defense discretionary spending. Adjusting for inflation, non-defense discretionary spending actually fell during the 1980s. In fact, between 1981 and 1996, non-defense discretionary spending increased by only three percentage points in real terms.

I think that many analysts, both conservative and liberal, are overestimating the impact of the triggers. Similar triggers were put in place in the Gramm Rudman Hollings Act, which President Reagan signed into law in 1985. The difference was that the Gramm Rudman Hollings triggers were installed to meet deficit targets, not spending targets. The triggers were only utilized sporadically and resulted in very few actual spending cuts. Congress often met the annual deficit targets by engaging in creative accounting and delaying expenditures until subsequent fiscal years. I am concerned that future Congresses may engage in similar gamesmanship.

Overall, in the absence of Obamacare, I might have urged the Republicans to take a harder line in these negotiations. However, as I have argued previously, the best thing that could happen for the long-term fiscal health of this country is a repeal of Obamacare. If the 2012 elections are about the faltering economy and Obamacare, Republicans have a good chance to win. Conversely, a focus on Medicare and entitlement reform would not work to the advantage of Republican candidates. Since the window of opportunity to repeal Obamacare will probably close after the 2012 elections, Republicans would do well to accept this compromise and not risk the political fallout that might accompany a partial government shutdown.

— Michael New is an assistant professor at the University of Alabama, an adjunct scholar at the Cato Institute, and a fellow at the Witherspoon Institute in Princeton, N.J.