Blog No. 15 The Washington Soap Opera and the Tea Party Tax

The latest episode of our Washington soap opera descended into self-parody, recalling Carol Burnett’s classic “As the Stomach Turns.” Faithful to the formula, the episode ended with the major characters surviving but faced with dire predicaments just ahead. So it was with the bill finally passed by the Senate and House to end the government shutdown and the threat of imminent default. The crisis is over, but not for long: the operation of the government has been continued only through January 15 and the debt ceiling suspended only through February 7.

The most popular phrase to describe Wednesday night’s Congressional action is “kicking the can down the road.” If the beloved William Safire were still among us, he would no doubt enlighten us as to the origin of what has now become a cliché. In Safire’s absence, Timothy Noah of New Republic used Nexis to trace the term back to arms control discussions in the eighties. Noah suggested that kicking the can down the road had not been a bad idea in the earlier context and, writing last January, argued that it might even be the best approach to the budget deficit. Indeed, even in the most recent crisis it was certainly preferable to allowing a government default or even prolonging further the shutdown. But surely enough is enough. Lurching from crisis to crisis is not only a distraction from addressing other important issues, it also deepens public cynicism, and exacts a toll on the economy when we can ill-afford such a burden. That toll could be dubbed most fittingly “The Tea Party Tax” (or in the lexicon of RINOcracy.com, “The Oozlum Tax”).

It may seem ironic to speak of a Tea Party Tax since any “t*x” is something a typical Tea Partier might speak of with the warmth and ease of a Victorian spinster discussing s*x. Nevertheless, that is essentially what it was: a tax in the form of a loss to the economy estimated by Standard and Poor’s to be $24 billion. The shutdown and the prospect of a default lowered employment, increased borrowing costs, depressed business earnings and deterred business investment. It was, moreover, worse than an ordinary tax which, no matter how wasteful or inefficient the government, will pay for something. By contrast, the Tea Party Tax paid for nothing beyond a minor tweak in Obamacare. (The final bill contained a provision that income eligibility for Obamacare must be verified. That provision is undoubtedly a worthwhile one; indeed, a similar provision was included in the original law but had been waived by the administration. Nevertheless, it is hardly a sufficient fig leaf to conceal the naked surrender of the Congressional Republicans.)

Some of the $24 billion Tea Party Tax may be recovered, but given the continuing uncertainty of what lies ahead, that itself is far from certain. Indeed, that very uncertainty imposes a continuing tax. As a December 17 article in USA TODAY put it “[T]he short-term extension of the debt-limit and funding deadlines will alleviate the crisis atmosphere but only prolong uncertainty about whether the next showdown will hurt the economy, drive up interest rates and taxes, or tank stocks.”  The paper also cited the estimate of Stanford economist Nick Bloom that “the unease will reduce job growth by hundreds of thousands in the next year.”

In addition to the cost to the nation, the political cost to the Republican Party was equally undeniable and even more severe. Polls show that while President Obama did not come away unscathed, the public had little difficulty placing the principal responsibility for the shutdown and threat of default with the Republicans. At the same time, the stunning failures of the Obamacare exchanges became a secondary story, hardly noticed in the chaos of the fiscal crisis. If Senators Cruz and Lee and their co-religionists in the House had plotted to give President Obama a lifeline, they could hardly have done a better job. And now that the costly misadventure has concluded, not with a bang but a defiant whimper, will anyone be held accountable? In the ordinary world those who had designed and carried out such a costly and embarrassing failure, would be expected to take responsibility and demonstrate some contrition. But the political world is not the ordinary world. Short of being caught up in a particularly nasty personal indiscretion, being a politician means never having to say (or allowing yourself to say) you’re sorry. Thus, the folks who put the country and their colleagues through weeks of anxiety and angst appear uniformly unrepentant. And that does not bode well for the future. One hopes and assumes that they will not attempt to repeat precisely the same scenario in the fashion of Groundhog Day, but there is little reason to expect a generally more reasonable attitude in the future. It is probably just not in their DNA.

