Lessons from the Debt Showdown of 2013
No long faces or hanging heads here. The government shutdown of 2013 was a tough fight with all of the ugliness of modern politics on display. The White House is saying there were no winners, but like almost everything else from 1600 Pennsylvania, the statement was disingenuous. Politics has trumped policy during this whole sorry year, and behind every public statement was an obvious political signal, motivation, or celebration. And today, as the dust settles on the Senate deal, it is clear the House Republicans lost and the uncompromising Democrats won. Lost in the drama are the deeper historical lessons about what has happened and is happening to America’s political economy. Here are three things worth noting:
1. Politics of Extremism and its Causes. The shutdown was not an unprecedented event (they occur roughly once every two years since I was born), nor was it like Clinton-Gingrich clash that many expected. The fiscal issues highlighted by the Tea Party are real and much more serious than in the 1990s. Americans know that. What was unprecedented in this debt-ceiling increase was the Obama administration’s hostility to compromise, highlighted terrorism analogies by Democrats and the phone call made by the President himself to House Speaker John Boehner with the simple message: I will not negotiate. This is not the post-partisan leadership expected by independent voters.
It is understandable that Obama wouldn’t agree to defund or delay his signature legislation, but not understandable to non-partisan observers why the President refused to use this crisis to forge a bipartisan consensus for a Grand Bargain. Boehner offered to negotiate that, but Obama wouldn’t talk. Why?
It is not unreasonable to view the actions of the White House as nakedly political, fomenting the crisis in order to turn the public against the Republican brand, perhaps to regain Dem majority control of the House of Representatives in the 2014 election. That is a corrosive strategy.
Clearly, U.S. politics are broken. A pox on both sides is the most common sentiment among the public. However, the pundits who are angriest about political dysfunction are also the most irrational. The most common error is to blame extremists in one party while silent or defensive or in denial about the other. The second error is to rant about “too much money in politics.” Fact is that American politics has become increasingly polarized on both sides since the 1970s — a measurable fact (see the data at voteview.com). What pundits and journalists do not seem to appreciate is that the poison is not personal — it’s not about Obama, or Bush, or the Tea Party, or Lewinsky, or special prosecutors. It predates all that!
Go back to the 1970s to find what caused the rise of partisanship. The smoking gun is that campaign reformers in the 1970s made changes to election laws designed to do exactly what has been done: increase partisanship. That was their goal. By restricting 1st Amendment rights, reformers like Norm Ornstein and Thomas Mann designed campaign finance rules to control money, not reduce it. Money was funneled away from candidates who have been limited in the amount of money they can raise directly, but opened up the funnels of indirect campaign giving that goes to the national parties. That’s the law. Just follow the money, oh Woodwards and Bernsteins of today. Follow the money. Is it any surprise that the campaign finance reformers got exactly the partisan control they wished for? And the ultimate irony is the new battle cry: “We need MORE campaign finance reform.” What Americans actually want is not a stronger 2-party system and weaker representatives, they want more independent thinking in Washington. This is all covered in chapter 12 of our book or the recent Foreign Affairs essay.
2. Prioritization must return to Fiscal Policy. This is nuanced, but stick with me. One of the more revealing statements in the heat of shutdown was when the Democrats objected to GOP efforts to pass “piecemeal” funding. That word piecemeal was used a lot, an obvious talking point to push back against GOP efforts to fund DOD and NIH cancer trials for children. Senator Reid made the biggest gaffe on the Left when he ridiculed a question from CNN reporter Dana Bash about why the Democrats wouldn’t save a few lives if they could. What was revealed is the fiscal foundation of Democrats: all-or-nothing. But the mocking tone of GOP efforts to prioritize funding is at odds with the normal course of business, and also at odds with the ultimate search for fiscal balance.
Democrats tend to be very sanctimonious about the damage to “research, schools, and health care” any time cuts are discussed. Okay then, what should be cut? America needs that conversation, and it needs it be led by an honest president. What are the priorities?
The conversation was instead an all-or-nothing argument about a “clean” CR. Odd. CR stands for continuing resolution, which is itself a technique born of dysfunction (read the wikipedia entry). The normal course of business is not budget by CRs, rather it is for both chambers to produce appropriations bills that are piecemeal. We’ve come full circle here! The fiscal function of the legislature is to prioritize – to be piecemeal – not to numbly continue spending levels from last year. The absolutist “clean CR” as the rallying cry of Democrats was the most revealing bit of theater of all.
3. Obamacare got a reprieve, not a save. The notion that the disastrous launch of Obamacare on October 1 was less damaging to Democrats because of the shutdown distraction is true, and also irrelevant. Absent the government shutdown, media coverage of the “failure” of Obamacare as described Ezra Klein would have been even harsher. So what? This is analogous to the Captain of the Titanic celebrating the fact that he was “lucky” the iceberg was hit at night when so many people on board were asleep. Well, Captain, guess what? The long run matters. The fact the Republicans are even more clearly identified with trying to repeal the law is not going to hurt them in 13 months.
However, I do believe this experience affirms the tactical mistake of the defund caucus in the GOP. One conservative economists likened it to Pickett’s charge at Gettysburg. I disagree that the tactic will be so fatal to the cause, but it’s a useful point. A less direct attack, and perhaps no attack at all, might have won the Civil War. In the case of Obamacare, if Republicans truly believe the law is unworkable, then why not simply let it not work? Let Obamacare implode all on its own. A better focus in the months ahead would be on reforms to the big three entitlements, programs that will never be repealed but desperately need reforms at the margin.
In sum, there is ample space for compromise here on substance. But, as Glenn likes to say, “American politics have not kept pace with its economics.” You might even say they are moving in different directions. I am hopeful that political reforms will bring a new crop of policymakers to Washington in the decade ahead. Let’s not be discouraged by the extremists in office today, because as I wrote earlier, this too shall pass. If we can get our political institutions fixed, the economics will be easy.
The Insomniac Libertarian 