The Government is Coming Back, Dysfunctional As Ever

House Speaker John Boehner

We did it, folks. After 16-plus days of government shutdown, the Democrats and Republicans have finally reached a deal to reopen Washington. What have the Republicans gained from shutting down the government? Absolutely nothing, and they probably lost more than what they expected to. What did they teach us? Well, a couple of interesting party dynamics were revealed here.

First, I can’t emphasize enough that the Republicans held up government functionality for over two weeks (though some might argue that they’ve been doing it for decades) to get, apparently, nothing out of the deal. This handy picture from WonkBlog details the main points of the deal: Government is reopened through January 15; the debt ceiling is lifted through February 7; a House/Senate budget conference must have a deal by December 13; and income verification for Obamacare. Basically, this is an extension for a couple of months, and something that is already included in the original legislation of Obamacare, which Democrats managed to mask as a concession. So remind me what this was about, again?

Oh, right. Defunding Obamacare. Once again, the Republicans managed to shoot themselves in the foot here. With the majority of Americans focusing on the shutdown drama over the past two weeks, the Obama Administration was able to focus on a lot of the glitches that slowed down Obamacare’s rollout on October 1. Admittedly, these won’t be fixed by the time the government is back up and running, but Bill Keller writes that Obamacare has, on the whole, been a large success: if anything, website failures signal that so many people want affordable health care that they’re crashing government servers. If Ezra Klein is right, then these problems are all rapidly being solved. Besides, as Matt Yglesias points out, a lot of countries were able to implement larger reforms than the US is — even single-payer systems! — without the  internet.

It’s clear that the Republicans are the party to blame here, and it’s good that the American people see it that way. Republican poll numbers prove it: their favorability rating dropped a staggering 10% from September to October, the biggest drop since Gallup began asking that question in 1992. Ross Douthat accounts for this in a long series of tweets on the issue, pointing out the asymmetry in governing styles between the two major parties. President Obama had, back in April, offered a budget that included $1.8 trillion dollars in deficit reduction over 10 years. He tried to work both sides by including traditional Democratic priorities such as a “Buffett Rule,” a Pigovian tax on cigarettes, raising the tax rate on investment fund managers, and decreasing the amount of itemized deductions for high income earners. He then offered the Republicans their boondoggles: chained CPI to calculate inflation, and a 2:1 ratio of spending cuts to revenue increases, coming mostly from agriculture subsidies, Medicare, and unemployment insurance.

The Republicans should have then, as the normal democratic process would explicitly dictate, taken that offer and proposed a counteroffer. This is something that they failed to do for the Fiscal Year 2014 budget. Afterwards, House Speaker John Boehner and his caucus did not allow a budget conference committee to form during the spring, or the summer, or even early fall, nor did they allow the government to continue functioning without attaching riders to a continuing resolution that would dramatically affect the implementation of Obamacare. Democrats then, correctly, believed that without a “clean” CR, they would be working with an opposing side which was bargaining in bad faith, but Boehner refused to allow a clean CR to reach the House floor. With this action, Boehner succumbed to the radical Tea Party wing of his caucus and let them shut down the government. To review, the government was shut down because the Republicans refused to negotiate with the Democrats when it was the proper time to do so, and after the government was shut down, they would only bargain if it was in bad faith.

The worst part of all of this though, is that the Republicans were not only bad politicians, but bad economists as well. Rand Paul somehow tricked himself into believing that defaulting on our debt is really balancing the budget. This is wrong: passing a budget with less spending and higher tax receipts is what balances the budget. Or, allowing the economy to function properly, so that inflation eats away at our overall debt, and makes it consistently easier over time to provide a constant amount of services, balances the budget. What default does, as the Globe and Mail put it, is snowball into an increasingly larger economic catastrophe that would scare markets, harm our already precarious position as a lender to the world, send Treasury Bond interest rates soaring, and slash spending programs substantially enough to retreat from the debt ceiling. This would all cripple the US economy: capital would flee the United States as our full faith and credit is damaged, and because around 35% of current GDP is government spending, two of the four aspects of GDP would directly decrease. This is zero-sum: if investment decreases and government slashes its spending, GDP directly decreases. Things would actually be much worse, as much of both consumption and tax receipts is composed of money that is accrued through government stimulus and investment spending. The US would be ruined.

We learned a lot about the Republican party over the last few weeks. We confirmed that the Tea Party holds disproportionate power over the House Republicans, preventing them from executing deals properly. At the same time, John Boehner has lost control of his caucus. If it wasn’t clear last December with the Plan B debacle, it is certainly clear now. He was not able to marshal his side into an effective party line and hold it there: even now, Ted Cruz is still complimenting Boehner for succumbing to the Tea Party and leaving the moderate Republicans to deal with Harry Reid. This is an interesting power shift within the GOP itself. Noam Scheiber details the collapse of Boehner’s strategy — insofar as he had one — here. Mitch McConnell is the one in power, not Boehner, even though Boehner presides over that piece of the Legislature with an actual Republican majority (despite the fact that more people voted for Democrats in the House races last November than voted for Republicans). Finally, the Republicans can no longer be considered the party of Wall Street or of business, large and small: the Democrats were the ones who listened to markets and negotiated strongly when they needed to. Liberals and Democrats alike may not be proud of this, but it’s true. When the markets threatened to crash, the Democrats calmed them down.

To hammer the point home: The Republican party is a mess. Ted Cruz is a “wacko bird” (John McCain’s words, not mine) who not only dissed Penn, but also had to be asked by Kelly Ayotte to allow a vote on the current deal to go through. Yet the leadership is beholden to guys like him. When Rod Dreher (ROD DREHER!!!) of The American Conservative is saying things like, “I hope the House flips to the Democrats in 2014, so we can be rid of these nuts. Let Ted Cruz sit in the Senate stewing in his precious bodily fluids, and let Washington get back to the business of governing,” you know that it’s time for a change. But change won’t come fast enough to avoid this whole mess again in January.

Image courtesy of Speaker John Boehner’s Twitter.