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Post-Election Republican Agenda

One of the benefits of being an economist is that we are trained to always think on the margin. Since there’s no use wallowing in last night’s failure, I figured I’d make a list of important policy battles to be fought over the next few months. 

  • Battle over sequestration, defense cuts, and the fiscal cliff

  • Expiry of the Bush tax cuts
  • Appointment of commissioners to Obamacare’s Independent Payment Advisory Board (IPAB), which requires Senate confirmation, if I am not mistaken.
  • Legal battle over the Obamacare contraception mandate
  • An investigation into the Benghazi coverup
  • Obamacare’s sharp cuts to Medicare Advantage, and to Medicare more generally, start to bite in 2013
  • Another debt ceiling increase

The striking thing to me about the list — with the exception of the Benghazi mess and the contraception mandate –  is the extent to which the major policy changes that are coming have default options that require cutting government spending or raising taxes. From a policy point of view, fiscally conservative Republicans might consider whether they should let some of these default options go through. The main Republican assets are a sizable House majority and a Senate filibuster (to the extent that Senate Democrats permit it). 

From a tactical point of view, Republicans need a strategy to make sure they do not get blamed if or when these default options happen. The main Republican liabilities here are a hostile press and a ruthless opposing party. I am sorry to say that I am not optimistic. My guess is that Republicans will get blamed whether these default options happen or not. 

Despite that assessment, I think it is nevertheless important for our country that Republicans use their assets to promote fiscal sanity. There are opportunities here for both policy and political gain. Someone needs to be the grown up and it almost certainly will not be President Obama.

  1. liberal jim

    Both parties have repeatedly lie to the electorate and made promises that are impossible to keep.  It does not take a PHD or MD to figure that out. While figuring out away not to be blame might be considered clever in some circles, being honest might prove to be more productive in the long run.  The things you listed won’t be remembered a decade from now.  

  2. Duane Oyen

    I can’t wait for everyone to go crazy over this Washington Post headline

    If you actually read the article, Boehner is proposing a combination of the GOP platform, Simpson-Bowles, and Romney positions: don’t raise marginal tax rates, some increased revenue is OK as a part of broader tax reform (lower rates, broad base), and reform SS & Medicare entitlements. 

  3. Jay Bhattacharya
    C
    liberal jim: While figuring out away not to be blame might be considered clever in some circles, being honest might prove to be more productive in the long run.  The things you listed won’t be remembered a decade from now.  

    I agree with you that honesty about the fiscal problems we face is important, and that’s exactly the strategy I suggest for the Republicans.  And while I also agree that both parties have trouble with this, I’m afraid the Democrats are beyond hope.  Mine anyways. 

    As far as whether people will remember these items 10 years from now, I’m afraid I have to disagree.  Even if the particulars are forgotten, the decisions made about these items over the next few months will have profound implications for America and its economy over the next decades. 

  4. Jay Bhattacharya
    C
    Duane Oyen:  Boehner is proposing a combination of the GOP platform, Simpson-Bowles, and Romney positions: don’t raise marginal tax rates, some increased revenue is OK as a part of broader tax reform (lower rates, broad base), and reform SS & Medicare entitlements.

    Thanks for the link — it’s an interesting read.  The problem, as it has been over the past two years, is that the House cannot accomplish any of these things while the White House stands in the way.

  5. Patrick in Albuquerque

    Forget all the bright and shiny things; eg, Benghazigate. Let the historians handle it. Whatever we did would die in the Senate anyway.

    Contraception probably falls in the bright and shiny category. The bishops did their best and we still lost.

    Defense needs to be whacked; we don’t need to be spending this much. And by whacking it, we can also get cuts in non_Defense discretionary.

    Hold out for spending cuts as part of a new debt ceiling deal. There’ll never be a better time for shutting down the government than right now.

