Friday, December 17, 2010

Clues to to the 112th Congress

Clues have been trickling in about what we can expect from the 112th Congress, which will be comprised of a Republican held house and Democratic controlled Senate. We can expect few major pieces of legislation from this Congress, and a lot of fireworks.

The major goals of the Republican Congress differ between the vaguely substantive "defund health insurance reform" and the purely political making of a "one-term President." With the defeat of the omnibus appropriations bill that would have funded the government for 2011, however, we get a glimpse at which normal means of governing the Republicans will balk. The Omnibus spending bill was a combination of the 12 appropriations bills that traditionally receive independent debate, though that tradition was abandoned for much of the last decade. Because of the $1.1 trillion price tag for the bill, and because it consisted of less than 1% of earmarks, Republican leadership withdrew support for the 2011 appropriations bills.

The obvious takeaway is that Republicans will shy away from large ticket bills, breaking them down in component parts. The sticker shock for a functioning government would be too much for the new conservative base, so expect to see some more creative accounting from the House appropriations committee. What is not obvious is how Paul Ryan and the Republicans think they can effectively slash the budget without a large package. Any smaller package can be held up by the Democratic Senate who will spotlight the least popular cuts. The Republicans might be able to win a budget war, but it would be difficult to get the American public on their side once they return to governing. The alternative is to make it look like Democrats are holding up the budget process for small change. The only way to mask large cuts as piddling losses for small constituencies would be to scale up the size of the bills. If Republicans try to play politics with the budget, they'll get burned from either side of the spectrum. Either moderates won't support their 2012 presidential candiate or the base won't maintain their 2010 level of support in less ideological congressional districts.

Even though House Republicans will write the next budget, they will have to defend any major cuts in the face of Senatorial review and a Presidential veto. There are very few indefensible programs in the federal budget, and even those ones that are have dedicated constituencies with vast power to ensure that those programs stay in place. Corn ethanol subsidies and farm subsidies which go directly to ADM, for example, will surely be firmly ensconced in the Republican budget. The budget will target cuts at programs that have little vocal support among typical Republican voters (after all, many of the tea party candidates won de fact election when they won their primaries). Expect to see enormous cuts in welfare programs, housing subsidies, vouchers to make health care affordable, and education. Democratic leaders either will be able to forcefully defend these programs, or the public will acquiesce to a Republican view of government and then blame President Obama for failing to fix the economy.

The big problem for Democrats is that if all the hard work that the Obama administration and Democrats have done on stimulus, fiscal policy, and creating a more stable financial industry pays off with improving growth in the next two years while Democrats are complaining about the illogic of Republican policies, Republicans may get the credit for the recovery. The American economy is an enormous system with many large actors that must plan their moves well ahead of time. Government-made policy, if it has a serious effect on the market, would have a seriously lagging effect. Deregulation of derivatives didn't cause a small but observable crisis in 2001. It caused a titanic crisis 8 years later. The Bush Tax Cuts, while they created a small budget deficit immediately, didn't cause the $10 trillion budget gap until 10 years later. Policies take a long time to manifest themselves at the aggregate level.

Democrats are stuck in a bad position of cheerleading small growth begun under the Obama administration while the other team just took the field. The best thing to do might be to focus on the small-bore effects of Republican cuts, arguing that they are unjust, not economically unsound per se. If Democrats go for the pure economic arguments, voters will cling to the connection between Republicans and the economy while not following the long link story that Republican actions will have negative consequences for the economy down the road. Worse yet, if the economic outlook improves for an individual, they will credit the Republicans with the good fortune. After all, didn't the Democrats say that Republicans were driving economic policy?

The White House needs to get out in front of the Republican budget, rally public support for the necessary components, and avoid letting the Republicans own the economy. If Boehner, Cantor, and Ryan want to cut funding for libraries and teachers, there's a lot of grassroots support that OFA could muster for these local institutions. Support the necessity of these institutions to the fair, open, and meritocratic society that America needs to be, then let Organizing for America go out and defend the libraries in the Obama supporters' backyards. These are political fights that Obama can win without invoking the spectre of economic hardships (which will surely accompany cuts).

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