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.