Nevertheless, let us hope that they foreswear, silently if not publicly, the use of government shutdowns or, even more, the threat of default. Both weapons are, quite simply, counterproductive and wielding them can only bring our party into further disrepute. A subscriber to RINOcracy.com recently wrote in to ask why we have a debt ceiling anyway. The answer is historical and political rather than logical. A form of debt ceiling was adopted in 1917 as a liberalization of the previous law which required Congress to approve individual debt issues. Today, it has outlived its usefulness and many, including quite prominently Warren Buffett, have urged that it be abandoned. That is, of course, logical as the debt ceiling does not restrain future spending but only limits the ability to pay for spending that Congress has already authorized. Yet any politician who proposed eliminating the ceiling would be assailed as a spendthrift and few would be likely to take on that burden.

Defenders of the recent maneuver argued that the debt ceiling had been used by both parties for political leverage without undue harm. That is true, but as Ross Douthat has pointed out, previous debt ceiling negotiations were quite different in important respects, most notably in the nature of what was being sought . In any case, appropriating the nation’s credit for use as a bargaining chip was wrong then and it is wrong now. Government shutdowns are less dangerous but still inflict damage that the public will not tolerate for long. If the Republicans cannot wean themselves away from such weapons, the electorate will respond accordingly. Some Congressmen may feel protected in the bunkers of gerrymandered districts, but sooner or later even they can be made to feel the consequences of their recklessness.

Perhaps the leadership of the House and Senate will find a way to exert some control over the ranks of their more unruly members. John Boehner, it must be admitted, proved to be a more nimble politician than RINOcracy.com had recognized. In the end he not only did what needed to be done, bringing to a vote a measure that lacked the support of a majority of his caucus, but he was credited by the hard-liners with having done the best he could. For his part, Senator McConnell emerged from his paralysis to negotiate a surrender with as much dignity as possible. Going forward, however, neither Boehner nor McConnell will find it easy to restrain the craving of some of their colleagues for political pyromania. It is disquieting that, even at the very end, 18 Senators and 144 Representatives voted against the bill to reopen the government and avoid a default. To be fair, it was a “free” vote, since passage without their support was assured and they could cast a vote they thought would please their constituents or at least part of their constituency representing the vocal “base.”

If there is one hopeful sign it is that business interests, many of which gave considerable support to Tea Party candidates, have begun to realize that the Tea Party agendas do not always coincide with their own. Moreover, even when they do, Tea Party tactics may be counterproductive or worse. The Wall Street Journal, which knows a thing or two about business attitudes, reported that:

In interviews with representatives of companies large and small, executives predicted a change in how business would approach politics. They didn’t foresee a new alignment with Democrats but forecast backing challengers to tea-party conservatives in GOP primaries, increasing political engagement with centrist Republicans and, for some, disengaging with politics altogether.

Many business executives say they were dismayed that some Republicans didn’t heed their warnings that closing the government and risking default would hurt the U.S. economy. Others expressed disgust with Washington politics in general. All said the crisis could have been averted with a more pragmatic approach. 

A similar story in The Washington Post stressed business support for John Boehner and identified three specific states (Michigan, Idaho and Alabama) in which business interests were considering mounting opposition to candidates thought to be problematic to Boehner’s leadership.

To the prospect of the business community coming to oppose selected Tea Party candidates one can only say YES! The Tea Party, it should be said, is not all bad. They have brought energy and enthusiasm to the party, and their support for lower taxes and smaller government follows the consistent Republican philosophy of many years. The problem is that often, as in the recent experience, they carry it several steps too far. In addition, their selection of candidates (and choice of candidates to oppose in primaries) has often been unfortunate, to say the least. RINOs tend by nature to be inclusive and reluctant to get involved in trying to force anyone out of the party. But we should put our shoulder to the cause of attempting to moderate the more extreme elements of the party and demanding that our leaders do likewise. If they do not, the Oozlums will surely succeed in their flight path of self-destruction for the Republican Party.