The political world has changed dramatically in the past few years to the advantage of Reagan Republicans despite losing two presidential elections to Barack Obama.
The first change was when opposition to government spending became a vote-moving issue. For years conservatives knew that tax hikes would lead to tax revolts: California’s Proposition 13. Property tax revolts in many states and cities. Spending was thought to be politically popular with recipients of taxpayer largesse and unseen by taxpayers until “spend too much” became “tax hike.”
But the spending surge in the spring of 2009 a few weeks into Obama’s first term drove more than one million Americans into the streets in more than 600 rallies known collectively as the tea party movement. TEA party for “Taxed Enough Already,” an homage to the tax revolt that lit the fuse in the war for independence.
Obama’s $800 billion stimulus spending plus TARP Part II plus the threats of coming Obamacare spending and a trillion in general budget increases awoke a sleeping giant. Obama was truly a community organizer. He organized — heck, he created — the anti-spending movement that went on to end earmarks and create a Republican party committed to both lower taxes and lower spending.
The second change was made possible by this first.
Everyone has known for years that we have to reform entitlements — someday — or unchanged federal spending will jump from 20 percent of GDP to 40 percent of GDP as the nation ages. Someday, someday soon, we would be forced to act. And we understood that the Democrat party’s price for helping would be a massive permanent tax hike. Tax hikes and entitlement reform would constitute the “Grand Bargain.” This was the thinking behind “Simpson-Bowles” and a dozen other “bi-partisan deals.”
But then Paul Ryan designed the Ryan budget plan which reformed entitlements so that spending in 50 years would remain below 20 percent of GDP without any tax hike. A great plan and one that will be passed as soon as Republicans win a House majority, 51 votes in the Senate, and the presidency at the same time. Because we sort of “forgot” to win in 2012, this cannot happen before 2016 or 2020.
Until then we face the danger of the grand bargain of tax hikes and (promised) spending cuts.
But that changed in 2011 when Obama created the sequester to reduce projected spending by $1.2 trillion over the decade as part of the $2.5 trillion debt ceiling agreement. Obama assumed the GOP would balk at the tight Pentagon budgets created by the sequester. But Republicans informed by the tea party’s commitment to lower spending did not back off.
Now the Democrats face a decade of limited spending courtesy the hard-won sequester. They feel the sequester as a tight choke collar. They can hardly breathe. They desperately want to remove or at least loosen the choke collar, the sequester.
Now Paul Ryan and the Republicans stand ready to accept a dignified surrender by Democrats. The sequester can be loosened — not ended — in return for real changes in law to reduce entitlement spending in the future. Small spending increases now for massive spending reductions in law (not in promises). That deal remains on the table waiting for the time when Democrat politicians can no longer take the deprivation of facing real limits on domestic discretionary spending.
There is no tax-hikes-for-spending-
The tax hike/spending cut promise grand bargain no longer stands as the temptation/threat alongside all budget fights in Washington. Tax hikes truly are off the table.