Ryan Streeter
The House Budget Committee's announcement this past week that it would set the budget at 2008 non-defense discretionary levels was both praised and excoriated. Because the government is a good way through the fiscal year, House Republicans fell short of meeting the $100 billion in cuts they had promised in their Pledge to America. Some thought getting back to the 2008 levels was quite an achievement, and others thought it was disappointingly low given voters' intentions and expectations in November.
The dual reaction to the budget indicates a growing rift among Republicans between those who want to make incremental and realistic progress on spending reductions and those who want to be more ambitious. This has prompted a round of speculation (again) about whether the Tea Party and the GOP can get along.
It is the weekend to ask, "what would Reagan do?" If we were to transpose him into the House leadership, I think he would do things differently than the current leadership's approach.
Presently, GOP leadership is making spending cuts the rubric under which two other key issues - growth and deficit reduction - find their place. Eric Cantor's "cut and grow" agenda makes sense, but it jumbles the issues, which gets in the way of strategic action and public communication. Right now, spending cuts are an end-all: if we can cut spending, the economy will grow; if we can cut spending, we'll tackle the deficit.
Making spending cuts the point of the spear in this way has other disadvantages. For one, when you fail to meet expectations, as happened this past week, your entire agenda is in jeopardy because everything hangs on the cuts-first theory. And second, you're buying time in a dangerous way: if you lead voters to believe that you can make strong headway on the long-term deficit problem through spending cuts alone (we need to reform entitlements to do that), it won't be long before they won't forgive you for letting them down further.
I think Reagan would separate out these three elements from each other and reframe them as one overall agenda, and have the House committees pursue them all simultaneously and in complementary ways. Like this:
Growth. We need to increase per capita GDP and to generate new jobs, and in order to do this, we need more investment. During the current Congress, the GOP could push hard on:
- Providing greater certainty to investors within the boundaries of the current, flawed financial reform bill. It would be better to rewrite the law entirely, but there are some practical steps Congress could take to make provide certainty to financial institutions so they know how and when they will be regulated and not. Currently, there's too much grey area in the law, which prevents capital from moving where it should.
- Reaching agreement on a lower corporate tax rate. There's enough bipartisan agreement to make this happen. And there's a lot of evidence that it's the most important factor in generating growth and creating jobs.
- Setting a date for a vote on extending the current tax rates. The two-year extension was a mess at the end of 2010, and while important for the economy, doesn't give families and businesses much certainty about how things will go at the end of 2012. There's an argument for waiting until after 2012 in hopes Republicans will reclaim the White House. But this is a big gamble, and it would be better to force a vote much sooner so families and enterprises can know that certainty is coming.
- Pursuing a modest cluster of tax reform initiatives such as the deficit commission recommended. We could suddenly free up hundreds of billions of dollars by zeroing in on the right cluster.
Cuts. Cuts support growth, they don't create it. That should be the message. Republicans have lately gotten pretty close to reversing that message. Federal spending is a drag on our economy in multifarious ways. The GOP could:
- Push even harder to bring levels down below the 2008 levels next year. There is still a lot of fat left to trim in the federal government. The Republican Study Committee's plan, however much people don't like it, shows this to be the case. Set a higher goal than $100 billion for next year - and deliver this time.
- Obamacare is a cost-driver of extreme proportions. Repeal is a huge spending cut. The wind is at Republicans backs on this one, and I think Reagan would say to keep doing what they're doing.
Deficit reduction. All the discretionary cuts in the world won't repair out long-term deficit crisis, even though they help. Only reforms to Medicare and Social Security will do the trick. Republicans should:
- Begin talking openly about this openly, instead of leaning away from the issue for fear of political retaliation. Use lots of graphs and charts, make the case over and over again in concrete terms, so that all Americans see what kind of credit card bill their children and grandchildren will have if we don't reform the programs very soon.
- Propose a couple of key reform initiatives, starting with additional retirement age increases and means-testing for the programs.
- Propose a bill that allows a couple of states or a limited populations of volunteers to begin experimenting with "defined contribution" approaches to Medicare instead of the current defined benefits program. This would take the debate away from making drastic reforms for everyone and allow Republicans to start pushing one of their best ideas in a visible way.
This three-pronged approach is simple and easy to talk about. It avoids putting every good idea under the "spending cuts" umbrella, and it would do more to support an overall jobs agenda than the Republicans are pushing right now. It strikes me as the kind of thing Ronald Reagan would want us to do.
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