Now, the next battle
BY ANY rational measure, the deal struck last weekend to raise the debt ceiling - formally, the Budget Control Act of 2011 - is a victory for conservatives and an incredible disappointment for Democrats. President Obama initially sought a “clean’’ bill to raise the ceiling, with no conditions attached. House Speaker John Boehner wanted to include a deficit-cutting package composed of 85 percent spending cuts and 15 percent tax increases. What the president signed was a capitulation, and then some: It could amount to as much as $2.8 trillion, all cuts and no taxes. While it raises the debt ceiling, it does nothing to stimulate the economy, help the jobless, or support state and local governments.
But while conservatives are unquestionably the victors here, the deal is set up in a way that will force them to confront a number of major - and conflicting - policy priorities that they have usually been able to muddy. This doesn’t offer much in terms of balance, but it will be interesting to watch how they deal with them.
The biggest conflict is between the defense-oriented conservatives and those who prize tax cuts above all else. Both groups are vital Republican constituencies, whose animating issues are fundamentally opposed to each other. It’s hard to build a robust and active military while trying to shrink the size of government - wars and weapons systems are costly and require tax revenue to pay for them.
Up until now, Republican leaders have usually managed to satisfy both groups by pushing to cut taxes and increase military spending - that is, by ignoring the bottom line and running up huge deficits. During the George W. Bush administration, Dick Cheney captured this mindset to perfection when he famously remarked, “Reagan proved that deficits don’t matter.’’
But the process established under the debt deal will expose the inherent tension between these competing factions, and could go a long way toward resolving it. At first glance, the tax-cutters have won in a rout. They didn’t get all they wanted - there’s no balanced budget amendment or extension of the Bush tax cuts - but their interests plainly prevailed. No one’s taxes will go up as a direct result of the new law, and the initial $1 trillion in cuts is likely to include hundreds of billions in military spending.
The second phase could cut even further. The law creates a bipartisan commission charged with finding an additional $1.5 trillion in deficit reduction over the next decade, and includes a trigger that will automatically enact deep reductions in military spending if the commission fails or deadlocks. It’s not yet clear what will go, although Medicaid, Social Security, and veterans’ benefits are exempted. But it is clear that most Republicans value lower taxes over large military expenditures.
That is a marked change from recent history, and it derives from a shift within the Republican Party on deficits. Conservatives like Cheney always professed a commitment to balancing the budget - at least in public - even though their actions often demonstrated otherwise.
But the debt deal enshrines in law the very opposite of what Cheney actually believed - it is founded on the premise that deficits do matter, and matter enough to force Republicans (and some Democrats) to finally confront their conflicting desires to cut taxes and increase spending.
The fact that military expenditures are being sacrificed to keep tax rates low reflects the new balance of power within the Republican Party, one partly brought about by the failures of Cheney and the defense crowd.
“The Tea Party people are anti-military spending to a greater extent than establishment Republicans and have a healthy dose of isolationism thanks to American intervention in Iraq and Afghanistan,’’ says Representative Barney Frank of Massachusetts, who has long pushed to cut the defense budget. “On this issue, they were a positive force.’’
That won’t put anybody back to work or stimulate the economy. But any push toward honesty in budgeting is a welcome one, because in the long run deficits clearly do matter. And while it’s small solace for Democrats, they’re hardly alone in their displeasure with the new law.
Joshua Green is senior editor of The Atlantic. His column appears regularly in the Globe.