Politics & Policy

Boehner’s Blunder

Giving in on key Republican principles such as taxes is no way to rebuild the party.

Well, that didn’t take long.

They hadn’t even finished counting the ballots in Florida when House speaker John Boehner indicated that Republicans were preparing to surrender on issues ranging from taxes to health-care reform.

With regard to taxes, Boehner signaled that he was once again open to a “grand bargain” to avoid the looming fiscal cliff. While he kept an increase in tax rates off the table for now, Boehner said that he was open to “additional revenue” as part of a deal. Such additional revenue could, of course, take many forms, such as closing loopholes, raising fees, or counting on increased economic growth. But by preemptively conceding on revenue, Speaker Boehner takes the focus off the need to cut spending.

Speaker Boehner correctly noted that everyone agrees we can’t keep spending more than we take in. But that implies that the problem is simply the difference between what comes in and what goes out. It’s not.

The Congressional Budget Office projects that, under current policy, federal spending will reach 46 percent of GDP by mid-century — even if we never add another new government program. True, a substantial portion of that spending will be interest on the federal debt. Theoretically, therefore, if taxes were increased enough to cover spending and close the deficit, adding no additional debt, we’d have far lower interest payments, meaning that total levels of government spending would be lower in the future. Lower, but not that low: Even if one assumes that the government accumulated no additional debt beyond the $16.2 trillion it currently owes, federal government spending would still approach 30 percent of GDP by 2050. Throw in state and local spending, and government at all levels would consume roughly half of everything produced in this country. We might have no deficit, but we would have both higher government spending and a bigger tax burden than Greece has today.

Boehner’s willingness to give in so easily on revenues makes it less likely that there will be real spending cuts as part of any deal. We’re likely to get more of the sort of smoke-and-mirrors measures that the president has already proposed, such as reliance on phantom savings from ending the wars in Iraq and Afghanistan, double-counting cuts that were already included in last year’s budget agreement, and the perennial promises to eliminate “fraud, waste, and abuse.” Just look at how illusory the alleged spending cuts in last year’s debt-ceiling deal turned out to be: In the twelve months following that deal, federal spending actually increased by 3.6 percent, an average of $11 billion more every month.

At a minimum, Speaker Boehner seems to have given up any leverage that he might have had to demand the entitlement reforms necessary for any long-term spending restraint. Having conceded on taxes, what does he have left to trade?

For that matter, even his line in the sand about tax rates seems unlikely to hold. Having already surrendered to the idea of tax hikes, the debate becomes one not about whether to raise taxes but about which taxes or whose taxes to increase.

Similarly, the speaker sent conflicting signals on whether or not Republicans will continue to pursue repeal of Obamacare. Boehner first told Diane Sawyer that “Obamacare is the law of the land,” and that Republicans will no longer devote political capital to repealing it, while maintaining that there “may be parts of it that we believe need to be changed.” Later he walked those comments back in a tweet, saying that full repeal remained a Republican goal.

If nothing else, Boehner’s health-care remarks muddy the party’s position on a crucial issue.

It is not as though Obamacare has become significantly more popular. Exit polls showed that even an electorate that reelected President Obama opposed the new health-care law by 49 to 44 percent. And many of the law’s most damaging and unpopular provisions have not even kicked in yet. Next year, for instance, will see the implementation of many of its new taxes, including the medical-device tax, a Medicare payroll-tax hike for those making over $200,000, and a new surtax on investment income for the same group. And, of course, in 2014, just in time for the midterm elections, Americans will be hit by the law’s individual and employer mandates.

Obviously, with the Democrats in control of the Senate and President Obama reelected, Obamacare was not going to be repealed this year. But that doesn’t mean that Republicans should stop fighting it. House Republicans still have the power of the purse, and state governments have been entrusted with the law’s implementation. At least ten states have refused to set up the insurance exchanges that the law stipulates. (Governors Bob McDonell of Virginia and Sam Brownback of Kansas are the latest to announce that their states will not do so.) At least another eight states simply will not be able to set one up before the law’s deadline of January 1, 2014. That means that the Obama administration will have to seek additional funding in order to operate federal exchanges in those states. House Republicans should refuse to appropriate any such funds and should block attempts by HHS to shift funds appropriated for other purposes.

But can Americans count on House Republicans to hold the line in the wake of Boehner’s comments?

Republicans certainly took a drubbing in this year’s elections. Rethinking and repositioning may well be necessary, especially on immigration and social-issues messaging. But let us not forget that Republicans are only two years removed from a historic landslide victory won in part by opposition to government spending, taxes, and Obamacare. And, despite the Democrats’ best attempts to paint House Republicans as plutocrat-loving, grandma-hating obstructionists, the GOP caucus lost a net of only four seats. Indeed, the Tea Party Caucus, for all the criticism it received, lost only three seats.

John Boehner knows that the Republican brand could use some refurbishment, but surrendering on taxes, spending, and health care is hardly an auspicious way to begin the task.

— Michael Tanner is a senior fellow at the Cato Institute and author of Leviathan on the Right: How Big-Government Conservatism Brought Down the Republican Revolution.

Michael TannerMr. Tanner is the director of the Cato Institute’s Project on Poverty and Inequality in California and the author of The Inclusive Economy: How to Bring Wealth to America’s Poor.


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