  6. Baja

    Does anyone really expect Republicans in Congress to actually do anything? Democrats aren’t going to negotiate because in Jan they get everything they want – higher taxes & deep defense cuts. Then a compliant media to blame it all on Republicans when things get worse. The only tool the Republicans have is the power to not pass spending bills until the Democrats begin to negotiate in good faith. That however, would require a spine which gets removed by leadership when new members show up in Washington i.e. how many of those elected in the Tea Party movement in 2010 actually stood up for fiscal conservativism? 

  7. Daniel Frank

    If we are going to lose anyway, why not do the right thing for once?  

    My first thought when I heard that Fauxcahontas unseated Scott Brown was, “For goodness’ sake, man, you could have stopped Dodd-Frank! And now you’ve lost your Senate seat, and the only thing any of us will remember you for was your cave on the worst piece of financial services legislation in human history.”

    Maybe it’s time for Republican legislators to consider to consider the verdict of history.  That may be all any of us have left, now.

  8. Patrick in Albuquerque
    Baja: how many of those elected in the Tea Party movement in 2010 actually stood up for fiscal conservativism?  · in 0 minutes

    Those guys are our ONLY hope so we can’t give up on them. If your district is represented by a Tea Party person, you need to have a talk with him/her ASAP.

  9. J Climacus

    We had a slim chance of avoiding economic catastrophe in the near future by electing Romney and a Republican Senate, who could repeal Obamacare and enact a pro-growth program including elimination of the web of regulations with which Obama is strangling the energy sector. Even then the chance was remote; with Obama reelected a debacle is inevitable, the only question is who will get the blame. I’m wondering if Republicans shouldn’t simply defer to Obama’s leadership as he takes us over the cliff. Republicans caved on principle in the debt ceiling debates of recent years when we still had a chance to avoid disaster, all for the sake of the 2012 election. How did that work out? Now they will stand on principle when it won’t make a difference and will share the blame for the subsequent catastrophe. Perfect.

  10. J. D. Fitzpatrick

    “And the war came.”

    –Lincoln, Second Inaugural Address

  11. Raxxalan
    Jay Bhattacharya

    Raxxalan

    Indaba

    When will the US dollar stop being the world’s go to currency? · 3 hours ago

    When either Europe gets it’s act together or the Chinese stop manipulating the yuan.  Either would be a good competing reserve currency IF they were credible.  The  debt crisis puts the future of the Euro in doubt and China manipulates the yuan to keep it competitive on the export market.  I don’t see another viable reserve currency. 

    30 minutes ago

    That’s exactly right — there’s a lot of competition to dive over the fiscal cliff.  But remember, US federal debt has already been downgraded.  In this one area — currency debasement — I expect President Obama to excel. · 6 hours ago

    We are actually very lucky that Europe was not able to hold on.  If the euro had been viable as a world reserve currency.  It would already have replaced the dollar.  That would change the calculation on our fiscal cliff in ways we can’t even begin to understand.  

  12. Indaba

    Harry Shearer on his podcast Le Show had an expert who said the Trillions in debt were not a problem. 

    There are many Democrat politicians who say there is loads of money, do not listen to Paul Ryan that the money will run out. It sounds convincing to me.

    What do you think will happen with sequestration which got discussed in the debates?

  13. Indaba
    Jay Bhattacharya

    liberal jim: While figuring out away not to be blame might be considered clever in some circles, being honest might prove to be more productive in the long run.  The things you listed won’t be remembered a decade from now.  

    I agree with you that honesty about the fiscal problems we face is important, and that’s exactly the strategy I suggest for the Republicans.  And while I also agree that both parties have trouble with this, I’m afraid the Democrats are beyond hope.  Mine anyways. 

    As far as whether people will remember these items 10 years from now, I’m afraid I have to disagree.  Even if the particulars are forgotten, the decisions made about these items over the next few months will have profound implications for America and its economy over the next decades.  · 2 hours ago

    When will the US dollar stop being the world’s go to currency?

  14. No Caesar

    The contraception mandate was for show only.  Now it’s no longer useful, it’ll be dropped like Cindy Sheehan.

