How the ‘Cut, Cap, and Balance’ Bill Could Sabotage a...

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THE PERMANENT CAMPAIGN JULY 20, 2011

How the ‘Cut, Cap, and Balance’ Bill Could Sabotage a Debt Ceiling Deal

House Republicans voted on Tuesday to pass a legislative version of “Cut, Cap, and Balance,” one of the newest and most disturbing of the many conservative oaths currently being sworn by large swaths of the GOP. Of course, the bill is not going to be enacted, and for some congressional Republicans, it will just serve as cover for some ultimate debt limit vote that will anger the conservative base. But the “Cut, Cap and Balance” measure explains a lot about the actual priorities of conservatives at a time when they are supposedly fixated on eliminating deficits and debts. Instead of reflecting a concern about balancing the budget, the measure prioritizes a radically limited government agenda at all costs. Its current popular ascendance in Congress will only intensify the already-enormous pressure on Republicans to just say no to any conceivable debt limit increase.

In its original form, as developed by the conservative ideological commissars of the House Republican Study Committee, CCB was a “framework” for budget negotiations, drafted as a list of demands:

103 House Republicans sent a letter to House Republican leadership calling for a solution that could resolve the current debt limit impasse and prevent the bigger, Greece-like debt crisis just over the horizon: Cut, Cap, and Balance.  

1.  Cut - We must make discretionary and mandatory spending reductions that would cut the deficit in half next year.

2.  Cap - We need statutory, enforceable caps to align federal spending with average revenues at 18% of Gross Domestic Product (GDP), with automatic spending reductions if the caps are breached.

3.  Balance - We must send to the states a Balanced Budget Amendment (BBA) with strong protections against federal tax increases and a Spending Limitation Amendment (SLA) that aligns spending with average revenues as described above.

CCB aroused high hosannas from conservative opinion-leaders, and was heavily promoted by the RSC’s senatorial counterpart, Jim DeMint. It was soon converted into a “pledge” that omitted some of the original proposal’s specifics (i.e., the GDP “triggers”), but added the inflammatory promise to oppose any other approach, including any debt limit increase at all, until such time as Congress had acted favorably on CCB. The pledge was endorsed by a vast array of conservative advocacy groups, and was pushed especially hard on GOP presidential candidates, who were loath to offend DeMint in advance of next year’s potentially crucial South Carolina primary. By the time Michele Bachmann signed it on Monday (she initially refused on grounds of her own categorical opposition to any debt limit increase), every 2012 wannabee other than Jon Huntsman had signaled their commitment to the cause.  

Meanwhile, of course, Republicans in Congress devised a legislative version of CCB, which passed the House last night by a vote of 234 to 190. It’s arguably a bit milder than the original proposal, as it exempts Social Security and Medicare from immediate cuts and phases in the GDP triggers on spending. But despite all the talk of the House vote (and a prospective, if doomed, vote in the Senate) being a meaningless Kabuki exercise that just wastes time before a “real deal” is negotiated between congressional leaders and the White House, it’s worth remembering that 38 House members and 12 Senators (plus those nine presidential candidates and virtually every conservative group you’ve ever heard of) not only endorsed the CCB legislation, but signed the pledge, which effectively makes them unavailable in any deal-making exercise. In other words, even if GOP leaders in Congress pull their forelocks in obeisance to the commands of Wall Street and endorse a debt limit deal, the lines to their office doors of Members seeking a sanctioned “free vote” against it will be very long, and many will cast a nihilistic vote for default no matter what.

The logic of CCB itself gives away the potentially disastrous stance of its adherents. Republicans are taking this very hard line not, as is so often asserted, as a way of returning to the GOP’s ancient creed of deficit hawkery, abandoned in favor of supply-side free lunch nostrums in the 1980s and beyond. Yes, it has indeed become fashionable again for conservatives to deplore the public debts being passed on to future generations, a habit that they generally lost during the administration of George W. Bush. But when you look at the content of the CCB proposal, pledge, or bill, it’s obvious the “balance” part of the formula is entirely subordinate to “cut” and “cap,” and to another phrase not in the headline: “tax limitation.” CCB rules out revenue increases as an element of budget-balancing and erects the kind of super-majority requirement against future revenue increases that has done so much to frustrate budget-balancing in California. Moreover, it makes huge cuts in spending both a statutory and a constitutional mandate, and only then, with government shrunken and taxes frozen, will it enable a balanced budget. 

Until now, modern conservatives have typically supported two basic models for dealing with unbalanced federal budgets: the “supply-side” theory, in which lower marginal tax rates will produce sufficient new revenues not only to pay for themselves but to align revenues with spending, and the “starve the beast” theory, in which deficits deliberately created through tax cuts can be useful in creating downward pressure on spending—with the political pain of spending cuts being shared by the two parties, or more often than not, ironically, by Democrats constrained to exhibit fiscal discipline. Republicans with an atavistic attachment to balanced budgets as ends in themselves were typically denounced in harsh terms like Newt Gingrich’s famous putdown of Bob Dole as “tax collector for the welfare state.” 

Unlike older versions of a balanced budget constitutional amendment, CCB bridges these two models. It is compatible with supply-side theories, in the unlikely event that they are ever proven right, and is essentially a mechanism for “starving the beast” if they are not. It’s a tax-cutting and government-shrinking machine flying under the false flag of simply keeping the national checkbook balanced. 

It’s appropriate, therefore, that CCB has become the vehicle of Republicans determined to avoid any bipartisan solution to the country’s fiscal problems. Their affection for the measure, particularly among those who have adopted it as the only acceptable approach, makes it clear they don’t much care about deficits and debts if dealing with them interferes with their agenda of cutting taxes and limiting government to only those functions it performed in the distant past. That the CCB pledge could produce a debt default perfectly reflects the priority conservatives have assigned to paying the country’s obligations, material or moral.

Ed Kilgore is a special correspondent for The New Republic.

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posted in: the permanent campaign, ccb, greece, congress, republican party, jim demint, south carolina

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