What Republicans should do if they win a supermajority by 2024.
What Republicans should do if they win a supermajority by 2024
I t’s becoming increasingly difficult to expect a soft landing for the U.S. economy. Inflation is the highest it’s been in 40 years. As a result, the Fed is likely to implement a set of monetary policies — increases in short-term interest rates and reductions in its balance sheet (quantitative tightening) — that eventually tip the economy into recession. Most likely the recession will start between late 2023 and the end of 2024. And if that happens, the Democratic Party may find itself at the gates of political hell.
At present, the most likely outcome in this year’s midterm elections is that Republicans will take back the House of Representatives and get a Senate majority with around 53 seats. But 2024 could be much worse. The Democrats have been blessed for the past generation with never having to defend the presidency in a bad economy. President Clinton ran for reelection in 1996, when the economy was much improved from his predecessor’s recession and “jobless recovery.” President Obama ran for reelection in 2012 with an economy that hadn’t fully healed from the Great Recession but was much improved.
Having to go to the voters with a newborn recession would be a different ballgame. The last time the Democrats did so was 1980. That year, the GOP had to defend only ten Senate seats, while the Democrats had to defend 24. The Republicans kept all ten of their own and took half of the Democrats’ 24, a net gain of twelve. In 2024, the stars may be similarly aligned. The Republicans will have to defend only ten seats, while the Democrats will have to defend 23 (including two independents who caucus with the Democrats). If the GOP is able to keep all its current seats and take half of the Democratic seats, as happened in 1980, the Republicans would end up with 64 or 65 seats (assuming they make it to 53 this year).
Of course, 1980 isn’t the only recession year we can use as a template. We can also use President Obama’s election in 2008, but in reverse. That year, the Democrats were able to keep every Senate seat they already held, win every Senate race in a state that had been left of center in 2004, and win 29 percent of Senate races in right-of-center states where the GOP had to defend a seat. If you apply the same outcomes in 2024, just switching the parties, it would be a similar bloodbath for the Democrats, with the Republicans picking up twelve seats.
Some of these states will be harder to win than others, but none would be outrageously difficult, particularly if Hispanic voters continue to shift toward the GOP. Recessions have a way of getting marginal incumbents to retire and getting states that normally lean in one direction to shift to the other side, even if only for one election. The Democrats can console themselves that a 2023–24 recession would not be as bad as the Great Recession. But the Republicans ran John McCain that year, a war hero with bipartisan appeal, the sort of candidate Democrats would be unlikely to nominate in 2024.
With a GOP Senate supermajority of 60 or more seats, the Republicans could invoke cloture to end filibusters without any cooperation from Democrats. This would make for a playing field substantially wider than it has been at any time in modern Republican history. No longer would a GOP Congress have to narrowly focus on what it could accomplish through budget reconciliation — the position of Presidents George W. Bush and Donald Trump — or through significant bipartisan cooperation. Major legislation could be enacted beyond tax policy without the need to compromise with Democrats, not even Joe Manchin (D., W.Va.).
Does this mean Republicans can enact everything on the conservative wish list? Not even close. Take, for example, the goal of closing the Department of Education. Even with 60-plus Senate seats, it’s hard to see the GOP getting enough votes to invoke cloture on completely shutting down that department.
But there are many bills they could pass that would either meet conservative goals in the here and now or render conservatives better able to compete, both culturally and politically, in the future — in particular, by reducing the money and power used by the political Left. In addition, Republicans could bend the long-term trajectory of entitlement spending to reduce the size of government for future generations.
There are ten key reforms a GOP supermajority should be prepared to make. This is not intended to be a comprehensive list of all the legislation that should be considered, including, for example, a permanent tax reform that reduces top tax rates and shifts the fiscal burden away from parents. Instead, I’m focusing on policy measures designed for a unique situation: a Republican Senate supermajority.
The first three proposals address the government itself, at all levels, top to bottom. For reasons beyond the scope of this article, people who are left of center, and often far left, have come to dominate permanent jobs with the government: federal, state, and local. In these positions, supposedly nonpolitical workers can ignore or slow-walk proposals when elected conservatives are in office, sabotage conservative leaders, rush proposals to benefit liberals, and proselytize children in leftism.
