"Will They, or Won't They?"

Sydney M. Williams

Thought of the Day

“Will They, or Won’t They?”

March 1, 2011

On midnight Friday, the government’s spending authority expires. Continuing resolutions have kept the federal government operating since the failure to pass a budget last fall, when the current fiscal year began on October 1. The ensuing stalemate is indicative of the morass that has become Washington.

In 1994, Republicans gained control of both houses of Congress, the first time they had controlled the House since 1952. Newly elected Speaker of the House, Newt Gingrich managed the election rout with his “Contract for America.” Robert Dole became Senate Majority Leader. In the fall of 1995, the fiscal 1996 budget, which included items like welfare reform, was submitted. President Clinton vetoed the measure. Congress refused to raise the debt ceiling. A game of chicken ensued. The government was shut down for five days in November 1995, and for twenty days between December 16, 1995 and January 6, 1996.

President Clinton was able to pin the blame for the shutdown, costing $800 million according to his calculations, on the Republicans. An alleged comment from Gingrich that he and Senator Dole were made to sit in the back of Air Force One gained wide circulation, and made any claims by Republicans look petty. President Clinton’s approval ratings rose to the highest level since the fall of 1992 and he went on to win re-election, winning 49.2% of the popular vote versus 40.7% for Dole. (Ross Perot garnered 8.4% of the vote.) Nevertheless, President Clinton later adopted, as his own, many of the planks that had been included in the Republican platform.

The lessons of those years, including the arrogance demonstrated by Mr. Gingrich in victory, have surely not been lost on Speaker John Boehner. Since Democrats continue to hold the Senate, the comparisons are not analogous. Federal debt was then about 65% of GDP; today it is 100%. Actual debt, in the interim, has risen at more than twice the rate of GDP growth. The future obligations of entitlements have only worsened. And the peace dividend, deriving from the collapse of the Soviet Union, has been replaced with the demands of a new type of war, emanating from Islamic terrorism. However, the Republican gains in state legislatures, in 2010, were far more sweeping than in 1994, suggestive of a drastically changing mood in the country.

Regardless, there is peril for the Republicans, no matter which way they turn. Many of the freshman legislators were elected on the basis of fiscal prudency – a condition that does not exist in Washington. Compromise may be difficult for them, and therefore for Mr. Boehner. At the same time, every spending bill in Congress, no matter how wasteful, has its supporters and its beneficiaries. And the media is very capable of highlighting the suffering to be incurred by anybody who is deprived of the teat of Washington, and the heartlessness of those who would do so.

There is another element in this saga that could benefit Mr. Obama, in his preference for kicking the bucket down the road, and that is that the economy is recovering – not as quickly as most would like, but nevertheless it is improving – which should serve to increase tax revenues, thereby alleviating the urgency of the crisis.

As all Americans are acutely aware, the budget impasse is a manifestation of the principle that one should never promise what cannot be delivered. But politicians, I feel certain, will continue to do so. A study from the nonpartisan General Accounting Office (GAO), to be released today, is expected to unveil overlapping and duplicate federal programs. According to the Wall Street Journal, the report is expected to have uncovered duplicate programs, like 82 to improve teacher quality and 56 to help people understand finances. Senator Tom Coburn is quoted in the article as estimating that the report will identify between $100 and $200 billion in duplicative spending. Nonetheless, there are those who are employed by those programs and others that benefit. Even duplicate programs will not be cut without squawking.

It is far more popular to fill the punch bowl than to remove it; therefore, success in reducing the deficit will have to be a bipartisan effort. With the President having submitted a budget that incorporated none of the recommendations from his own nonpartisan deficit panel and when he refers to the Republican’s slightly more than 1.5% reduction in the annual budget ($61 billion,) as using a “meat axe,” one can infer we are a long way from seriously addressing the problem of debt. As I wrote above, continuing economic growth (a desirable outcome) will serve only to postpone the underlying problem of entitlements that, left untouched, will ultimately create high rates of inflation.

As to the question, will they or won’t they, I am guessing they won’t shut the government down at midnight on Friday – that continuing resolutions will keep the government operating. But we should all recognize that in doing so, the problem is not being resolved, only back-burnered.