In a stunning development, Speaker of the House John Boehner was forced Thursday night to drop his “Plan B,” a bill that would have raised the top marginal rate on people with incomes over $1 million. The theory was that Boehner could undermine President Obama’s position in the fiscal cliff bargaining by caving in to one of his key demands, raising taxes on the rich. I’m not sure how that theory was supposed to work, and apparently others were equally skeptical. When House leaders went to their caucus to get the votes together to pass the bill, they couldn’t do it.
So it looks like Plan C is to fight back. And perhaps the first phase of Plan C should be to elect a new Speaker of the House, because in the most important negotiations of his tenure, Boehner clearly has not earned the confidence of his caucus. I think Republican congressmen are going to find that they need someone in the negotiations with President Obama who better represents their mood and outlook.
There is going to be a lot of handwringing that this vote is a disaster. The argument is that Boehner was “willing to lose a pawn for a queen,” that is, to give in on tax increases for the rich in order to avoid tax increases for everybody else. But Harry Reid had already declared that Boehner’s Plan B was dead in the Senate, so it was always just a symbolic vote. It’s real goal was to make sure that, if we go over the “fiscal cliff,” Republicans don’t get blamed for it.
But if this was all just symbolic, the opponents of Plan B are the ones who got the symbolism right.
To understand this, we have to define exactly what the fiscal cliff fight is all about.
The fiscal cliff is the result of Congress kicking the can down the road for eleven years. Congress was so narrowly split over passing the Bush tax cuts back in 2001 that they couldn’t get the votes for a permanent tax cut. Instead, they passed them with an automatic expiration date. Each side was attempting to push the issue back to a point when they thought they might be politically stronger. Republicans hoped that by the time the tax cuts were due to expire, they would be in a position to make them permanent. Democrats hoped that when expiration loomed, they would be able to roll back the tax cuts.
Both sides were wrong. When the Bush rates expired, we were just as deadlocked as we were before, with a strident president Obama in office, and a strong Republican majority sent to the House by the radical small-government Tea Party movement. So the two sides struck a deal to push the issue back to the other side of this year’s election, in the hope that voters would resolve the conflict. But here we are and the situation is still the same: President Obama is still in office—and so are the Tea Party radicals.
The deadlock comes from the fact that each side is trying to establish a key premise about the cause of the nation’s fiscal problems. In trying to get Republicans to vote for a tax increase, President Obama is trying to get Republicans to endorse the premise that we have massive deficits and a spiraling debt because we aren’t taxed enough. In trying to get Obama and the Democrats to agree to spending cuts, especially entitlement reform, Republicans are trying to get Democrats to acknowledge that the real problem is that we’re spending to much.
So you see the problem with Plan B. In pre-emptively surrendering on tax rates for the rich—and without getting anything in return!—Boehner was conceding the premise that low taxes are the problem. That was the actual symbolism of Plan B.
Boehner’s defenders respond that he had no choice because the fiscal cliff gives so much leverage to the left. Leaving aside the fact that Boehner was one of the people who designed the fiscal cliff, back in the previous round of negotiations, there is a point to this objection. Yet Republicans have equal or greater leverage to use against the administration.
In a negotiation like this, the best leverage you can have is the knowledge that if nothing happens, you get your way. Democrats are in that position on the fiscal cliff. If we go over, the Democrats get a big tax increase, a big cut to defense spending, and only relatively mild cuts in other government programs. For the committed left, what’s not to like? That’s why folks like Howard Dean are happy to have a deal fall through. The fiscal cliff is their agenda. Why would they want to avoid it?
The right is the side that needs to avert the fiscal cliff, because we’re the ones who want to prevent a tax increase and avoid drastic cuts in defense spending. So it looks like President Obama and the Democrats have an unassailable advantage.
But in a few more weeks, the tables are turned. In January, the federal government is projected to hit the debt ceiling again and will require congressional authorization to keep borrowing.
When it comes to the debt ceiling, the Republicans are the ones who know that if nothing happens, they get their way. Just as the fiscal cliff is the left’s agenda, so the debt ceiling is—or ought to be—the right’s agenda. A lot of us would love to tear up Uncle Sam’s credit card and tell the Washington establishment, “You’ve hit your limit and you can’t borrow another dime. Now live within your means from now on.”
As Thomas Jefferson once wrote, “I wish it were possible to obtain a single amendment to our Constitution. I would be willing to depend on that alone for the reduction of the administration of our government to the genuine principles of its Constitution; I mean an additional article, taking from the federal government the power of borrowing.”
So it is the left that really needs to raise the debt ceiling. They need it even more badly than we need to stop tax increases. If the Bush tax cuts are reversed, it will be bad for the economy and for our agenda, but the damage will be limited. It’s been a long time since it was a question of reducing the top marginal tax rates from 70% down to 28%. So having top rates go from 35% to 39.6% will hurt the economy at the margins, suppressing growth even farther, but it won’t be the end of the world. By contrast, the left’s agenda depends entirely on the unlimited ability to pile up debt. Hitting the debt ceiling would be the end of their world.
That’s our leverage, if we have the courage to use it.
To be sure, both sides have significant leverage, and I certainly don’t want to see all of the Bush tax rates expire, so I am not categorically ruling out a deal with President Obama. But if we’re going to give him some of what he wants, we have to get something very significant in return—unlike the last time Speaker Boehner negotiated with Democrats on the debt ceiling.
Remember the big issue at stake here: what is the cause of our fiscal problems? Is it not enough taxes, or too much spending? If we’re going to give Obama even an inch on the premise that taxes are too low—then we’d better get a very big admission that spending is too high, and a really serious measure to reduce it. Crucially, since entitlements are the real drivers of out-of-control government spending, we would need the president to accept significant and wide-ranging entitlement reform, from reducing cost-of-living adjustments, to raising the eligibility age, to means-testing that would limit benefits only to the truly poor and stop giving handouts to the prosperous middle class.
This would have the virtue of actually doing something about the nation’s long-term fiscal problems, and it would establish the premise that spending is the problem.
So what is holding back the Republican leadership? They seem to be paralyzed by the fear that they will be blamed if we go over the fiscal cliff or if we run up against the debt ceiling. Or rather, it is the fear that they will be vilified in the press. But Republicans are always vilified in the press. If we’re going to let that hold us back, we will be stuck in the eternal political purgatory of “me too.” Which, come to think of it, is the whole purpose for vilifying us in the press.
It is important to remember the paradox of congressional approval ratings. If you ask the average voter what they think about the job Congress is doing, you will usually get a very low approval rating. Currently, it’s somewhere around 18%. Yet somehow most of the rascals still manage to get re-elected. How is that possible? The answer is that most of us disapprove of Congress in general but like our own representative in particular. And that was definitely true this year. Voters may rate Congress as a whole pretty lowly—but they expressed overwhelming approval at the polls for the Republican majority in the House.
President Obama no doubt feels emboldened right now because he just won an election. House Republicans need to remember that they just won an election, too. So while Obama thinks he has a mandate to do—well, to do whatever he likes, apparently—House Republicans can reasonably conclude that their constituents like what they’ve been doing and want them to keep on doing it. They can conclude that they, too, have a mandate: to obstruct Obama’s march toward ever-bigger government and national bankrutcy.
Yes, Republicans have been a little raw and demoralized from a stinging loss in the presidential race. But it is time to recover, run our Gadsden flags back up the pole, and regain what Jefferson called “the spirit of resistance.” In blocking Boehner’s Plan B surrender, House Republicans have just shown us the way.