High Risk, High Reward

The odd thing about Mitt Romney’s selection of Paul Ryan as his running mate is that the news was received with elation by both sides, by both Republicans and Democrats, by both the right and the left.

Both sides see the potential upside for themselves. The right sees a vice-presidential candidate who compensates for the deficiencies of their presidential candidate, providing more energy, more regular-guy charisma, and most of all a clear and compelling vision. The left sees a candidate who has taken a strong stance in favor of a proposal they are comfortable attacking. Ryan offers them relief from having to run on a weak economy and allows them instead to run against an agenda they think is deeply unpopular.

So everybody’s happy. But as John Dickerson points out, both sides can’t be right. No matter what side you’re on, if you don’t feel a pit in the bottom of your stomach right now, you’ve lost the thread.

This is a high-risk, high-reward proposition for both sides. But the risks and rewards are not evenly distributed. The risks are much greater if you’re on the left, and the rewards are much greater if you’re on the right.

For those on the right, the downside is bad—but not as bad as you might think. While a Romney-Ryan loss may be pinned by some on Ryan’s radicalism, it is far more likely to be pinned on Romney—on his campaign’s failure to respond early enough to a ruthless negative campaign, or his awkwardness in explaining parts of his past record, or the general perception that he lacks conviction on the big issues of the day. Like Sarah Palin, Ryan is likely to be remembered as the part of the ticket people were most enthusiastic about—and unlike Palin, if Ryan goes down, it won’t be due to his own failings. He does not have a messy family life, and he has demonstrated that he is well-informed, well-prepared, and able to handle himself ably in press interviews. So if he does not become vice-president, I suspect Paul Ryan will be first in line for the Republican presidential nomination in 2016.

And he’ll be watching and waiting, because he knows that the economic and fiscal issues that define his agenda are not going away. In fact, he will expect that under Obama they are all going to get worse. Federal entitlement spending isn’t going to be controlled; it’s going to grow even faster once Obamacare comes fully into effect. A Democrat-controlled Senate that has gone three years without producing a budget will go four, five, six, seven years without a budget. If the economy hasn’t responded by now to fiscal and monetary stimulus, it probably won’t do so next year, either. After all, there are many European countries where Obama-like policies have kept growth permanently down at our current, anemic level of 1% to 2% per year and unemployment in double digits. So Ryan and the Republicans will be ready to say, “I told you so.”

And what is the upside for Obama if he gets re-elected? Well, he gets to veto a repeal of Obamacare. And he will feel empowered to pursue more of his agenda, maybe on global warming, maybe undoing welfare reform, maybe on immigration, and so on. But here’s the problem for Obama. Unless something changes really radically—unless Obama wins with a much bigger landslide than I think he can hope for—no one is realistically projecting that Democrats are going to win back the House, or that they will get back their brief filibuster-proof majority in the Senate. In fact, even with an Obama victory, Democrats may not keep the Senate at all. So while Romney and Ryan are playing to win a mandate for their agenda, Obama is very unlikely to win a mandate for his.

In short, if he is re-elected, Obama gets the “reward” of facing all the same problems he has now: a stagnant economy, a runaway debt, a hostile Congress, and a half-dozen foreign policy problems waiting to become a big, intractable crisis. I think Obama still benefits, for the moment, from the fact that the recession hit before he came into office, so people still blame it on his predecessor. But at this rate, he’s likely to re-live George W. Bush’s second term. In 2004, voters gave Bush a second chance to solve the mess in Iraq. By the end of 2006, as the chaos and insurgency just kept getting worse, they wrote him off, and even the success of the surge in 2007 came too late to make people reconsider. Obama faces the same problem. Voters may give him a second chance on the economy, but if it doesn’t improve sharply in another year or so, he will get the blame, and he may finish out his second term with Bush-like approval ratings down around 30%–and Joe Biden as his successor.

But what do the Democrats have to lose if the Romney-Ryan ticket wins? A lot.

