Rep. Mike Pence (R-Ind.) (WDCpix)
Between Monday’s Fiscal Responsibility Summit and Tuesday’s presidential address to Congress, the White House’s economic message shifted to new territory: health care.
“To my fellow budget hawks in this room and in the rest of the country, let me be very clear,” said Peter Orszag, the director of the Office of Management and Budget, at the financial summit. “Health care reform is entitlement reform. The path of fiscal responsibility must run directly through health care.”
Image by: Matt Mahurin
The sudden shift caught Republicans off guard. They had girded for a health care battle, but not on these terms. House Republicans have responded with a change of subject: they have proposed a “spending freeze,” a controversial idea among economists during an economic downturn. Their immediate target is the $410 omnibus spending bill that packs together nine bills, containing spending that ranges from NASA to national parks, that did not get a vote in the last Congress. It’s a double-down bet on spending austerity and opposition to “wasteful spending” as the message that can bring the party victory in the 2010 mid-term elections.
“We’re advocating that Congress freeze all federal spending immediately,” said Rep. Mike Pence (R-Ind.), the chairman of the House Republican Conference, during a Tuesday luncheon at the conservative Heritage Foundation. “People out there are hurting, and they understand what you do when times are tough. You make hard choices. Today House Republicans are urging the Democrats to do the same. We think it’s time that the Democrats put our money where their mouth is.”
The strategy — in its very early stages — presents problems for Republicans who have not received any measurable uptick in support from their opposition to the economic stimulus package. Most of the party’s leadership is on record having supported Bush-era spending packages that grew the deficit. With the exception of a shrinking number of moderate Republicans from the northeast, all of the party’s members of Congress support further tax cuts, which would lead to revenue shortfalls. And while Republicans argue that voters are on their side and opposed to further spending, there are few polls that back this up.
Pence’s argument for a spending freeze is widely accepted within the Republican conference. On Monday, House Minority Leader John Boehner (R-Ohio) asked Democrats to “abandon their plans” to push through an omnibus bill “and instead pass a clean bill that freezes spending at current levels.” Gov. Mark Sanford (R-S.C.) has decried the economic stimulus package because, in his words, “when times go south you cut spending.” In a conversation on Monday, freshman Rep. Jason Chaffetz (R-Utah) concurred with party leaders.
“We’ve already done TARP, we’ve already done the stimulus, and we’ve already spent $3 trillion,” said Chaffetz. “Can’t we freeze it at that point? We already have a $3.1 trillion budget, and the majority asked for, and got, an additional $2 trillion. It’s just time to say, ‘time for a freeze.’”
This is a controversial stance: an economic downturn is not generally seen by economists as the right time to cut back on government spending. “They’re about as wrong as it’s possible to be,” said Robert Reich, Bill Clinton’s first secretary of labor, when asked about the Republicans’ statements on Monday. Bruce Bartlett, a conservative economist who wrote a book critical of George W. Bush’s spending, could not name many peers who believe that smaller deficits and less spending are the way to combat economic downturns. “It’s a total double-standard,” said Bartlett. “Republicans deficits stimulate, Democratic deficits don’t.”
Brian Riedl, the lead budget analyst for the Heritage Foundation, disagreed that the economics of deficit spending were quite this simple. “Is the assumption that expanding government is good for economic growth?” asked Riedl. “If that worked, France and Germany would have spent the last 25 years as the strongest economies in the world, instead of watching the United States grow at a faster rate.”
Republicans have taken this view of recession economics and laid some of the groundwork for an anti-deficit, anti-spending argument on “fiscal responsibility.” As Byron York reported in the Washington Examiner, Senate Minority Leader Mitch McConnell is one of several Republicans attempting to “connect the dots” between various spending bills and inform voters of the overall sum. Sen. McConnell, for example, pointed out that $1 trillion was more than $1 million every day since the birth of Jesus Christ. Two weeks later, a conservative political group, the American Issues Project, recycled Sen. McConnell’s attack for an anti-spending TV ad.
The problem is that spending austerity is not — as it was in the early months of 1993, for example — very high on voters’ minds, or even high on the list of reasons why voters remain cool on Republicans. In his response to the president’s State of the Union speech, Gov. Bobby Jindal (R-La.) argued that voters had “rightly” rejected the GOP because the party “got away from its principles” and “went along with earmarks and big government spending in Washington,” repeating an argument that Sen. John McCain made during the presidential campaign.
There is little polling to bolster this argument. Voters did not list government spending, or earmarks, or deficits, in their top concerns in the 2006 or 2008 national exit polls. The current Washington Post/ABC News poll puts support for Democratic plans at 64 percent. Indeed, the closest any pollster has come to nailing down public opinion on earmarks conducted by the Club for Growth, the free market, anti-tax, and anti-spending political group, known as a “527,” that funds like-minded Republicans and primary challengers. In a 2006 poll conducted across 15 swing districts — where the vote for George W. Bush over John Kerry was, on average, 2 percent higher than the 2004 results — the Club asked voters whether they’d be more likely to support “a candidate who wants to reduce overall federal spending, even if that includes cutting some money that would come to your district; or, a candidate who is willing to increase overall spending on federal programs and grow the federal budget, in order to get more federal spending and projects for your district?” By a 57-28 margin voters supported “cutting spending.” But the issue has not placed high enough in voters’ priorities to be tested in major polls since 2006.
As Republicans push for spending cuts or spending freezes, they continue to propose tax cuts. That unsettles even some economists who agree with the thrust of Republicans’ arguments. “I would probably not support supply-side tax cuts right now,” said Lee Ohanian, an economics professor at the University of California-Los Angeles who co-wrote a much-cited study arguing that the New Deal lengthened the great depression. “There’s no tax reform being discussed right now that would expand the tax base and increase revenues.”
In Tuesday’s address to Congress, President Obama furthered the argument that “fiscal responsibility” would mean reforming health care by the end of 2009. Republicans, conspicuously, gave the president a standing ovation when he spoke of a “responsibility to ensure that we do not pass on to them a debt they cannot pay.” But there is something like unanimity among Republicans that they can respond to the deficit by attacking spending, and not by engaging on what they expect to be expansions of health care coverage.
“What you saw percolate up, with that vote on the spending package, was a reaffirmation that we didn’t just lose our majorities in the last elections,” said Pence on Tuesday. “We lost our way. Americans long for the Republican party to return to discipline and reform. This is a new House Republican party, and the other side had better get used to it.”