What's the End Game For Republicans?

Jonathan Podhoretz reads a Quinnipiac poll showing that by a margin of 48-34, the public is going to blame Republicans and not Obama if we don't raise the debt ceiling, and joins the ranks of the Washington sellouts:

At some point, those who believe it will be acceptable to go to August 3 without an increase in the debt limit, as well as those who believe the politics favor the Republicans, are going to have to reckon with the fact that there are no data points supporting their beliefs. The way things are going, if August 2 comes and goes without an agreement, there will be a worldwide panic that would have catastrophic immediate consequences in the equity markets. And when Obama says, "I warned and warned and warned and they didn't listen," any attempt to offer a counterargument is going to sound very hollow.

I know I'm beating a dead horse at this point, but I continue to be mystified by what the base, the activists, and the politicians who are pushing the "no new revenue" stance hope to accomplish.  

Let's start by pointing out the obvious: the Democrats do not show any signs of caving.  They have offered what seem to be very attractive deals, and been turned down.  Think you're going to get a more attractive deal?  Every time another poll like this comes out, your bargaining position gets worse.  Moreover, in Washington, deals take time.  Even if Obama and the Democrats caved right now and gave the GOP massive entitlement cuts in exchange for raising the debt ceiling, the government would be hard-pressed to hammer out the details, draft them into legislative language, get the CBO to score the cuts so you know that they're real, and then whip the votes to get the damn thing passed.  Every day you wait makes it less, not more, likely that you can get any deal at all.

Maybe you think the deadline is artificial and Treasury is just exaggerating.  I have been very much less than impressed by the arguments I have seen to this effect, because most of the people making them seem to be under the impression that on August 2nd Treasury can just start playing accounting games, when August 2nd is in fact the date when Treasury says it will have exhausted all the accounting games that we've previously used to finesse the debt ceiling.  But even if it were true, so what?  How does extending the crisis another month get us any closer to a deal?  What's going to change?

Maybe you don't want a deal.  Maybe you think it will be better for America if we either default, or force Obama to slash spending drastically.  I imagine that this graph is something along the lines of what most of the advocates of this approach are imagining.

I've tried to roughly prioritize spending as I think is politically palatable to both tea partiers and others: the debt payments first, followed by military payrolls and family housing, VA benefits, Social Security, Medicare and Medicaid.  After that, we hit the red bloc: funding for military operations.  Somewhere in there, the money runs out.  Anyone in line after that doesn't get paid.

The problem is, prioritizing strictly the way this chart does won't work.  Are you really going to just stop funding current military operations on August 3rd?  You're going to leave a bunch of guys sitting in Iraq and Afghanistan and Libya with tanks and automatic weapons and no way to get them home?

Going to empty the prisons?  How many guards do you think turn up for work when you stop paying them?

How about border control?  I don't think it's going to be popular with the GOP base when you cease border enforcement and invite anyone who wants to to stroll across our unmanned border checkpoints.  However much you hate the ATF and the DEA, they are a small fraction of this sort of spending at the federal level.

If we cut all funding for "general government", who is going to collect the revenues that you need to pay for all the social security checks and Medicare payments you plan to move out?

How long are landlords going to let tenants ride when Section 8 checks don't arrive?  Going to let kids sleep on the streets?

Is your kid planning to take out a student loan for college this fall?  Not any more, they're not.

With joblessness going up, you're going to get an earful when unemployment checks don't arrive.

. . . and when the mortgage market shuts down because Fannie and Freddie and the FHA stop writing checks.  

Also, all those laid off state and federal workers are going to make the jobless numbers jump.  

To the extent that you fix any of these problems, it means cutting into the sacred four: military payrolls, VA benefits, Medicaid/Medicare, and Social Security.  Or defaulting on our debt.  Also, when you cut spending, GDP is going to fall, which means that tax revenue will also fall, which means that we probably have to cut even deeper into those politically untouchable programs.

Okay, maybe this will really suck in the short term, but it's necessary to get us on a long term sustainable fiscal path.

. . . er, what long term?  Voters are telling pollsters they're going to blame the Republicans for the shutdown.   And the spending cuts you're going to do won't even be that popular with the tea party, who aren't much more enthusiastic about Medicare/Medicaid cuts than the rest of the country.  

To me that sounds like "huge Democratic victory in 2012".  I know, I know--if it's so "great for Democrats", why aren't they urging this course?  Well, one school of thought says that they are--and neatly maneuvering the blame onto the GOP, thanks to the tea party's very vocal intransigence.  But if that's a little too Machiavellian for your taste, the simpler answer is that this can be lose-lose.  If we shut down the government, key social programs get hurt, the economy contracts, and the Democrats have to cut spending in a recession in order to make the budget balance after this little contretemps raises our interest rates.  But the fact that the Democrats are worse off doesn't mean that the Republicans are better off.  The Democrats can lose while the Republicans lose even bigger.

That has implications, not just for the debt ceiling, but for a whole range of problems.  Republicans have a decent shot of taking the White House and the Senate in 2012; by throwing that away with both hands they also throw away their best chance at repealing ObamaCare before it starts irrevocably altering health care markets.  They also ensure that any deficit-reduction deal we do post election will be heavily weighted towards tax hikes; give Democrats a fresh crack at all the bits of the Obama agenda that they ignored in favor of passing health care; and probably let them preside over a mid-decade recovery that will leave the GOP in a very difficult electoral position in 2016.  

The GOP will have taken a chance at meaningful entitlement reform and a mostly-spending budget deal, and thrown it away for literally no gain.  Anything you can achieve by simply saying no, they can undo by simply persuading voters not to re-elect you. And the 1996 experience suggests that this will not be hard for them.

Does that mean that I'm shilling for the Democrats and saying you can never cut spending?  Hardly.  But you cannot cut spending by 40% in the middle of a recession.  Throw out any metaphors you have in your head about families or CEOs.  The political system doesn't work like that.  Neither voters, nor other congressmen, are children or employees who can be dictated to.

If we had to cut spending--if no one would lend us any more money--could we do it?  Definitionally, yes.  But it would mean an enormous amount of real suffering: homeless families, hungry old people, nursing homes closing their doors to indigent patients.  And the fact that we could do it if we had to doesn't mean that we can therefore do it when we don't have to.  If you try to artificially create a situation that requires drastic cuts, voters are going to get rid of you, not the spending.

In fact, we wouldn't even have to wait that long.  The tea-partiers who are proud to stick to their guns are not actually tough enough to weather the television coverage of homeless families, the doctors regretfully turning away their Medicare patients, the angry constituents beating down their office doors.  They'll fold--but not until they've lost virtually all their capital, and have no way to get back in the game.

I know I've said it before, and I'll say it again: there is no game-theoretic substitute for political legitimacy.  There is no neat strategic maneuver which will allow you to bypass the American public and cut their government benefits by 40% overnight if they don't want you to.  And if you think that the American public actually wants you to do it . . . well, then it's not Washington, DC that's out of touch with the rest of America.

Origin
Source: The Atlantic