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Friday, July 29, 2011

Why can't the Tea Party support genuine spending cuts?

Two quotes will illustrate the gist of my question. First, consider this passage from Charles Krauthammer's NRO column:

We’re in the midst of a great four-year national debate on the size and reach of government, the future of the welfare state, indeed, the nature of the social contract between citizen and state. The distinctive visions of the two parties — social-democratic versus limited-government — have underlain every debate on every issue since Barack Obama’s inauguration: the stimulus, the auto bailouts, health-care reform, financial regulation, deficit spending. Everything. The debt ceiling is but the latest focus of this fundamental divide.

Next, consider this criticism of President Obama froma NY Post column entitled "Bam, It's Time to Cut Spending-- Period," by Betsy McCaughey, former lieutenant governor of NY and "conservative" pundit:

What about "shared sacrifice"? The Obama health law imposed plenty of sacrifice on seniors and baby boomers: It slashed funding for Medicare by $500 billion over the next decade. It uses those "savings" to pay for two entitlements: a huge increase in Medicaid enrollment and new subsidies for middle-income Americans (families earning up to $88,000 a year) to buy private health plans.

These two quotes epitomize a deep confusion about Tea Party opposition to Obama's fiscal policies. Krauthammer's column suggests that the fight over the debt limit is a fight between dramatically different "visions" of government -- "social-democratic versus limited-government." But McCaughey's column suggests a different battle -- not about "how much?" but rather (in Lenin's pungent phrase) "who, whom?" After all, if McCaughey were really demanding that "Bam... cut spending -- period," then her statement that President cut $500 billion from Medicare ought to constitute high praise, not (as she intended it) an accusation. But, as Republicans' backing away from the Ryan Plan suggests, cuts for the middle-class elderly are not popular among Republican rank-and-file. It is the cuts in spending on the poor elderly (i.e., Medicaid) that mobilizes them. This is why H.R. 2560 (the so-called "Cap, Cut, and Balance" proposal) exempts Medicare from the Republicans' proposed spending limits: Republican rank-and-file are not really interested in capping spending as such. ("Capping" spending while exempting Medicare from spending limits is like dieting while exempting Bic Macs from one's food restrictions). Especially after initial Republican proposals to "cap" Medicare arguably handed an upstate NY congressional seat to Democrat Kathy Hochul, Republicans have focused on reducing spending perceived as benefiting indigent households.

So, no, Charles Krauthammer, there is no grand debate being conducted right now in Congress between the advocates of "social-democratic versus limited government" over "the very nature of the social contract". There is instead (and, as a conservative Republican, I write this with sadness) just another attack on social welfare programs by the middling gentry who dislike the dependent poor.

Posted by Rick Hills on July 29, 2011 at 11:34 AM | Permalink


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Just a very minor quibble: Reading over the McCaughey op-ed for the first time, I'm not sure if she is saying that the "slashing"of Medicare was bad because it was a a real sacrifice saying that it was bad because it was a fake sacrifice - fake because, as the next sentence says, really they were just moving the money around from one source to another. Rick takes the former interpretation, but I'm not sure that's right, in part because McCaughey then seems to contrast that with a "true" sacrifice in the next paragraph.

That's my sense, at least: I find the op-ed hard to read, and I wouldn't have tried if Rich hadn't flagged it.

Posted by: Orin Kerr | Jul 29, 2011 11:56:50 AM

Admittedly, the scare quotes around "savings" are ambiguous. I took McCaughey to be implying that the cuts in Medicare were not true savings at all, because they amounted to tax increases on baby boomers and the elderly. Your alternative reading could be correct -- but then McCaughey seems to be conceding that Obamacare is budget-neutral, which does not seem to be consistent with the prevalent Republican narrative.

By the way, the view that Medicare is a private insurance program that does not count as government spending is surprisingly widespread: Consider this chart from Suzanne Mettler's paper.

Posted by: Rick Hills | Jul 29, 2011 12:10:47 PM

I think you're on to something about how the "pro-cut" crowd backs off touching middle-class sacred cows, and goes for the poor instead. But I think it falls in a slightly broader framework, in which Krauthammer is right about an underlying core debate about whether to cut spending or raise revenue. But both side cringe when their respective goals, utting or taxing, runs up against middle class politics. So both sides end up alternating between (1) stealth moves to touch the middle class or (2) backing off so that the real payoff isn't reached.

