Apologies are in order. The House Republican leadership does get it. Incoming Speaker John Boehner correctly went to the country after the election celebrating his party’s great victory but conceded what is obvious under our separation of powers constitution, that President Barack Obama has most of the power to determine ultimate results. He placed the burden on the president to move toward what the people voted for in the election. Boehner understood in a way Newt Gingrich in 1994 did not that one must be subtle to confront the clout of a president.
This was followed by a GOP leadership commitment to enact its Pledge to America promises to cut spending to 2008 levels, to make the present tax cuts permanent, and to hold a House vote repealing ObamaCare. Yes, even if the Republicans were able to accomplish all of this in the House, it is unlikely the 60 Senate votes needed could be obtained, and a two-thirds override of a presidential veto is impossible. But an effort must be made to keep faith with the voters. Even if spending was reduced the whole $340 billion proposed by the Heritage Foundation’s Brian Riedl, it would not be enough anyway. Entitlements will sink America unless something starts soon – but one of the main reasons ObamaCare is so unpopular is because of Riedl-sized cuts it made to Medicare. Cutting spending will be very tricky.
The economy is still problem number one and government regulation is as out of control as is spending. As many economists have noted it is the uncertainty of Obama regulations that delays a full recovery. Federal Reserve Chairman Ben Bernanke’s plan to purchase $600 billion in Treasuries on top of its current $2 trillion will make things worse as it is for the explicit purpose of increasing inflation, which he thinks is too low. Bernanke’s idea is that if investors believe inflation is coming, they will perceive the present discount rate now near zero to be even lower than zero and will invest more. But as economist Alan Reynolds noted, why would investors not demand higher yields to offset the inflation or shift to commodities, negating any positive effects and only leaving ruinous inflation?
President Obama supported Bernanke, saying it was necessary to prevent “being stuck with no or very limited growth, and I think that’s the Fed’s concern.” But Dallas Federal Reserve president Richard Fischer disagreed. “The remedy for what ails the economy is, in my view, in the hands of the fiscal and regulatory authorities, not the Fed.” Kansas City Fed president Thomas Hoenig outright opposed the proposal but even a supporter, Fed governor Kevin Walsh, was concerned. “There are significant risks that bear careful monitoring,” he warned, specifically mentioning the dangers of runaway inflation, a steep drop in the dollar and disrupting the Treasury bond market. Reflecting world opinion, German Finance Minister Wolfgang Schaeuble was more blunt, calling the policy “clueless.”What can conservatives do? In the short run, the Republicans in Congress are basically on the right track without being pressured. Freezing spending across the board at 2008 levels is not the best approach but it might even pass the Senate and place the president in an untenable position if he vetoed a bill supported by a number of Democrats. It would be much better to adopt the Riedl targeted spending cuts aimed at inefficient, overlapping and harmful policies than cutting good and bad, and conservatives should try to get the GOP leaders to at least give it a try. Failing that, these cuts would make a fine follow-up bill. In any event, the vote should be taken very soon after Congress convenes to prove they got the voter’s message.
The repeal vote on ObamaCare will apparently be second, also early in the new session. The White House commission on the deficit will produce a proposal that might cut entitlements as in its initial draft but it also included tax increases. If Republicans oppose the plan, the real danger is that Tea Party activists might perceive the Republicans as opposing reduced spending. The House should vote on as many bills as possible to demonstrate they have learned since they were last in control. While President George W. Bush has a table in his memoirs claiming he reduced spending it shows total spending, not the domestic spending Americans have rebelled against. He also defends his support for an active Fed and for bailing out General Motors but admits ‘We were pretty risk-adverse at this point. We really were.” Why did he do it? “That’s what I was told” to do. Who told him? Treasury Secretary Hank Paulson, whose mother, Mr. Bush reveals, cried when she heard her progressive son was going to work in a Republican administration.Republicans will get nowhere making excuses. The mid-range GOP goal must be to erase these years of apostasy in the Congress and the presidency by concrete conservative legislative accomplishments that cannot be gainsaid, even if they are ultimately vetoed. The other mid-range goal must be to mobilize politically for the 2012 elections. Democrats have many more vulnerable Senate seats at risk, presenting a unique opportunity for major conservative and Republican gains. There will be a presidential election too, of course, and conservatives cannot expect a conservative president if none is nominated. This is job number one for right activists, very much including the Tea Party.
If these efforts are successful, conservatives and Republicans will acquire the mixed blessing of having to solve the coming entitlement bankruptcy and the Bernanke hyper-inflation. That will not be fun. Hopefully some action can be taken beforehand to share some of the pain and Republicans cannot be perceived as against reform anyway. While conservatives can rely upon Republican, activist and even business self-interest for short and mid range goals, only dedicated conservatives can look long term. There will be more on what can be done about entitlements and inflation in our next issue. Rep. Mike Pence has taken a good first step in having Hoenig speak to the GOP caucus to consider what can be done about the Fed.For now, conservatives should give the Republicans in Congress a little running room. They are in a tough fix with a Democratic president and senate. If they start to go wobbly, there is time to remind them why they are there. Until then, the job is to achieve as much as is possible in Congress and prepare for 2012.
Donald Devine, the editor of ConservativeBattleline Online, was the director of the U.S. Office of Personnel Management from 1981 to 1985 under Ronald Reagan and is Senior Scholar at Bellevue University’s Center for American Vision and Values.
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