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The House GOP vs. The Deficit Grand Bargain

The widespread speculation about a big bipartisan agreement to reduce the budget deficit focuses on what seems to be some impressive bipartisan behind-the-scenes support in the Senate. But it overlooks the extremely long odds of getting a deal like that through the House. It's pretty significant news that Paul Ryan is throwing cold water on the possibility of a big deficit deal:

Mr. Ryan (R., Wis.) said he thought the coming debate over raising the country's borrowing limit would lead to an agreement with Democrats for at least a "down payment" on tackling the federal government's deficits and debt.
"Because we have such a difference of opinion on health care, it's hard to imagine we're going to have a global agreement," Mr. Ryan said in an interview with The Wall Street Journal and Dow Jones Newswires in his Capitol Hill office.

Ryan enjoys overwhelming prestige and influence on budget policy within his party. And despite his carefully crafted media image, he is not and never has been a deficit hawk, and the notion that he might support a grand bargain seems fanciful. Ryan was on the Bowles-Simpson panel but voted against the plan. Ryan displayed through the health care debate that he does not accept the budgetary assumptions of the Congressional Budget Office, or any entity not steeped in his ideology. As I argued in a Newsweek column, when Ryan invokes the need to avert a fiscal crisis, he is not talking about the numerical gap between revenue and outlays. He is invoking his Randian belief that collectivism is doomed to lead to societal collapse. And indeed, a deal that closed the numerical gap between revenue and outlays but preserved the collectivist character of the welfare state would not, from Ryan's standpoint, represent progress of any kind. It would deprive him of the pretext he requires to win the sweeping changes to the social compact he requires.

And without Paul Ryan, can you imagine the House cutting a deal? I certainly can't. The closest parallel is 1990, when, in the face of an imminent debt crisis, President Bush negotiated a deal with Congress to raise taxes -- slightly -- and reduce spending. Conservatives revolted in opposition. Want to guess how many House Republicans voted for it? 10. And that was with the Republican Minority leader and a Republican president whipping for the deal. I just don't see where the Republican support for a deal like this would come from now, in a far more conservative House GOP caucus, and without a Republican president supporting the deal.

Keep in mind, too, the broader context surrounding the House Republicans. The Congressional Budget Office has downgraded its estimate of the cost savings of the last budget deal, the one to prevent a shutdown, from $38 billion to virtually nothing, enraging conservatives. (Conservative blogger and television pundit Erick Erickson notes that this "should radicalize freshman GOP'ers against deals." It probably will.

The greatest obstacle is simply that conservatives believe, as David Frum puts it without endorsing the claim, "(1) American freedom stands in imminent danger of disappearing into totalitarian night; and (2) that the vast majority of the great and good American people are yearning for a mighty rollback of big government, even at considerable personal sacrifice." They believe the 2010 elections represent the full endorsement of the American people, and that any previous electoral defeats are attributable to fluke circumstances and/or insufficient ideological fealty.

That's why the most plausible deficit reduction plan is to rely on gridlock rather than cooperation. Obama yesterday held absolutely firm in his opposition to extending tax cuts on income over $250,000. If Obama won't relent, then Republicans probably won't relent on the rest of the tax cuts, and the whole thing will expire. And then, if Obama wins reelection, he'll be most of the way toward a sustainable deficit, and the Republicans will have had their triumphalism beaten out of them. At that point, a deal to raise a little revenue by reforming the tax code plus spending restraint would be far more plausible.