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As Simple as One, Two, Three

A legislative strategy for the House Republicans.

Nov 15, 2010, Vol. 16, No. 09 • By JEFF BERGNER
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Republicans have won control of the House and have gained several seats in the Senate. What will the Republicans do? Will they simply nibble at the edge of big government orthodoxy, fearing that Senate inaction would doom more ambitious efforts? Or will they act, understanding that the only steps capable of reversing our slide into bankruptcy are so large as to be outside the comfort zone of the political class in Washington? Will they make good on the commitment to economic growth on which they ran and were elected? 

As Simple as One, Two, Three

This is a problem of political courage, to be sure. But it is also a practical political challenge. It is simply not realistic to expect a political party to act against its own interest in survival. In moments of high drama a party may act on principle against self-interest; but as a rule, it must find ways to reconcile principle and politics. 

The challenge before the Republicans is to fashion a legislative agenda combining boldness and prudence, a set of principled policy reforms that commands public support. Republicans need an agenda that is both radical and popular (as opposed to the Obama agenda, which was radical and unpopular). An agenda that is more than high-sounding-yet-empty reforms to the legislative process. Only concrete actions to address the nation’s problems will do. What follows is a modest proposal for squaring this circle, an agenda as simple as one, two, three.

One Tough Vote

Pass an appropriation bill that returns nondefense discretionary spending to 2008 levels. Discretionary spending has exploded in the past two years; outlays have grown from $1.134 trillion in 2008 to $1.408 trillion in 2010, a 24 percent increase, according to the White House Office of Management and Budget. Discretionary federal spending has grown by one-fourth in the past 24 months. Even Barack Obama knows this is not sustainable. That’s why his 2011 budget proposes a spending “freeze” at $1.414 trillion—a bit like stealing your neighbor’s horses, then insisting that everyone should just keep what they have. A freeze is not a serious response to our budgetary problems.

If we are unable to cut deeply into spending, we cannot balance the federal budget. Even massive tax increases could not squeeze enough out of the taxpayers to do this. If we do not act promptly to cut spending, we will inevi-tably be forced to move to a brand new type of tax, a value added tax, to be superimposed on the income tax. 

Setting the level of federal spending is essentially a legislative function, and thus more achievable than initiatives dependent on the president. It would be easier with a president willing to help. But the first step is to pass a clear Republican budget. Pass it and see which Democrats sign on. 

Republicans can learn from the budget impasse in 1995. Here are a few tips:

♦ Roll all spending for fiscal year 2011, including defense, into one bill. Do not let Democrats have separate votes on defense and homeland security spending. Given the trend toward large continuing resolutions in recent years, this shouldn’t be too hard.

♦ Do it with fanfare. Call it the “We’re all in this together, anti-bailout, anti-incumbent, anti-lobbyist, anti-special pleading, anti-Washington, save the country from bankruptcy” bill of 2011.

♦ Treat it like a national referendum. Many Americans are living on less than they earned last year—many families, businesses, localities, and states. Are we to suppose that only Washington cannot do this? Bring in the talk show hosts. Nationalize the issue. Offset the president’s bully pulpit.

♦ Include a rescission of unspent funds from the unpopular economic stimulus bill.

♦ Be prepared for blowback. You will be called “heartless” and “dangerous” and worse. You will be accused of “using a meat cleaver when a scalpel is needed.” This is the standard Democratic game. But you will be called the same if you try to cut current spending by a dime. You will be criticized anyway; why not take a principled stand?

Two Policy Fixes

Repeal health care reform. Much ink has been spilled in conservative circles about whether to repeal Obamacare whole or to target for repeal only such (small) provisions as could make it through the legislative process. Here again is the tension between principle (repeal it all) and prudence (Obama will veto a repeal; take what small steps you can). The answer is: Do both. Pass a wholesale repeal of Obamacare, which polls show enjoys majority support in the country. Put down a marker. Make clear that liberal legislation is not irrevocable. Then go to work on ways to pick it apart. De-fund it, defer it, repeal the new tax increases, end the legal mandate to buy health insurance, permit interstate competition, offer new options for health savings accounts, and enable the states to take more steps on their own. Do it all, in the knowledge that there is popular support for every bit of this.

