Red Ink Rumble

Red Ink Rumble
By W. James Antle, III on 3.29.11 @ 6:09AM

A government shutdown looming, the budget talks between congressional Republicans and Democrats on both ends of Pennsylvania Avenue appear to have stalled. Reports are circulating that Republican leaders are poised to reject the White House's latest budget offer. Senate Majority Leader Harry Reid is already pointing the finger of blame.

"The infighting between the Tea Party and the rest of the Republican party, including the Republican leadership in Congress, is keeping our negotiating partner [from] the negotiating table," Reid told reporters Monday. "It's pretty hard to negotiate without someone on the other side of the table to talk to." A deal must be reached by April 8 to keep some parts of the government from temporarily shutting down.

Reid later issued a statement recounting "weeks of productive negotiations with Speaker Boehner" and demanding, "For the sake of our economy, it's time for mainstream Republicans to stand up to the Tea Party and rejoin Democrats at the table to negotiate a responsible solution that cuts spending while protecting jobs."

The political calculus behind all this is clear: Republicans won the midterm elections because enthusiastic conservatives, rallied by the Tea Party, joined with wary independents in rejecting Democratic candidates. Splitting this coalition by forcing Republicans to disappoint either Tea Party conservatives or moderate swing voters is a prerequisite for any Democratic recovery next year.

But there is another conflict at work here: the tension between the budgetary math and the political math. The former clearly suggests drastic action on federal spending is needed. The national debt has zoomed past $14 trillion and Washington borrows nearly 40 cents of every dollar it spends. The cost of servicing that debt is rising, and the picture looks bleaker when the total unfunded liabilities of the major entitlement programs are factored in.

Left unreformed, Social Security and Medicare will soak up the entire budget -- crowding out such necessities as national defense -- and ultimately subsume the country's whole GDP. The tipping point for that crisis remains far off from the perspective of politicians' and voters' short time horizons, but reform sooner will avoid painful benefit cuts to retirees already dependent on those programs later.

Praising his party as "honest with ourselves and the country," Reid declared, "We readily recognize that in the end, we won't get everything that we want." But we are in this fiscal mess precisely because the political class has been getting everything it wants. As the Heritage Foundation's Brian Riedl reported last year, discretionary spending has grown 79 percent faster than inflation since 2000. Over that period, anti-poverty programs increased 89 percent faster than inflation, education 219 percent, veterans spending 107 percent, and Medicare 81 percent.

Also over that time period, the federal government has created two new health care entitlements (both unfunded), launched three wars (all unfunded), bailed out multiple industries, passed a massive stimulus bill, enacted bloated farm, energy, and transportation bills, and approved over 9,000 earmarks just last year alone. "Simply put," writes Reidl, "all parts of government are growing."

The president likes to talk about "false choices," but his colleagues on Capitol Hill have avoided making any hard choices. It took until 1987 to approve the first $1 trillion federal budget. It would now take substantial and almost unprecedented spending reductions to run just a $1 trillion annual deficit.

In that sense, it is the Tea Party that has been most honest with themselves and the country. Fresh from introducing a plan to cut $500 billion from the federal budget in a single year, Sen. Rand Paul (R-KY) has offered a five-year balanced budget proposal. It's not certain all the specific numbers will add up once scored by entities like the Congressional Budget Office -- though sometimes that's the fault of the scorers, who assume that repealing Obamacare will cost more money than it saves, for example -- but it is bolder than anything seen from the leadership of either party.

Here is where the political math intrudes: nothing can pass without significant Democratic buy-in, in addition to the votes of wobbly Republicans. Democrats appear to be balking at $61 billion in spending cuts over the next six months. How many of them would vote for stronger stuff?

Then there is the question of whether the next six months is really the most important timeframe. House Budget Committee Chairman Paul Ryan (R-WI) is getting ready to release the fiscal 2012 budget, which will deal with entitlements as a part of a longer-term, 10-year spending plan. It remains to be seen whether even his budget will pass Tea Party muster. "Paul Ryan is the moderate on the House Budget Committee now," Rep. Tim Huelskamp (R-KS) jokes. But Ryan has been thinking longer and harder about the debt crisis than just about anyone in the leadership.

Arguments can be made for both a more and less aggressive Republican approach to the current budget standoff. Some point out that the Republicans were ultimately, if unfairly, blamed for the Clinton-era government shutdown and lost their momentum on spending afterward. Others would counter that the Republicans recovered from the shutdown sufficiently to not just maintain control of Congress but actually negotiate a balanced budget. GOP fiscal discipline didn't really collapse until 1998, which might tell in favor of striking while the iron is hot.

It is by no means clear that even this Congress is ready to grapple with a fiscal catastrophe precipitated by the failure to make hard choices and set meaningful budget priorities. The coming weeks will show how determined Washington remains to delay the inevitable.