The Economy and the Election: What if the Republicans Win?

Charles N. Steele
Issue CCLXIII - October 31, 2010
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What if Republicans take control of Congress in the upcoming elections?  As in my previous articles (here and here), I’ll focus on America’s debt dilemma.
Polls and pundits are predicting an overwhelming Republican victory in the upcoming elections.  I suspect they are are correct, and that the Democrats will receive an asked-for comeuppance.  The Democrats crushed the Republicans in 2006 and 2008, owing to Republican arrogance, hubris, and irresponsibility, but since then, the Democrats have continued in the Republicans' footsteps.  They’ve fought hard for three sets of fiscally irresponsible policies that are extremely unpopular: bailouts, stimulus spending, and Obamacare.  Hence in two short years, the tables are turned, and it’s the Democrats who are likely to be crushed at the polls.  But any Republican victory will be because of Democratic hubris and the resultant Tea Party opposition, not because of anything about the Republican Party itself.  It’s the Tea Parties that have revolutionized American politics.  It’s the Tea Party phenomenon – popular opposition to bailouts, stimulus, and Obamacare – that has led to the Democrats’ election nightmare.
Unfortunately, the Republican Party is the only vehicle currently available to those who oppose the massive expansion of the federal government, and the Tea Partiers and fellow travelers alarmed by the growth of government have moved to it.   But the Republican Party itself is as much to blame for the current mess as the Democrats, and the Republican leadership is now working to co-opt the Tea Parties as the vehicle for their own ends.  The Republican Party leadership is of the political class, and has more in common with Barack Obama and Nancy Pelosi than with, say, Ron Paul.  It was a Republican Congress and President that first put us on the recent track of soaring deficits, and the Republican Party elite is in many respects threatened by the Tea Party newcomers, who are not of the political class.  Hence the pitched battles fought by Tea Party candidates against Republican establishment candidates.  At this point, an uneasy alliance now seems to have settled over the GOP, but if the election brings a sweeping Republican victory, what can we expect?
I expect any Tea Party-type candidates who are elected to be largely co-opted or diluted, if the "Pledge to America" is any indicator.  The Pledge pays all sorts of lip service to limited government and the Constitution, but it’s difficult to find in it anything specific that anyone is pledging to do that would improve our debt nightmare.  The document calls for caps on non-military discretionary spending (p. 21), implies that cutting Medicare is unacceptable (p. 26), argues that interest payments are too high already (p. 20), and promises tax cuts (p. 16).  Unfortunately, America could cut all discretionary spending to zero and would still face a long run debt crisis.  It’s entitlement spending, and especially Medicare, that is growing, not discretionary spending.  Tax reform, which includes cuts of certain taxes, will be crucial, but simply cutting taxes cuts revenue and worsens the fiscal mess.  (And as I’ve previously argued, tax cuts without spending cuts are really not cuts of taxes at all; the fiscal burden is merely passed to us in some indirect fashion.  We still pay.)  Interest payments are too high?  Well, the only way to tackle that is to reduce the debt – that means running budget surpluses.  Where’s the plan for that?
I confess that I find the “Pledge to America” a frustrating and disappointing document.  I had hoped for a bold statement and a clear plan of action.  But the Pledge contains little in the way of specifics, and more than enough verbiage that sounds like sop to various constituencies.  There’s a reference to the Tenth Amendment (p. 3) for those of us who believe the feds should follow the Constitution (but they even get it wrong – the Tenth Amendment is not a grant of anything; it is recognition of corollaries of our natural rights.)  There’s a pledge to honor families and traditional marriage (p. 3) for social conservatives (what does this mean…umm, would the likes of, say, Newt Gingrich, would be excluded?)  The Pledge seems to be largely a campaign ad, not any sort of serious political document or plan (note that about one third of the pages are glossy photos that I gather we are supposed to find inspirational).
Most telling is page 21, where we read, “We will have a responsible, fact-based conversation with the American people about the scale of the fiscal  challenges we face, and the urgent action that is required to deal with them.”  Really?  If we elect you, then you’ll be square with us and admit we’re headed for bankruptcy, and that cutting taxes and capping non-discretionary spending will not suffice?  Why can’t you have give us straight talk now?  We deserve at least this much from our would-be leaders.
Simon Johnson has recently argued that there’s really no political force for fiscal responsibility in the United States today.  Save for the Tea Parties, he seems to be right.  Certainly no one in the political class – neither Democrat nor Republican – seems seriously concerned that we are heading towards a debt catastrophe.
My prediction is that if the Republicans win we’ll not see real movements to reverse the growth of the federal government.  I hope that they will indeed work to repeal Obamacare (p. 27).  That would be a positive thing.  And I do think they’ll generate a certain amount of gridlock, and be much slower than Democrats to expand the power of government in our lives, and for these reasons I hope the Republicans take both houses of Congress.  But for the most part they do not show any serious intent to tackle our debt problem or reduce the federal government.  No matter which side wins, our debt dilemma will likely worsen and government power will grow.  Those of us who hope to return government to its proper limits have a very hard road ahead.

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