Pass legislation in 2011 to mandate the closure of our borders to illegal immigration. This step has around 70 percent support from the American people. It is wildly popular. Still, anyone attempting it will be told that the long-term future of the party is at stake. Do not believe it. Explain to people that this is in fact the only practical way to begin to address the issue of the roughly 11 million illegal immigrants who are already in the country. Tell some basic truths about illegal immigration:

♦ Illegal immigrants who live here are not now, or ever, going to be deported en masse.

♦ What is holding back the creation of a pathway to permanent legal residence, or even citizenship, for these illegal immigrants is the very demand for “comprehensive legislation.” We need to bound the problem before we can fix it. To quote the president, we need to “plug the damn hole.”

♦ America can find a reasonable way to deal with illegal immigrants who are already here. What Americans can’t accept is an open-ended commitment to allow illegal immigrants to continue to come here without limit.

Make a commitment that within two years of effectively ending illegal immigration, Republicans will bring forward a sensible and humane plan to deal with illegal immigrants already living in this country. Here lies the only possible solution. Republicans can make it happen. If they do, they can be the electoral beneficiaries of immigration reform in both the short and long terms.

Three Structural Reforms

Pass a pro-growth tax reform bill in 2012. This will be extremely popular. Congressional Democrats—and the president—will oppose it at their peril in an election year. Simplify and reduce tax rates for individuals; cut the corporate tax rate to a level competitive with other advanced democracies; and reduce capital gains tax rates to encourage and reward investment. These steps not only will be politically popular; they also are the only realistic way to increase federal revenues to help reduce the deficit. We cannot tax our way out of large and persistent deficits. We can only grow our way out. Tax reform is a sure winner on the counts of both principle and political prudence. Dare congressional Democrats and the president to oppose tax cuts in 2012. Dare them.

Reform the federal government. Address the engine that has brought America to the edge of bankruptcy—the federal government itself. Begin with the congressional budget, which no president will touch. The annual appropriation for Congress lies entirely within Congress’s hands. In the two years from 2008 to 2010, Congress’s spending on itself grew from $3.7 billion to $4.3 billion, an increase of 17.6 percent. This at a time when American families were suffering through a ruinous recession. Republicans should pointedly include Congress in the return to 2008 levels of spending. 

Second, congressional pensions are indefensible by any standard. Congress should set an example and recalibrate pensions downward for all past and present members. For members elected in 2012 and after, it should abolish the congressional retirement system altogether. This wouldn’t be the term limits many Americans (mistakenly, I believe) seek; but it would be a sign that the default position is no longer for members of Congress to make a lifetime career in Washington.

The executive branch is also in need of reform. Here are some places to start:

♦ Equalize government salaries with those in the private sector by freezing executive and congressional pay for three years.

♦ Loosen the mind-boggling civil service protections that make it nearly impossible to fire government employees for incompetence.

♦ Reduce executive and congressional benefits to levels comparable with the private sector, including eligibility ages for retirement.

These initiatives will be unpopular inside the Beltway. You will be criticized by both federal employees and the Washington media. You will receive strong support from the electorate across the country.

Reduce federal payments to individuals. Rolling back discretionary spending is important, but the principal engine of growth in federal spending is direct payments to individuals—entitlement spending. Social Security, Medicare, Medicaid, unemployment compensation, and roughly 190 other such programs consume an ever larger share of the federal budget—well over half the federal budget this year. Consider the chart above and the graph at the end of this article.

Here is America’s real spending problem. Some observers ask why there seems to be so little federal money for large national projects—whether space exploration, infrastructure modernization, high-speed rail, or cutting-edge research. They need look no further. Americans discovered in the 1930s that they could vote themselves benefits, and politicians ever since have been only too eager to oblige. 

Whether we should tackle the growth of these programs is not a serious question. They are unsustainable. What we must decide is when and how to modify them. Out of economic necessity, the American private sector has gradually moved away from a pension system of defined benefits and to a system of defined contributions. Government at all levels needs to do the same. In a world of intense economic competition with rising powers and hungry work forces, we cannot afford massive income transfers unrelated to productivity. Down that course lies third world status.

Solving the entitlement problem is easy enough conceptually, but very difficult politically. We may not yet have developed the inbred entitlement mentality of France or Greece, but the political dynamics in the United States are actually much the same. No one wants to cut Social Security benefits, and if either party chooses to demagogue the issue, there is little hope of joint action. What then is to be done?

