TRB JULY 13, 2011
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It should not have come as a remote surprise when House Speaker John Boehner announced last weekend that he was abandoning negotiations for a “Grand Bargain” to bring spending and revenue into line with each other. The surprising thing was that Boehner ever pondered the possibility that such a deal might occur. When Boehner tried to pitch fellow Republicans on a huge bipartisan compromise, they reacted as though he had taken leave of his senses. “It’s crazy to think the speaker was considering a trillion [dollars] in tax increases,” one leading Republican told Politico. “After all, we’re the anti-tax party.”
It’s unclear what brought on Boehner’s temporary and uncharacteristic fit of idealistic mania. He had reportedly spent a lot of time talking privately with President Obama, growing convinced of the need to do big historical things. Perhaps he contracted a Washington version of Jerusalem Syndrome, succumbing to delusions of grandeur and forgetting he was serving at the pleasure of a party inalterably opposed to the sort of bipartisan compromise he envisioned. In any case, Boehner woke up from his fantasy world and faced the deranged reality of the party he’s actually leading.
The GOP defines itself as a Reaganite party. That, however, isn’t exactly true. Ronald Reagan did pass a huge, regressive, debt-financed tax cut during his first year in office. But Reagan’s advisers understood that they had overreached and spent the rest of their presidency backtracking. Reagan signed a series of tax increases that clawed back about a third of the revenue lost from his big tax cut. He also signed legislation in 1986 that cleansed the tax code of many of the loopholes he had helped open and shifted a greater share of the effective tax burden onto the rich. In all these ways, Reagan’s actual record is anathema to his modern-day worshippers.
The true foundation of the contemporary party is the 1990 budget deal, an agreement between George H.W. Bush and congressional Democrats to combine spending cuts, future budget controls, and higher taxes. House conservatives, led by Newt Gingrich, revolted against the deal and eventually overthrew the moderate leaders who acceded to it. In the years that followed, conservatives endlessly recounted the story of the virtuous Reagan who refused to compromise his principles and therefore won reelection, followed by the wicked Bush who raised taxes and, as a result, lost reelection. They forced Republicans to sign a no-taxes pledge and ran primary campaigns against incumbents who flirted with bipartisanship. The whole apparatus of the conservative movement is built to prevent a recurrence of 1990.
Now, take this underlying dynamic, and overlay it with the results of the 2010 election. Republicans concluded from that victory not that they would share power with Obama, or even that they would halt the further advance of his agenda—as Democrats concluded about George W. Bush after the 2006 elections—but that they were now the incarnate of the public will and sole repository of public legitimacy. “This is about listening to our country, listening to the people who just elected this Congress to restore discipline with respect to our spending,” said one freshman Republican. Even party veterans adopted this stance. “The principle of not raising taxes is something that we campaigned on last November,” said John McCain, “and the results of the election was the American people don’t want their taxes raised and they wanted us to cut spending.” In the right-wing mind, any claim to legitimacy from Obama or Senate Democrats had been superseded by the previous election. Viewed in this peculiar light, compromise with the president would violate not just policy goals but democratic principle itself.
That is the context in which to understand the GOP’s rejection of Obama’s offer. The president had proffered a $4 trillion deficit reduction, of which 80 percent would consist of spending cuts. How accommodating was that offer? It’s the same ratio of spending cuts to tax hikes proposed by U.K. Prime Minister David Cameron—who controls the entire government, not just one-half of one branch. Want another measure? Researchers at the conservative American Enterprise Institute studied the history of fiscal consolidations in developed countries. They found that the successful examples consisted, on average, of 85 percent spending cuts and 15 percent revenue increases. That, of course, is close to the deal Obama put on the table. And the United States begins from a position of having some of the lowest effective tax rates in the advanced world.
The GOP’s fixation with tax rates itself ignores the fact, affirmed by such conservative luminaries as Milton Friedman, that the size of government is defined by spending levels, not revenue levels. Financing the spending via debt merely postpones the taxes that pay for it. Since spending is all that matters, reducing spending, even while raising taxes, reduces the size of government. There is no small-government rationale to turn down spending cuts on account of tax hikes being part of the deal.
Conservative New York Times columnist Ross Douthat recently defended the party’s hard line. Taxes, argued Douthat, are set to rise in 2013 when the Bush tax cuts expire, making at least a partial tax hike nearly certain if Obama wins reelection. Thus, he concludes, “any deal struck this summer comes with a very large asterisk attached: *Includes tax increases to be named later.”