    Ben Ghazi must be investigated if we are to be taken seriously.  But more important than that, it is the right thing to do.  Our military deserves better than they’re getting.  Fire up non-stop back-to-back investigations. Make the apparatchicks lawyer up and spend all their time defending themselves, so they have less time to get into mischielf.  

    The Republicans in Congress have two choices on the tax and spend issues: 1) “compromise” and get nothing, but share in the blame when it all crashes, thereby further depressing the conservative vote in the next election; or 2) pretend to compromise but refuse to give in, thereby getting the blame from the media and official Washington now for standing in the way of “solutions”, but positioning themselves for a future I-told-you-so.  Nothing the current Democrat leadership is going to propose or agree to will address the problems.  We are better off if the crash happens sooner than later. 

  15. Aaron Miller

    There is no excuse for raising the debt ceiling again. If Republicans won’t force cuts now, why expect them to ever do so? Whether Republicans are in power or are not, the likely effects on elections are the same. Rise to the challenge or begone!

    Every person in America has been hearing for a lifetime about government waste. Are Republicans too feckless to call Democrats out for now denying that waste? Propose 1% cuts across the board. If Republicans can’t defend that, they can’t defend anything.

    I’m not optimistic. As Steyn pointed out, a nation which can’t bring itself to cut even a profitable children’s show like Sesame Street is not likely to consider more significant cuts.

  16. Bryan G. Stephens

    They will cave on everything. That is their nature. We are Doomed.

    Of course, people don’t want to hear hard truths, even conservatives. Looked what happened to the man that said we are doomed on NRO.

  17. Raxxalan
    Indaba

    Jay Bhattacharya

    When will the US dollar stop being the world’s go to currency? · 3 hours ago

    When either Europe gets it’s act together or the Chinese stop manipulating the yuan.  Either would be a good competing reserve currency IF they were credible.  The  debt crisis puts the future of the Euro in doubt and China manipulates the yuan (actually the formal currency is called something else I believe) to keep it competitive on the export market.  I don’t see another viable reserve currency.  SDR’s, a UN backEd pseudo currency are really not viable as a reserve since h UN is basically a cruel joke on the world  anyway.

  18. Jay Bhattacharya
    C
    Raxxalan

    Indaba

    When will the US dollar stop being the world’s go to currency? · 3 hours ago

    When either Europe gets it’s act together or the Chinese stop manipulating the yuan.  Either would be a good competing reserve currency IF they were credible.  The  debt crisis puts the future of the Euro in doubt and China manipulates the yuan to keep it competitive on the export market.  I don’t see another viable reserve currency. 

    30 minutes ago

    That’s exactly right — there’s a lot of competition to dive over the fiscal cliff.  But remember, US federal debt has already been downgraded.  In this one area — currency debasement — I expect President Obama to excel.

  19. Lavaux

    I advise Congressional Republicans to give the Democrats everything they want by abstaining from voting on every bill proposed by Democrats. I further advise Republicans to communicate the following mantra to voters at every opportunity: “You wanted this America, you got it. But we Republicans won’t have anything to do with it because it’s wrong and it will lead to much suffering. You still don’t believe us, so it seems you’ll have to learn the hard way. Class has started; let the lesson begin.”

    Most lefty pundits are loathsome liars who rarely see anything outside of their own bubble, but when a lefty does see something it’s usually very instructive. To whit, Matthew Yglesias of Slate:

    “Looking at California since Proposition 187 one sees neither a burgeoning progressive utopia nor technocratic feats of good governance. A pleasant climate and its status as the longstanding hub of America’s high tech industry gives the state enduring strengths that other areas lack. One shudders to think of California public policy mixed with the objective conditions that exist elsewhere.”

    Spot on. But Democrats have no restraint. So let ‘em loose so voters will learn the hard way.

  20. Peter Robinson
    C

    Can’t thank you enough for this, Jay.  Not wallowing.  Items for action.

    Today you represented Ricochet’s very own cleansing breath.