Republicans should invite Democrats to participate in an entitlement review commission. This would not be a commission to provide cover for tax increases while adjusting payments at the margins; it would be a commission to examine the role, trend lines, and sustainability of entitlement payments in a nation which must compete in the world economy. Democrats might or might not agree to participate.

More broadly, Republicans should begin a serious effort to explain to the American people the need for intergenerational justice. Reforms of this scope, as the Bush administration learned in 2005, cannot be rushed. The ground must be prepared. Republicans should explain the advantages of medical insurance and retirement accounts which are owned by individuals rather than paid out of current government revenues or borrowing. In this endeavor, they should enlist the young, who will be the main beneficiaries of entitlement reform. Most young Americans already doubt that Social Security will be there for them when they retire; show them how individual retirement accounts work—invested in the same kinds of instruments as pension funds and university endowments and private fortunes across America, with statements sent regularly to the owner, who can plan for retirement.

In all of this, Republicans should stress one major point. Like candidate Obama, who promised during the presidential campaign that everyone who liked their present health insurance could keep it, Republicans should impress upon the public that no one at or near retirement age will be forced into a new program. 

Republicans should borrow another page from the political left. What the left does when it cannot pass a program wholesale is contained in the magic words “pilot program.” Republicans should push to establish voluntary pilot programs for medical insurance and retirement accounts. Voluntary retirement accounts could be -modeled on the federal Thrift Savings Plan, which allows individuals to choose from a prescribed range of options, from financially aggressive to safe. These pilot programs would demonstrate the superior long-term returns of private accounts. They would function much like charter schools in the educational field: While charter schools have not broken the back of status quo inner city education, they have demonstrated to a certainty the superiority of freedom and choice over government mandates.

Going Forward

It may be that not all these initiatives will pass in the next Congress. The Senate might bottle up some of them or amend them in unhelpful ways. The president might veto some or all of them. But at least Congress and the president will be working from a pro-growth, job-creating Republican agenda. People in America are ready for this. They will reward a political party that advances these ideas, whether it can fully achieve them right away or not. What the American people will not reward is business as usual from a Republican Congress.

Perhaps, too, we will discover whether, and in what ways, the Democratic party is committed to the bipartisanship it so often espouses. It has often been said that there has been no bipartisanship on domestic issues during the last two years. This is actually not true. A strong bipartisan majority of all Republicans and 31 Democrats in the House favor the extension of all of the Bush tax cuts. Isn’t this an example of bipartisanship? Wouldn’t Obama-care have been lauded by the mainstream media as bipartisan legislation if it had secured 31 Republican votes in the House? The way to achieve genuine bipartisanship is to work off a pro-growth, job-creating agenda. Many, if not all, of the initiatives described above will receive some Democratic support.

The American people would like to see a direct and understandable legislative response to their desires. They are tired of being told that there are reasons too subtle and complex for them to understand why it is acceptable to keep spending far more money than we raise. Or that the government must spend even more to achieve an unemployment rate lower than 9.6 percent. Or that every single federal program is so vital that we should borrow 40 cents of each dollar from our children to pay for it. Or that we are really just “spreading the wealth around” when we are actually engaging in outright intergenerational theft. Or that making ever more Americans reliant on government payments is the just and humane path to civic virtue. Or that which medical procedures are available to our families will be determined by what is “fair” in the mind of an assistant secretary of Health and Human Services. Or that it is shameful and xenophobic to adopt a generous and lawful system of immigration and to enforce it at our borders. Or—perhaps most important of all—that America can no longer compete successfully and that we and our children should get used to having less. The American people are not looking for a sociological explanation for our decline as a nation; they are looking for leadership to reverse it.

If President Obama is politically savvy, he will find a way to accommodate significant portions of this agenda. If he is not, let him defend in 2012 a platform of business as usual in Washington, of vast and growing debt, of continued illegal immigration and stalemate for current illegal residents, of higher taxes, of health care controlled by a massive bureaucracy and health insurance premiums ever-rising. Let him run as the candidate of the political class in Washington. As someone once said, “Bring it on.” 

Jeff Bergner has served as staff director of the Senate Foreign Relations Committee and as assistant secretary of state and has been a professor of government.

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