The Agenda

Will Republican Legislators Know A Good Deal When They See One?

Steve Teles, a political scientist at Johns Hopkins and one of my smartest friends, has written a thoughtful take on why congressional Republicans will probably not cut a deal with congressional Democrats and the White House on closing the fiscal gap:

 

But my point is that Republican members would find it exceptionally difficult to cut a deal even if it was, by historical standards, extremely beneficial to them. Imagine that Boehner cut a deal with the White House for a plan that was 80% spending reductions, and 20% tax increases. Could he get his members to swallow it? I doubt it. The path of least political resistance for members is to vote no, and the leadership could not make them do it—what discipline they have operates in only one direction today (that is, discipline toward the right).

I think Boehner is aware of this and will not want to enter into negotiations that will lead to him being ultimately rebuked by his base. The likely scenario, therefore, is that Republicans will find some reason not to enter into negotiations with the Democrats (most likely the hope of getting a 100% spending cut solution as of 2013), and nothing will get done.

So that’s the negative scenario, which is what I’m good at.

Then, of course, there is the question of the kind of tax package conservatives might embrace. 

 

If one wanted to construct a feasible scenario for deficit reduction—by which I mean one that Republicans would be capable of signing off on—then one would have to concoct conditions under which they would be able to get away with agreeing to a tax increase. I think this is where the analysis stops being about rational actors and starts becoming semiotic—that is, about the meaning of signs. Here, the question is, what is the meaning of a “tax increase?” What would the actors involved in these interactions interpret as a tax increase?

The simplest, rational form of analysis would say that a tax increase is anything that raises government revenue on net over what it would have been in the absence of a change in policy. But I’m not sure that is exactly how the Republican base might see it. Consider the Bowles-Simpson proposal from yesterday. It raises taxes, on net, but it does so in the context of comprehensive tax reform. So tax rates actually go down, because the tax base is expanded (by eliminating deductions). What would the “meaning” of that policy act be? I think that would be up for grabs. It may be, however, that the success of deficit reduction rests entirely on the answer to that question, and in particular on what Republican elected officials believe the answer will be (which is not the same)—in essence, on elected officials beliefs about the potential beliefs of a large, non-hierarchically organized and still inchoate group. [Emphasis added.]

I am of the belief that rates matter most, and my hope is that more conservatives will come around to this view over time.

Because Steve hails from the center-left, he places less emphasis on what I see as the blinders of many of our friends on that side of the fence. The main way Democrats demonstrate their “fiscal conservatism” is by backing the rollback of the 2001 and 2003 high-income rate reductions. This, of course, represents a relatively small slice of the overall fiscal imbalance. And Democrats also favor an increase in public spending in many other domains, e.g., as many progressive observers explained, the planned slowdown in the growth of Medicare spending would not have happened without the creation of a new health entitlement, which will likely cost more than advertised (i.e., if unemployment proves higher than 5.6% and if the subsidy gap between the exchanges and employer-provided insurance encourages more firms to drop coverage than the CBO model assumed). I increasingly see repealing and replacing PPACA as essential to achieving fiscal sustainability. The status quo is now structurally center-left.

Of course, friends of mine still argue that PPACA is right-of-center legislation, which I’ll never fully understand. I sense that this notion rests on an honest misunderstanding of the 1993 Chafee and Cooper proposals, which I described a short while ago.

 

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

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