Three of the ten proposals are directly focused on government workers. First, Congress should end all recognition of and legal protection for unions representing public employees at all levels of government. Yes, some states will continue to allow unionization for government workers, but the people in these states can vote with their feet: Bye, bye, Illinois.
Second, laws regarding federal workers should be changed so that as many as possible are subject to being fired at will, just like in the private sector. What good is it to elect a president to lead the executive branch when almost all the personnel remain the same, lean hard to the cultural left, and hold enormous power?
Third, the defined-benefit pension plan for federal workers needs to be completely replaced with a defined-contribution plan. Under current law, federal workers with more than five years of tenure eventually get defined retirement benefits based on their “high-three” years of pay. The system is inherently biased in favor of older workers with more tenure, even though younger workers are often just as productive, or more. Ending that bias will effectively raise pay for younger workers who don’t intend to sit around watching a clock for the next 30 years, and lower pay for those who do.
Another reform would not address government workers directly but would substantially alter their work product. The GOP should overhaul the Administrative Procedure Act, the law that governs the process of issuing federal regulations. One option would be to turn all rules and regulations into legislative proposals only, having no effect until approved by Congress and signed by the president. Proposed rules and regulations would be in the same position as presidents’ annual budgets. Now we often have omnibus budget bills; in the future we could have omnibus regulatory bills. Another option would be to require all rules to include automatic sunsets of 20 years or less.
The fifth proposal takes us outside the government itself: stripping asset managers of the right to vote shares on behalf of investors. Imagine a world in which the same handful of families owned controlling shares in pretty much every publicly traded company in the country. Well, this is the system we have today, except instead of the controlling families being related by blood, they are related by workplace, with several large asset managers effectively deciding who gets to run almost every major company in America.
This is not a form of capitalism that Adam Smith would recognize, or that any Republican should support. Smith realized about 250 years ago that private enterprises have an “agency” problem when managers run firms, as the interests of managers and owners do not necessarily coincide. Many years later the great conservative James Burnham elaborated on how the managerial class can empower themselves to the detriment of owners, investors, and workers.
Allowing asset managers to vote shares is an agency problem on steroids. Traditionally, the agency problem involves a company’s managers not having their interests aligned with those of shareholders. But now we have publicly traded asset managers who themselves have managers with interests that differ from those of the asset managers’ shareholders, voting shares over which they acquire dominion only because individual investors gave them money to invest.
In turn, these managers are in the process of forming “cultural trusts,” by which they use their voting power to impose leftist values on corporate America and on America as a whole through corporate America. But woke asset managers should not be America’s social dictators. These firms should be stripped of the right to vote shares, which should either be voted by the individual investors who ultimately own them or not voted at all, leaving corporate control to shareholders who own their shares directly.
The sixth proposal would overhaul college finance. Once upon a time, student loans were designed to help people of limited means get ahead in life. Those days are long gone. Student-loan programs are now a jobs and wage-subsidy program for the leftists who work as administrators and professors in higher education, using young adults as “mules” to carry money from taxpayers to academics.
Government spending is the source of a large portion of academics’ salaries. According to the GDP accounts, the value of higher-education services totaled $196 billion in 2019. Meanwhile, housing and meals at schools totaled $57 billion. For comparison, federal loans and grants totaled $134 billion in the 2018–19 school year, with an additional $13 billion in state grants. And these figures exclude direct government spending sent to colleges themselves.
Imagine if Fannie Mae and Freddie Mac had a program to buy all the mortgages that banks make to 18-year-olds who buy homes with no money down. Obviously, that would lead to excessive home ownership among teenagers. Well, that’s essentially what’s happened with colleges — except a mortgage has a home collateralizing the loan; you can’t foreclose on a degree in grievance studies.
The Democrats’ plan is straightforward: Forgive some portion of student loans and move toward “free college,” which would mean even more subsidies for leftist academics and an even greater burden on taxpayers. Most in the GOP want to keep the burden off of taxpayers but ignore the subsidies for academics as long as former students pay them — no matter how absurd, useless, or harmful the “education” they received, and no matter how these institutions impinged on their freedom of speech.
Neither party is taking on the core problem: the subsidies for academics. The GOP needs to make that shift, ending the windfall for the intellectual class and making them put skin in the game, so they have an incentive to focus on improving marketable skills for students capable of doing college-level work.
