The Agenda

Daniel Gross on the GOP

Daniel Gross of Slate has a gift for smart framing devices and contrarian notions, like his inconveniently-timed but nevertheless convincing celebration of the housing boom. He’s written an attack on congressional Republicans that gets at a number of themes that we’ve raised at The Agenda, albeit with a much sharper emphasis.

Throughout, there’s been a consistent chorus: Deficits are too high, but we must cut taxes (a move that will increase the deficit), and we must not cut Medicare spending in any way, shape, or form (a move that will increase the deficit), and we must not raise taxes (a move that would narrow the deficit). The Bush-era Medicare prescription-drug benefit funded entirely by deficit spending is fine, but a broader package to expand health insurance coverage that generates long-term fiscal savings would be disastrous. The bailouts were wrong but so are proposals to recoup bailout funds through taxes on banks.

In fact, it’s virtually impossible to find an elected Republican official who can speak intelligently and accurately about budget issues. Minnesota Gov. Tim Pawlenty is supposed to be a comer in national politics, but his piece in the inaugural issue of the Daily Caller was a howler. Budget analyst Stan Collender smacked him down for arguing that a $1.4 trillion deficit could be narrowed primarily by reducing “discretionary spending in real terms, with exceptions for key programs such as military, veterans, and public safety.” Columnist David Brooks recently tried to elevate South Dakota Sen. John Thune into a serious thinker about fiscal issues. “He doesn’t have radical plans to cut the federal leviathan. He just wants to restrain the growth of government to bring deficits down.” In fact, Thune, like his colleagues, has no plans to cut the federal leviathan or bring deficits down. When I called his office in December to ask if Sen. Thune had ever laid out any specific combination of spending cuts and revenue enhancers that could reduce the deficit, the answer was a polite, genial no. Last summer, at a dinner with a group of conservatives where I heard frequent complaints about $9 trillion in deficits over the coming years, I asked the assembled if they could come up with budget cuts and/or tax increases that would cut $900 billion from the projected deficits—one-tenth of the total. The response: silence.

A few stray thoughts:

Gross is very right about almost all of this, particularly the sections where I’ve added emphasis, but I have a few caveats. 

The Bush-era Medicare prescription-drug benefit funded entirely by deficit spending is fine, but a broader package to expand health insurance coverage that generates long-term fiscal savings would be disastrous.

Plenty of mainstream Republican candidates would happily object to the Medicare prescription-drug benefit. Also, the whole dispute about the broader package is whether it really will generate long-term fiscal savings, as Gross understands. He doesn’t find the criticisms credible, I imagine, but there is a serious debate on the issue. The CBO estimates are constrained by procedural limitations that necessarily undermine its ability to provide real-world assessments re: the macroeconomic impact on employment levels, etc. 

The bailouts were wrong but so are proposals to recoup bailout funds through taxes on banks.

This also seems completely plausible. Many people, conservatives and liberals, believe that we should relay on straightforward taxes, preferably consumption taxes, rather than a series of silo-ed taxes targeting particular industries and practices. Some worry that a TBTF tax would exacerbate the moral hazard problem, by turning the tax into something like a TBTF seal of approval. I’m more inclined to think that we should be open to ideas like the Diamond-Kashyap proposal, but again, this isn’t quite as boneheaded as Gross suggests. 

In fact, it’s virtually impossible to find an elected Republican official who can speak intelligently and accurately about budget issues. 

I would encourage Gross to contact Paul Ryan’s office, or perhaps John Barrasso or, among Republican governors, Mitch Daniels. But let’s be honest — he’s right to suggest that the general landscape isn’t very encouraging. Of course, confirmation bias is at work as well. Kent Conrad, an important player in the health reform debate, has consistently mangled the insights contained in T.R. Reid’s The Healing of America. Barney Frank is obviously a clever person, but I don’t find his take on the long-term fiscal picture terribly persuasive. The quality of leadership on both sides of the aisle is pretty low. I’ll grant that there is much more enthusiasm for raising taxes among Democrats, and that congressional Republicans tend not to understand the need for tradeoffs. 

And as for Scott Brown, Gross raises some of the objections that I raised in my Forbes.com column.

Brown is entirely in tune with his future Republican colleagues. He has railed against the proposed $500 billion cuts in Medicare and opposes the proposed tax on banks. In this op-ed, he says that the stimulus has failed to create a single job, rages about the rising debt, and advocates an across-the-board tax cut while offering no specifics on how to reduce the debt.

This is worrisome. I believe that Barack Obama campaigned for a health reform without an individual mandate that would include guaranteed issue and community rating, leaving aside his calls for deep tax cuts and major expansions of the middle-class welfare state. I am very pleased to report that Daniel Gross was adamant about damning the candidate at the time for his inconsistencies.

Wait a second …

But that’s too cute. Conservatives should hold themselves to a higher standard. The fact that many center-left economics journalists have become cheerleaders for the Democrats doesn’t mean that the center-right needs to cheerlead for Republicans in every instance. 

P.S. I’ll add that Gross seems strangely pro-TARP, despite the many persuasive critiques that suggest that opponents weren’t nihilists or failure advocates. Gross also believes that the stimulus package was worthy of passage, which, again, is debatable. 

Ultimately, his frustration is with the incoherence of the electorate’s views. Which is okay. I’ll sign up for that. But that’s the slow, steady work of persuasion. Gross should be exhorting Democratic candidates to barnstorm the country on behalf of TARP and other crucial aspects of his favored stability and recovery approach. 

Reihan Salam is president of the Manhattan Institute and a contributing editor of National Review.

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