NR Digital

Operation Rewind

by The Editors

While we like a good party now and again, the fact that House Republicans held no official gala to celebrate their accession to the majority in the new Congress reflects both a becoming modesty and the accurate understanding that it is time to get to work. John Boehner, now speaker, acknowledged on Election Night that in modern America the president, for the most part, sets the agenda. His job — and that of Senate minority leader Mitch McConnell, and of their Republican colleagues — is to work with President Obama where constructive cooperation is possible, and to begin making the case for starting on a better agenda than his in 2013.

Undoing Obamacare must be near the very top of that agenda, and House Republicans were right to announce that they would hold a vote on repeal in their first days on the job. The law weakens our economy by adding to the cost of employment. It threatens our already-parlous fiscal condition by creating a new entitlement and only pretending to pay for it. It staves off real Medicare reform by relying on price controls. It impedes upward mobility by raising effective marginal tax rates on low- and middle-income workers. It promises to retard medical innovation. And it is flatly inconsistent with the constitutional design.

The health-care legislation is also an integrated plan that cannot be fixed piecemeal or more than modestly improved. Republicans should not be intimidated by polls that appear to show that this or that aspect of the law is popular. Those features of the bill are inseparable from its least popular provisions, the package as a whole remains unpopular, and there is no reason to expect that to change any time soon. The ban on insurers’ taking account of sickness when offering policies and setting rates is popular in isolation, for example, but in order to work, it requires making the purchase of government-approved insurance compulsory.

Senate Democrats and the president will block full repeal, but Republicans should not let the struggle end there. Republicans should next attack Obamacare’s sources of funding. They could offer legislation to repeal the bill’s taxes on medical devices, for example, and make up for the lost revenue by delaying Obamacare’s subsidies. Another bill could undo Obamacare’s cuts in Medicare Advantage and recoup the money the same way. Still another could bar Obamacare from funding abortions (an amendment to that effect passed by a large margin in a heavily Democratic House in 2009, but did not make it into the final law). These bills would put supporters of the health-care law in a very tough spot. They would also keep the controversy over Obamacare from fading. What opponents of the law have to fear is not that it will become more popular but that the public will become resigned to it — that it will come to be seen as inevitable, like death and taxes. Republicans ought to keep hope (for repeal) alive.

On spending in general, the Republicans have to favor repeal as well. Non-security discretionary spending increased 24 percent over the last two years, not counting the stimulus. The run-up in the budget of federal departments has been spectacular: Since 2007, the Department of Labor is up 340 percent, the Department of Commerce 158 percent, the Department of Energy 90 percent, the Department of Agriculture 68 percent, and so on. House Republicans are committed to taking this portion of the federal government back to 2008 levels. It is only a $500 billion slice of a $4 trillion budget, but cutting that slice by 20 percent will be a significant, nay unprecedented, accomplishment. Every inertial force in Washington will resist this effort, not least the United States Senate.

Conservatives will have two points of leverage in the spring, but should be careful to use them with care. The debt ceiling must be raised — since there is no chance that the deficit is going to be brought down to zero in short order — and a new spending bill must be passed to keep the government from shutting down. It will be tempting to use these must-have pieces of legislation to bend the federal budget to conservatives’ will in one fell swoop. But one lesson from Newt Gingrich’s battles with President Clinton in the mid-1990s is that whichever side seems most eager to risk default or a shutdown will lose. Limited-government conservatism only recently recovered from that earlier defeat. But getting nothing in return for passing these bills would also be a mistake. Our preference would be to couple them with caps on discretionary spending that last several years.

The long-term driver of our debt crisis is not discretionary spending but entitlements. One of the most heartening developments of the midterm elections was the success of several candidates who campaigned on entitlement reform, including new senators Pat Toomey, Marco Rubio, and Rand Paul. In the House the reformers are led by new Budget Committee chairman Paul Ryan. Unfortunately these reformers are still in a minority of Republican congressmen, most of whom do not understand the issues nearly as well — an ignorance they share with the public. If President Obama proposes real reform of Medicare and Social Security, Republicans should by all means work with him. They should not, however, hand the Democrats an opportunity to demagogue without the prospect of actually enacting reform. If President Obama refuses to lead on the old-age entitlements, Republicans should concentrate on getting the discretionary portions of the budget, and perhaps Medicaid, under control.

Tax reform probably also requires presidential leadership — but Republicans can move the cause forward by advancing proposals to make the tax code less hostile to economic growth and middle-class families. Capping the deduction for state and local taxes, pruning back the mortgage-interest deduction, and broadening the top tax bracket to include more people should all be on the table, and any proceeds should go toward cutting taxes on investment and expanding the child tax credit. Republicans should not allow their message on taxes to consist wholly of the permanent extension of the Bush tax rates, which over time will put them in the position of defending an unacceptable and unpopular status quo.

Fannie Mae and Freddie Mac represent unfinished business. They were significant contributors to the financial crisis but have not undergone serious reform. Republicans ought to put them on a path to privatization or elimination — and should consult extensively with Peter Wallison, an American Enterprise Institute scholar who sounded the alarm about the government-sponsored enterprises early and has developed several options for moving to a market-based system of housing finance. One promising idea is to shrink the companies’ presence in the market by gradually reducing the size of mortgages they are allowed to buy. They could then eventually be dismantled without disrupting the housing market. Studies have shown that Fannie and Freddie have done little to reduce mortgage rates or increase homeownership, and claims that they are necessary to stabilize the market are at this point a sick joke. Who needs them? Not a reformist, free-market-minded House majority.

The new chairman of the House Oversight and Government Reform Committee, Darrell Issa, is making Fannie and Freddie one of his first targets for hearings, appropriately. All signs are that he will be extremely energetic on all fronts, giving the administration a strong dose of the accountability it has not gotten from the legislative branch over the last two years. As long as he does not get diverted into obsessing over minute scandals, as congressional Republicans did too often in the 1990s, Issa’s work will be welcome and important.

Speaking of scandal, Republicans must have zero tolerance for it in their own ranks. Every new majority comes in pledging purity. Then human nature intervenes. It is always easy to find an excuse for giving your own side a pass — personal relationships and political considerations crowd out ethics and standards. The last Republican majority slid down this path until it became a watchword for corruption. The Tea Party movement is partly a reaction against that self-serving politics, and Republicans had best not forget it.

We should not end on an admonitory note, though. Instead, pause to consider that even before they arrived in Washington, the new Republicans had effectively ended most earmarks, forced President Obama to accept an extension of all the Bush tax cuts, and dealt Senate appropriators a stunning setback by defeating a $1.1 trillion omnibus bill in the lame-duck session. If nothing else, the new Congress will stop Obama’s legislative agenda cold, and that in itself is a wondrous change from the last two years of arrogant and overweening liberalism. Operation Rewind can’t truly succeed without a Republican president in 2013. If congressional Republicans help set the table for one, they will have done their part in inaugurating a historic era of conservative reform.

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