When fully in control of Washington, the Republican Party has traditionally shown no concern for budget deficits. They had no problem passing both unpaid-for tax cuts or huge entitlement expansion on nearly party line votes. As Republican Vice President Dick Cheney famously said, “Deficits don’t matter” –at least as long as Republicans are in the White House. As soon as the Democrats take control, they manage to always, as if by magic, rediscover a burning passion for fiscal responsibility. Some feel this demonstrates the incredible hypocrisy of the GOP, but it goes beyond that. Whether it developed by clever design or happenstance, in our broken political system, these Democratic victory-inspired revivals of deficit hawking really are a win-win for Republicans. It allows Republicans to get cuts while transferring the blame to Democratic party.
Most specific cuts in government spending are extremely unpopular. Not only that, but cuts often lead to slower growth, which in turn really hurts the party in power. It would be politically a bad decision for Republicans to waste the times when they are fully in control of Washington to push for party-line cuts. Now, if the only way to force cuts in the social safety net was to pass them while Republicans were fully in control, the GOP might actually be willing to take this political hit to achieve this policy goal. After all, most elected Republicans really seem to enjoy slashing the social safety net. For example, think of how the Tories in the UK can only force the spending cuts they want when they are in control, so that is why they are pushing them now, despite it hurting their poll numbers.
Fortunately for Republicans, our broken political system doesn’t function like most democracies, so they are relieved of this tough choice and direct accountability. Thanks to divided government, and more importantly the filibuster, even in the minority, Republicans still have sufficient power to hold basically everything hostage to demand spending cuts. They are able to win the cuts while forcing the Democrats who control the White House to share the political blame for unpopular moves.
This strategy is on the verge of working out great for the Republicans again
Republicans are about to push President Obama to reach a “compromise” on spending cuts so he will share the blame. Cuts that are not only likely to be unpopular, but as David Dayen points out, highly anti-stimulative. The CBO’s baseline assumptions are already very dark.
CBO projects that the unemployment rate will gradually fall in the near term, to 9.2 percent in the fourth quarter of 2011, 8.2 percent in the fourth quarter of 2012, and 7.4 percent at the end of 2013. Only by 2016, in CBO’s forecast, does it reach 5.3 percent, close to the agency’s estimate of the natural rate of unemployment (the rate of unemployment arising from all sources except fluctuations in aggregate demand, which CBO now estimates to be 5.2 percent).
These employment assumptions are based on basically consistent spending levels. If Republicans manage to push for immediate cuts, further reducing aggregate demand, the likely result is higher than projected unemployment in 2012. Slow growth and high unemployment is almost always devastating to incumbent presidents, which, in this case, would be a huge political win for Republicans.
I can fully appreciate how the Republican Party’s seemingly bipolar behavior on deficits and spending cuts is such a smart policy and political win-win for the party. What I fail to understand is why Democrats are so willing to play into their rhetorical trap, or Democrats’ stubborn refusal to even consider changing the absurd rules that make this strategy possible.