But that’s not true. Press accounts reported that Obama, distressingly, proposed to make future revenue increases from the Bush tax cuts’ expiration—the tax hike Douthat warns will happen later—the source of the revenue in the deal. In other words, he was willing to bargain to get something he could have gotten by doing nothing if he wins reelection. What’s more, Obama offered to prevent any increase in upper-bracket tax rates in 2013, as long as Republicans agreed to close tax loopholes to make up the revenue. That is the deal Republicans refused—a deal to lock in the top-level Bush tax rates, while raising more revenue from a cleaner tax code, while getting Obama’s sign-off on large-scale cuts to entitlements.
Republicans may wind up signing an agreement to raise the debt ceiling in return for spending cuts and no net tax revenue increase. They’re walking away from much deeper spending cuts, rather than agree to a tax hike that’s scheduled to happen anyway. The Republican opposition to budgeting has moved past radicalism and proceeded into outright pathology.
Jonathan Chait is a senior editor at The New Republic. This article originally ran in the August 4, 2011, issue of the magazine.
21 comments
This country needs an enema!
- AaronW
July 13, 2011 at 1:33am
I wonder what a future Chinese Gibbon will make of this moment when he or she writes the history of our decline and fall?
- paskunac
July 13, 2011 at 6:39am
Does make clear that the Republicans don't actually care about the deficit at all. It is merely a rhetorical cudgel. They care about low taxes on the rich, will either accept either deficits to the horizon or regressive taxation as the necessary consequence, and don't care which.
- roidubouloi
July 13, 2011 at 7:38am
What would be the point of a second Obama term if he agrees to making the Bush tax cuts permanent? What social progress could he possibly achieve in his second term?
- IggyPop
July 13, 2011 at 8:42am
I wonder if they even care about that Roi. Does the average Republican voter even understand federal taxation? Government out of my Medicare? I mean, please. The evidence of the last several years shows us clearly that these voters only care about expressing inchoate anger, resentment, power mongering. It's just bullying for bully sake. The people that *run* the party harnass that for the rich, which is a small percentage of the party. The rest of them just seem like huge chumps.
- WandreyCer
July 13, 2011 at 8:47am
I agree, wandrey. I was talking about Republican officials and party the hierarchy. As the rich are, by definition, far too few to command a majority, the fascist agenda always proceeds by enlisting masses, of the lower middle class especially who feel most threatened from above and below, with a combination of racism, xenophobia, hyper-patriotism, homophobia, religiosity, fear of moral and sexual pollution and appeals to traditional moraly, and undifferentiated hatred. It has always been thus, at least since the Roman Republic.
- roidubouloi
July 13, 2011 at 9:24am
Reagan, following his Supply-Side tax cuts, reacted in horror and passed tax increases. Bush-I passed tax increases. It's only in the last 10 years or so that the Republican Party has become "The Party Of Lower Taxes", and I hoped that was only because of the Buse-II insanity and Karl Rove. I agree, it's a concern when an entire PARTY moves in lock-step with the words of one man. But then, I'm a Democrat.
- AllanL5
July 13, 2011 at 9:40am
After the 1994 Republican sweep University of Rochester political scientist Richard Fenno argued that the Gingrich crowd over-reached by interpreting their victory as a mandate for radical change. Sounds to me like the Tea Party has pushed matters in the same direction.
- cforeman
July 13, 2011 at 9:48am
I expect the tax loophole revenue to be malarkey but it works to rupture the no tax increase pledge, like it did with oil tax subsidies vote. That is to say, it has the same popularity quotient as saying that we can balance the budget by lowering the tax rate, stimulating the economy and getting a smaller piece of a bigger pie. And I expect loophole revenue to be just as reliable in its prediction.
