Politics & Policy

The End of the Grand Bargain

Former House speaker John Boehner (Reuters photo: Jonathan Ernst)
The spirit of bipartisan compromise, never strong in recent years, has vanished completely on Capitol Hill.

Is there any more tragic figure in American politics than John Boehner? A career politician to end all career politicians, stuck in an impossible and thankless job, criticized by both the Left and the Right, harboring forever an unachievable dream, destined to leave politics with that dream entirely unfulfilled. The dream had a suitably lofty name: the Grand Bargain.

The outline of the Grand Bargain was simple enough: Entitlement programs are growing out of control as America ages, a simple reality that was obvious enough to both Democrats and Republicans in the aftermath of the Great Recession, and the federal debt will soon be unsustainable. There are, of course, two ways of addressing the debt: (a) increasing revenue through tax hikes and (b) cutting spending. Republicans hate the former; Democrats hate the latter. The Grand Bargain would have forged a compromise.

This compromise came closest to fruition in 2011. As the Washington Post reported in a fascinating piece the following year, the framework for a serious deal was more or less in place in July 2011, with Republicans acceding to $800 billion of revenue increases through new taxes and tax reform, and Democrats willing to accept $1.2 trillion in spending cuts and $250 billion in Medicare-spending cuts. What happened?

Obama, nervous about how to defend the emerging agreement to his own Democratic base, upped the ante in a way that made it more difficult for Boehner — already facing long odds — to sell it to his party. Eventually, the president tried to put the original framework back in play, but by then it was too late. The moment of making history had passed.

No one talks about a Grand Bargain anymore.

The tribulations of Boehner are of more than historical interest. Mitch McConnell’s struggle to pass a health-care bill through the Senate has much to do with opposition to Medicaid reforms contained in the bill that would dramatically reduce spending on the program. According to Politico, some Republican senators “privately say they are uncomfortable changing Medicaid spending without any buy-in from Democrats.” Susan Collins has questioned the need for the Senate to act on Medicaid, noting, “Obamacare, except for the expansion, did not change base Medicaid.” Lisa Murkowski, another critical senator for McConnell, has also complained that the Senate bill addresses Medicaid reform instead of simply confining itself to a reform of the Obamacare exchanges. In all this one can see the faint glimmer of hope that, somehow, another Grand Bargain can be found — that the politics will eventually work out and a bipartisan compromise can be negotiated that will spare both parties the costs of an unpopular, unilateral bill that either raises taxes or cuts entitlements. This is ludicrous.

For starters, it isn’t remotely true that Obamacare had little to do with entitlements. Saying that Obamacare didn’t change Medicaid except for the expansions is like saying that, aside from the children, the lion never hurt anyone. The Medicaid expansions committed the federal government to pay for a dramatic expansion of the entitlement program, one that costs tens of billions a year and has considerably altered the growth trajectory of Medicaid spending. Any entitlement-reform package in the future will have to seriously address the question of the Medicaid expansions: As the congressional debate vividly shows, they are politically impossible to repeal altogether. In order to put our house in order, therefore, we will need to pursue either deeper cuts to the “base” Medicaid population or higher taxes than would exist in a world where the expansion had never happened. Obamacare, of course, was passed without a single Republican vote in Congress — do we really want a political system where unsustainable expansions of entitlements can be partisan but sensible and necessary reforms cannot be?

And the problems go even deeper. It would be one thing if there were some practicable path to bipartisan entitlement reform — then the Collins-Murkowski model might make some sense. But there is little to no common ground on which a deal even could be made, and both parties are keenly aware that there is a lot to be gained politically from withholding support for a politically painful reform package promoted by the other side.

Consider the 2011 deal, which failed for one simple reason: The Democratic base and the Republican base were too far apart ideologically. The framework that briefly prevailed between Obama and Boehner was never really more than aspirational: Obama knew he couldn’t sell the spending cuts to his own party, so he came back to the table with a new proposal that added another $400 billion in tax hikes to match the proposed cuts in Medicare and Medicaid. As for the Republicans, it is far from clear that Boehner could have sold even the initial framework deal to the right wing of his own party. It is possible that a deal could have happened in 2011, but it would have required an enormous degree of luck as well as a political finesse that neither Obama nor Boehner quite possessed.

Things are far worse now. The political atmosphere has deteriorated substantially — in large part because the Grand Bargain failed to pass — and there is no consensus for entitlement reform like there was six years ago. The federal debt has largely faded from the American political debate: In the 2016 campaign, both candidates articulated policies that would have increased America’s revenue and spending problem. According to the Committee for a Responsible Federal Budget, Clinton’s plans would have increased the debt by $200 billion over the next decade, and Trump’s by $5.3 trillion. Neither candidate mentioned the debt on the campaign trail, and the issue never came up in debates.

The political atmosphere has deteriorated substantially and there is no consensus for entitlement reform like there was six years ago.

The ideological common ground has also disappeared. As late as 2011, Obama accepted that a compromise on entitlement reform would mean spending cuts. Rank-and-file Democrats are unlikely to accept this nowadays. Hillary Clinton — and certainly Bernie Sanders — proposed to address the looming insolvency of Social Security and Medicare by expanding the programs and paying for the expansions with higher taxes. Single-payer is wildly popular among Democrats (although it will probably be less so when they realize someone will still have to pay for it). In such a political atmosphere, it is impossible to imagine that Democratic politicians will be willing to support spending cuts to entitlement programs in the name of America’s fiscal health. A bipartisan entitlement-reform package nowadays could only possibly mean expansion of entitlements financed by tax hikes — and that, of course, wouldn’t be bipartisan.

Republicans, then, have two choices: They can either work on partisan entitlement reform or abandon the issue entirely. The latter is not an acceptable option for anyone seriously concerned about our country’s financial health. But this means that Republicans will have to commit themselves to something very unpopular at some point: The words “entitlement reform” will never exactly fill voters with enthusiasm, after all. Democrats will not have a hard time casting Republicans as villains when this happens, since Republicans will be promising to take away benefits and Democrats will be promising to expand them. This anger can perhaps be best addressed by rejecting some of the unpopular orthodoxies of fiscal conservatism in favor of reformconservative plans for entitlement reform. Even then, conservatives will probably have to contend with the simple fact that most voters are leery of any effort to reform entitlements, even when such reforms are desperately needed.

But this means that it’s irresponsible for Republican politicians to balk at entitlement reform just because it’s unpopular. It will always be unpopular — that’s just how the game works — and there is no bipartisan solution around the corner. The Republicans will have to tackle it and face the costs — or no one will.


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Max BloomMax Bloom is an editorial intern at National Review and a student of mathematics and English literature at the University of Chicago.


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