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Window of Opportunity

Dec 13, 2010, Vol. 16, No. 13 • By MATTHEW CONTINETTI
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Did America hold an election last month? Sometimes it’s hard to tell. Congress is back in town, and the Democratic majorities in the House and Senate are acting as though the shellacking of 2010 never happened. Nancy Pelosi and Harry Reid, oblivious as usual, have stuffed this Christmas turkey of a lame duck session with votes on side issues like Don’t Ask, Don’t Tell, the DREAM Act immigration amnesty, and a resolution “supporting the goals and ideals of National Homeless Persons’ Memorial Day.” Meanwhile, back in the real world, unemployment climbed to 9.8 percent, the debt is piling up, and the economy is struggling.

Window of Opportunity

Photo Credit: Newscom

Important business remains undone. Congress still hasn’t passed a budget. Nor has it extended the tax rates that are due to expire in a few weeks. What Kevin Phillips once dubbed the “reactionary left” is busy running television ads urging President Obama to raise taxes on the rich, while House Democrats hold meaningless votes intended to expose Republicans as plutocrats. The obvious compromise—extension of current tax rates for two to three years in exchange for a vote to extend unemployment insurance—languishes on the table.

The dysfunction and desperation of the waning Democratic majority is staggering. But is anyone really surprised? Soon the House will be under new management and Harry Reid will have fewer votes in the Senate. Come January, Speaker John Boehner will try to chart a new course, to demonstrate that conservatives can govern responsibly, to start repairing America’s broken budget. Around 80 new, Tea Partying Republicans will be there to back him up. We’re happy to report that a center-right fiscal coalition is beginning to emerge outside Congress, as well.

The president’s debt commission may have failed to reach a consensus. Its plan may rely too heavily on tax hikes, defense cuts, and the Obamacare model of health insurance for our taste. But, as commission member Paul Ryan of Wisconsin pointed out the other day, chairmen Erskine Bowles and Alan Simpson have provided a valuable service nonetheless. They’ve shown that the rising tide of red ink is a huge problem. They’ve proven that Democrats and Republicans can agree that the situation must be addressed. They’ve acknowledged that tax hikes alone won’t balance the budget. They’ve proposed a drastic and intriguing overhaul of the tax code that would close subsidies and loopholes in exchange for lower rates.

So the Bowles-Simpson plan is a step in the right direction. But it’s only a baby step, and with the left foot. The commission’s true legacy may be in the number of additional plans it’s inspired. Representative Ryan’s Roadmap for America’s Future, released in 2008, suddenly has brothers and sisters. Ryan and Alice Rivlin, President Clinton’s former budget director, have come up with a Medicare proposal that would protect the current system of benefits for everyone 55 years old and over while transforming Medicare for future generations. Back in August, Paul Volcker’s commission warned that America’s tax code is too complicated and the corporate tax rate too high. The surplus of center-right ideas has forced the left to get in on the act. Representative Jan Schakowsky of Illinois and a bunch of liberal groups have all released their own plans for reducing the debt. For these folks, just talking about the deficit is a concession.

President Obama himself is the best evidence of how deficit politics have shifted to the right. He spent the last two years arguing that deficit spending—blithely tripled on his watch—was necessary to create jobs. Like a good Keynesian, Obama said that when consumers stopped spending, government needed to step in and fill the gap. But the failure of his economic program contributed to the Republicans’ historic gains in the midterm elections. Last week the president changed his tune, calling for a pay freeze for nondefense government employees and saying that “small-businesses and families are tightening their belts. Their government should too.” Somebody get a medic—those words are enough to drive Paul Krugman into cardiac arrest.

These reports and proposals will be worthless, however, if they aren’t taken up by a bold and imaginative leader. In our system of government, that responsibility falls to the president. And all that prevents President Obama from taking up the challenge of fiscal responsibility are his own ideological commitments and the left wing of his party. He’d benefit from abandoning both.

And if the president punts? Then it will be up to someone like Ryan to explain why an overhaul of the American welfare state is both necessary and beneficial. And why we must act quickly, before this window of opportunity slams shut on our fingers.

—Matthew Continetti

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