The Daily Caller

The Daily Caller

Republicans got a pretty good deal

Photo of Kevin A. Hassett
Kevin A. Hassett
Director of Economic Policy Studies, AEI

Which brings our attention to spending.

On that, Republicans seem firmly committed to entitlement reforms, whereas Democrats are, to put it mildly, less so. With taxes behind us, the next round of negotiations will focus on spending in isolation, and the key thing to note is that now the roles are reversed and Republicans have all the cards.

If no agreement is reached, then spending cuts that Democrats abhor will happen. What’s better, the Republicans will have three bites of the apple.

There will be a vote of the scheduled cuts (sequestration), a vote over the debt limit and then a vote over a government-wide funding bill that will expire in March. At each point, Republicans should be able to extract concessions from Democrats, increasing the overall cuts and tilting them away from defense.

Those concessions should be all the easier to extract since moderate Democrats are already antsy about passing a tax hike without any real spending cuts. Democrats are united about increasing taxes on the wealthy, but are not nearly as united on spending. Now the issues are separate. Democratic Senator Michael Bennet, for example, voted against the fiscal cliff compromise, citing the necessity of a plan to “put in place a real process to reduce the debt down the road.” With taxes off the table, debt reduction becomes spending reduction.

If no deal is reached, then sequestration will give the Republicans the significant spending cuts they have been seeking since recapturing the House. The odds are they will get much more, and that the total package will be far superior to their initial negotiating position in the fiscal cliff talks. The fact that the tax hikes are so small sets the next round up almost perfectly for Republicans.

Kevin A. Hassett is director of economic-policy studies at the American Enterprise Institute, where he is the John G. Searle Scholar.