On the GOP side: There's no way to cut without taking on middle class entitlements. That doesn't mean they don't want to cut them, but they get smacked politically when they try. So they try stealth moves like Ryan's shift to state block grants, which will eventually squeeze the middle class. When caught, they back off. They then revert to doubletalk where they talk about bringing entitlements under control, but as you say, attack only the politically-easier targets, but there's not enough savings there.

On the Democratic side: There's no way to get serious revenue without touching the middle class. Look at the bait-and-switch in how they approach the Bush tax cuts, which included the famous cuts for the rich, but also included big cuts across-the-board, including the 50-75-100K range, as well as the 100-250 K range, which are below the Prez's usual line about 250K. First, they point out how much of the debt we've built is attributable to "the Bush tax cuts," and how much we can help the future by "letting them expire." But those numbers are right ONLY IF talking about ALL the cuts, or at least the ones going down far below 250K. That triggers accusations that they want to raise taxes on the middle class. So they say "no, only the 250K-plus." But taxing "the rich," as defined at 250K, would barely make a dent in the deficit, just as cutting the Medicaid poor won't help the deficit.

These really are perfect mirror images. Each side is partly right about their attacks on the other -- "you want to cut Medicare for the middle class," or "you want to raise taxes on the middle class." Each attack is true, IF the side being attacked is willing to go where the money is on its side of the equation. In the alternative, each side is partly right in attacking the other side as not making a dent anyway, IF the side being attacked pulls back from touching the middle.

So the complicated dance means that no one can touch the middle, for taxes or spending, unless they sneak it in, while denying it all the while, or forcing the other side to do it. For example, the Ryan shift I mentioned. Or, if Obama had managed to let all the Bush tax cuts expire, and had managed to pin the blame on the GOP for tying the middle's fate to the rich's. He blinked, because he didn't think he could pin it, and he would have "raised taxes on the middle."

I have no predictions about whether something will give, but I have little doubt that the phenomenon you identify is wholly a function of the mismatch between the financial need to touch the middle class and the political need to back off, and each side has their version of it.

On the

Posted by: another cynic | Jul 29, 2011 12:41:37 PM

Isn't this another illustration that political parties are a "they" and not a "it"? Some Republicans are interested in cutting spending per se, and some Republicans are interested in reducing the amount of wealth redistribution, and others value both with different weights placed on each priority. For a start, Paul Ryan certainly was interested in cutting Medicare, and some members of the Republican base elected him.

To say this another way, one can spin the backing-off of Medicare in two ways. One is that they were never very interested in cutting Medicare in the first place; the other is that they are making pragmatic compromises in the face of political reality.

Posted by: TJ | Jul 29, 2011 6:29:23 PM

Broadly speaking, I've never seen any evidence the Republicans actually want overall spending cuts. The easiest way to tell this is that they don't actually cut spending--witness Medicare part D and the wars. There is some spending they don't like (medicaid, TANF), but even if they could slash these programs they would spend more on others--military and agriculture subsidies, for instance. There is just no actual (or a tiny) constituency for reduced spending over all.

The most amusing part is the reliance on commitment devices that are obviously ineffective, like statutory balanced-budget requirements and caps. These are the equivalent of an alcoholic purporting to have cured himself by pledging to quit drinking sometime in the future. You can put the Ryan plan, with its asinine commitment to voucherize medicare in ten years, in this category. Not only is it a bad idea, but it is a bad idea that, even if passed, would never be implemented.

This is what is so strange about the Norquist vision of "starving the beast," shrinking government by cutting revenue. The government doesn't actually shrink--it just does more deficit spending. To make another analogy, it is as if a broke friend, unable to live within his means, announced that he was going to solve his financial problems by earning less money.

I know that there has been some push for a balanced-budget amendment. But this would never pass, and if it passed would not be practically enforceable. Not to mention it would be an economic nightmare.

Posted by: John Greenman | Jul 29, 2011 7:30:34 PM

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