- Nusholtz
July 13, 2011 at 9:51am
"'The principle of not raising taxes is something that we campaigned on last November,' said John McCain, 'and the results of the election was the American people don’t want their taxes raised and they wanted us to cut spending.'" This statement is truly outlandish for at least two reasons. First, just because you campaigned on it and won doesn't mean people voted for it. As Chait has pointed out previously, when the economy sucks some people will just take out their frustrations on the party in power, period. It doesn't mean a mandate for everything in the out-party's platform. Just as 2010 was not a mandate for everything Democrats wanted, 2012 was not an order to dismantle Medicare and Social Security (see the NY-26 special election). Second, polls show that "the American people" do want taxes raised, at least on upper income earners--which is exactly what Obama and the Democrats have proposed. A recent Pew poll had 66% supporting tax hikes on income over $250,000, including a very near majority of 49% of Republicans. http://people-press.org/2011/06/07/more-blame-wars-than-domestic-spending-or-tax-cuts-for-nations-debt/ That support would surely be higher if applied to incomes of, say, $500,000, as some have suggested. "'This is about listening to our country, listening to the people who just elected this Congress to restore discipline with respect to our spending,' said one freshman Republican." What blather. They're not listening. They're interpreting throwing the other guys out as support for their own agenda. And when there's solid evidence that people don't support their agenda, they ignore it by citing the election results. They are bound solely by ideology. Now, one can argue about to what extend one should cater to the often contradictory impulses of the public (give me tax cuts! and keep all my benefits! and stop deficit spending!). But let's not pretend that these folks care one whit about the will of the people. As Chait writes, all they care about is tax cuts, pathologically so, even in the absence of majority support within their own party members.
- dsimon
July 13, 2011 at 9:53am
paskunac's comment about a "future Chinese Gibbon" reminds me of Albert Brooks' new novel, 2030. I don't want to give away the major plot points, but suffice it to say that his dour and insightful novel about America's future is very much tied in with the Chinese.
- rebscott
July 13, 2011 at 10:20am
Roi, we all knew that Republicans don't care about the deficit. What this makes startlingly clear is that the Republicans who matter don't really even care about the *size of government*, that it's merely a ruse to whip their base into a frenzy. It proves that the wealthiest of the wealthiest, who derive substantially all of their income from capital gains, dividends, and upper-bracket wages, are pulling the strings, and that the only thing they care about is minimizing the amount of that income that goes to taxes.
- aaronsama
July 13, 2011 at 10:37am
Anybody else notice that TNR divided essays on Republican insanity and female masturbation with an essay on "can't we all just get along". At least the editors have a rich sense of humor.
- rayward
July 13, 2011 at 10:40am
aaronsoma, I don't discount crass financial motives, but I think ideology is at work here, as well. As Chait notes, cutting taxes has become the centerpiece of the Conservative movement.
- Curran1
July 13, 2011 at 11:48am
This Congress is the only organization where the New-Hires get to set the goals and agenda. What stupidity.
- jgmusgrove
July 13, 2011 at 1:14pm
"The Republican opposition to budgeting has moved past radicalism and proceeded into outright pathology." What do you mean "has moved into pathology?" The Republicans have been pushing pathological economic programs since at least Ronald Reagan's day. Remember "supply side economics?"
- arnon
July 13, 2011 at 2:14pm
"The president had proffered a $4 trillion deficit reduction" Chait is 100 percent DELUSIONAL if he thinks Obama was actually serious about this. This is postering, plain and simple. Obama did NOTHING to try to reduce the deficit the first two years of his presidency and now suddenly he's a deficit hawk? I call bullsh*t
- newcourier
July 13, 2011 at 2:28pm
Actually newcourier the ACA, which Obama signed, is projected to decrease the deficit by a substantial amount over a decade.
- Pnaut
July 13, 2011 at 6:05pm
I do not see a way out of this crazy impasse. It will take a default followed by a panic in the market to force the issue. At that point everything will become much more difficult for a political elite that are used to crisis of their own making and are strangers to reality. By Monday if no deal is on the table markets will begin to move. Financial leaders will have to issue advice to their clients, the rating agencies will have to adjust ratings to the actual state of affairs and the first small bits of shit will hit the fan. None of this had to happen. Like our over reaction to 9/11 we are once more doing this to ourselves. How sad.
- paskunac
July 14, 2011 at 6:41am
It is sad and it's infuriating. The effects on real people are alarming. This isn't just abstract bickering.
- Sophia
July 14, 2011 at 3:02pm
The Republicans are psychotic and dangerous. But it's interesting to ponder that if keeping taxes low on the wealthy is now the bedrock of the party's identity, what would happen if those taxes went up ... significantly. We might actually balance the budget, maintain the social safety net and totally deflate the GOP. Now that's a trifecta!
- asterix54
July 27, 2011 at 5:53pm