To begin with, a Romney-Ryan win is likely to reverberate down the ballot, helping Republicans retain a big majority in the House and win a clear majority in the Senate. And it gets worse: Romney and a Republican Senate would likely get to appoint, and approve, a few more Supreme Court Justices. At the very least, this would help maintain the conservatives’ 5-4 majority on the court. At most, it could tip that 5-4 majority into a 6-3 or even a 7-2 majority. The court’s most conservative members—you know, the ones who would have found Obamacare unconstitutional—might even gain a solid 5-member majority. In short, the left could find itself shut out of power in all three branches of government for at least four years—or for a decade or more.

And that’s just the beginning. What if Romney and Ryan adopt Reaganesque economic policies—and achieve Reaganesque results? Reagan saw the economy dip sharply into a new recession just as he took office—but it started bouncing back sharply in 1982 and kept growing at rates between 4% and 7%, three to four times stronger than today. If Romney-Ryan can get anywhere near that—if the economy springs to life by 2014 and keeps on going, they will be the ones who can run in 2016 on the “morning again in America” theme, growing their congressional majority and—most important of all—validating small-government policies and converting a whole new generation of voters to the cause of free markets.

You can see the huge upside for the right and the reason why they are so excited. Ryan makes them even more excited, because the prominence of his signature budget plan means that if Romney and Ryan win, they win with a mandate to reform the big middle-class entitlements. That would sure take the jolt out of the “third rail”! From “touch it and you die,” the rule would become: “touch it and you become vice-president.” But I don’t think anyone quite realizes the long-term political impact of the reforms themselves. Or rather, the left does realize the impact but doesn’t like to talk about it.

By limiting the growth of the big entitlements, Ryan’s plan would make federal benefits a smaller, marginal part of most people’s lives—and thus would reduce the constituency for these programs. The big secret of the Medicare and Social Security entitlements is that they don’t just help the poor. They rope in the middle-class, too, recruiting them as shock troops for the welfare state. Why are Democrats hoping that Ryan will lose Florida for Romney? Because the state’s huge cohort of middle-class retirees are dependent on entitlements and on a big federal government. But what if, 20 years from now, that is no longer the case? We’ve already reached the point where new retirees are likely to receive less in Social Security benefits than they paid in. That is only projected to get worse, and if the entitlements are reformed and whole swathes of the upper-middle-class are effectively means-tested out of their benefits—which will have to happen to keep the system solvent—then the deal only gets worse.

So what if, a few decades from now, Social Security and Medicare represent a small portion of most retirees’ livelihood—and also represent a system in which they have lost tens or hundreds of thousands of dollars over their working lives? Under entitlement reform, the natural political constituency for big government will shrink—while the natural political constituency for small government will grow.

That is the prize the right is fighting for. That is the reward that makes it worth the risk of putting Paul Ryan on the ticket.

And there’s one last thing. Paul Ryan is known as a persuasive speaker and an appealing personality. This is how he is like Ronald Reagan: he gives small-government policies a reasonable, persuasive voice and a genial, likeable face. In the back of their minds, folks on the left have to be thinking along the lines of a vulgar but dead-on accurate parody in The Onion. Or for a more family-friendly version, read Maureen Dowd fretting in today’s New York Times that “Not since Ronald Reagan…has the GOP managed to find such an attractive vessel to mask harsh policies with a smiling face.” So not only will Ryan reduce the role of government in people’s lives, but they will love him for it. As they should.

In short, an Obama victory would not solve any of Obama’s big problems, it would not give him a clear mandate, it would not shut Republicans out of power, and it would not kill the cause of entitlement reform. But a Romney-Ryan victory would shut Democrats out of power in the short term and could take away the constituency for big government over the long term.

That is why this election has suddenly gotten so exciting. In its consequence for the two political parties, and in its consequences for the nation, it is high-risk and high-reward.


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