The showdowns on spending won’t end until the voters make up their minds.
Dec 17, 2012, Vol. 18, No. 14 • By JAY COST
As the nation heads ever closer to the so-called fiscal cliff—the January 1 deadline at which, absent congressional and presidential action, taxes will go up and (on January 2) spending will go down—
both sides are bandying about accusations, counter-accusations, and counter-counter-accusations.
Democrats are convinced that the GOP is not negotiating in good faith, as it is in hock to supposedly extreme antitax activists. Republicans are similarly convinced that President Barack Obama and Treasury Secretary Timothy Geithner are bad-faith actors, content to drive the nation over the cliff because it will advance the left’s long-term agenda of higher taxes and lower defense spending. Similarly, both sides spy incompetence in their opposition: The left believes that Speaker John Boehner cannot control his House caucus, and the right suspects that President Obama lacks the temperament to broker a deal.
All of this—and more—might well be true, but the political class is too prone to explain gridlock as a function of individual personalities. While they no doubt matter, the two sides are deadlocked for much larger, structural reasons, which stretch back generations in some cases and ultimately have their roots in the chronic indecision of the American people.
The first, and most obvious, source of gridlock has to do with the issue at hand: top marginal income tax rates. For decades, the two sides have not seen eye-to-eye on this issue. A quick perusal of legislative history indicates that clearly enough. Ronald Reagan’s 1981 tax cuts passed the House of Representatives with 151 Democrats voting nay and just 88 voting yea—and most of those yea votes were Southern Democrats who have since been replaced by Republicans. Northern liberals hated the Reagan tax rates in 1981, and they hate them today.
Similarly, congressional Republicans have balked at tax hikes time and again. After Reagan’s job approval numbers deteriorated in 1982, his political capital dissipated and he was forced to pass a deficit reduction bill that included nearly $100 billion in tax increases. The bill passed, but 89 House Republicans split with the man who has since been remembered as the embodiment of the modern conservative movement.
This pattern continued over the next 20 years. George H. W. Bush ultimately agreed to a deficit reduction package in late 1990 that included $137 billion in new taxes, as well as an increase in the top marginal rate. Some 105 conservative Republicans in the House voted against the president. In 1993, Bill Clinton’s budget, which again raised taxes, won the support of exactly zero House Republicans. Democrats have demonstrated similar recalcitrance in supporting tax reductions: Just 10 House Democrats backed George W. Bush’s 2001 tax cut package, and only 7 supported the 2003 tax cuts.
Given that it is these very same tax rates that are now on the table, is it any surprise that the two parties cannot find common ground? Of course not. The reality is that there has been virtually no common ground on taxes for a generation. Indeed, it was the very lack of common ground that generated the fiscal cliff in the first place. Why should any be discovered now?
If anything, common ground—always in short supply—has been eroding over the last few decades, which points to the second structural reason for gridlock. Ronald Reagan was able to win crossover support from congressional Democrats for his 1981 tax cut passage in large part because he had won handily in their districts. Ideology aside, pure political calculation signaled to these Southern Democrats that Reagan was not a leader to defy lightly.
However, President Obama has only a fraction of this sway over congressional Republicans. While the votes are still being tabulated, it is a safe bet that an overwhelming majority of House Republicans will have come from districts that voted for Mitt Romney. The implication is stark: The two sides are basically representing different constituencies, with competing values and beliefs. What sway does President Obama hold over a Republican whose district went for Mitt Romney? The answer: very, very little.
Third and most important, insofar as the two political coalitions do overlap, it is thanks to an electorate that seems, at best, confused and uncertain about what it wants. Democrats these days like to tout polls showing that the GOP’s position on taxes is unpopular, but they often fail to mention just how sensitive those polls are to the wording of questions. Tweak the way the question is phrased—for instance, from asking about tax hikes on “the rich” (the Democrats’ favorite) to hikes on “small businesses” (the GOP’s preferred phrase)—and you will get starkly different answers.