Under the current system, when a student borrows $20,000, for example, all the money goes to the college. After that, the student owes the government $20,000 and the college has zero relationship to the loan. Whether the student pays off the loan in full, pays off only partially, or doesn’t pay at all, the college already has its money and therefore has no reason to care. What we need is a new system to make them care.
Here’s how: When a student borrows $20,000, the college should only get a $10,000 check up front from the government, not the full $20,000. In addition, the college would get a 50 percent stake in whatever future payments (interest plus net principal) the student makes on the loan. The student would be in the same situation as before, owing $20,000, with no difference versus current law. But the situation would be very different for the government and colleges. If a student falls short of full payment, the government would have to eat only 50 percent of the shortfall; the college would share the other half of the default.
For example, let’s say a student graduates and then immediately defaults. Under current law, the government has to absorb the full $20,000 cost of the loan. Under the new system, the government gets to keep the $10,000 it held back at the start, so the loss is only $10,000. Meanwhile, the college gets only $10,000 up front and never gets any additional money.
In the past, I’ve considered a somewhat different proposal: Instead of the government holding back cash from colleges up front, it would hit them with penalties on the back end if former students default. But there are at least two problems with making colleges disgorge money as a penalty after a default. First, as a political favor, future Democratic administrations could simply refuse to collect the money from colleges. Second, when the government suspends payments, as it did during Covid, colleges wouldn’t have to disgorge anything!
By contrast, with a 50 percent stake in future payments on student loans, colleges would fight against payment suspensions and have an ongoing incentive to make sure their former students are prepared for the job market. Schools that intend to improve their students’ skills would have nothing to worry about from the new system; schools full of rent-seeking professors and administrators who don’t help their students would go out of business. Ninety-four percent of professors’ 2020 presidential-campaign donations went to Biden. They know who butters their bread, and it’s time Republicans made them pay for more of it themselves.
A seventh proposal would be designed to separate school and state, undermining the government K–12 school monopolies that stretch across the country. The federal government should provide a school voucher worth up to $10,000 to every child who doesn’t attend a public school in that calendar year. Private schools are fine, and so is homeschooling. The goal should be explicit: getting kids out of public schools where leftist teachers and counselors proselytize at taxpayers’ expense. This would cost a great deal of money but would help reduce the economy-wide costs associated with overly expensive public-school systems.
Proposals eight, nine, and ten, by contrast, would substantially reduce federal spending, over time, by reforming entitlements.
Although some conservatives would still like to create a system of private Social Security accounts, recent experience with asset managers’ exploiting their share-voting power should give them pause. In the long term, the most conservative solution for the shortfall in Social Security could be to simply reduce future promised benefits for people who are not yet retired, particularly for higher-income workers. This could be accomplished by raising and indexing the retirement age, lengthening the years over which contributions are measured, and changing the benefit formula to make it less generous for upper-income beneficiaries — by, for example, reducing the benefits associated with higher-income earnings and using a more modest indexing formula for wage histories.
Proposal nine would gradually turn Medicare from a “fee for service” program into an insurance “premium support” program. The GOP could even call it Obamacare for All. The Obamacare system is based on maximizing insurance coverage, with subsidies for low-income workers. The GOP would just turn Medicare payments into insurance subsidies for senior citizens as well. Proposal ten would block-grant Medicaid and send it to the states, giving them the incentive to reduce costs over time.
Again, notice what I did not include in the list of ten: no mention of tax reform, nothing about a wall or immigration, nada about adding free-speech protections to civil-rights laws or removing disparate impact as grounds for lawsuits. Nor did I mention deep culture-war issues such as abortion, same-sex marriage, or the sexual mutilation of children.
It is entirely possible that events will prevent the GOP from reaching a Senate supermajority. If so, some of my proposals would be impossible, while others could still be achieved through the budget process, particularly if they get clever. The ban on asset managers’ voting, for example, could be done through tax policy.
But if Republicans do win a supermajority, they need to be prepared; the bills need to be ready to go. The 119th Congress would likely be a once-in-a-lifetime opportunity to implement conservative policies on a broad scale with long-lasting effects that will be very difficult to reverse.