The Path Forward for Conservative Reform

The Path Forward for Conservative Reform
May 30, 2013

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)

There is a healthy acceptance on the part of a significant number of  influential intellectual and policy elites that the state of conservatism is not  strong, and that it requires reform. But do they understand why that reform is necessary? It is because the Republican Party has failed to connect with people,  has failed to meet the test of competency, and has failed to live up to its  promises.

Justice Scalia once wrote, “Campaign promises are—by long democratic tradition—the least binding form of human commitment.” One could explain much about what the Republican Party has done over the past fifteen years, and even  earlier, as an effort to prove Scalia thoroughly correct. The goals of limited government, fiscal responsibility, traditional values, and strong defense have  been an ever-present litany of bullet points from Republican politicians – but talking about limited government and actually delivering on it are two very different things. As the representatives of conservatism in the political  square, the Republican Party has proved to be an abject failure at delivering to  the people what they promised.

There are numerous reasons for this. Under President Bush, it was largely because the core of his policy team never believed in limited government anyway,  and the challenge of an unexpected terrorist attack and their subsequent push  into security buildout and two wars pushed any limited government efforts beyond  the initial tax reform to the side. The failure of the Bush administration to  meet its core conservative promise led to dissatisfaction in the limited  government ranks, and the failure of Republican competency – not just in war,  but in disaster relief, and in character – led to the 2006 rebuff. The response  to the financial crisis made this frustration explode in an organic outpouring  of disgust and distrust toward government institutions which led directly to the rise of the Tea Party.

As Sean Trende has pointed out on numerous occasions, the Republican Party  has won not so much when it was conservative as when it was populist, the Contract With America being the most prominent modern example of a government  reform agenda packaged for a dissatisfied electorate. The Tea Party kept this  trend alive: this movement dramatically altered the makeup of the Republican Party on Capitol Hill: today, the overwhelming majority of House Republicans  arrived after the 2006 election, and half the caucus came from 2010 on. It had  an enormous impact on the governorships of major states as well. These are politicians who have fewer establishment credentials – some of them not even a college degree – and tend to be far more libertarian-leaning than preceding  classes. But they are also far more populist, and more averse to negotiation on matters of principle, which they view as a betrayal of the base which put them  in power. That’s why things like sequestration, a nightmare for the Washington elites, have actually happened: this crew wants, more than anything, to live up  to their promises.

The choice for the Republican Party is whether to invest more in the 2010 strategy of this populist strain, to refine it and connect more policy proposals  to it … or to embark on an effort to restore the party’s standing as the adult in the room – the competent, clean cut, good-government technocracy that sees  the chief appeal of Republican politicians as combining agencies and seeking out efficiencies rather than rolling back government power and draining bureaucratic swamps.  The GOP swung back to this technocratic approach on a national scale in 2012, and let’s just say the electoral results left much to be desired.

Within this context, consider this from Jim Pethokoukis, who has a thoughtful and good natured response to my  critique of his concept of reforming conservatism – particularly, of his case  for ditching talk of flat taxes and a balanced budget. “[J]ust because people  support an idea doesn’t mean it’s a priority. Balancing the budget polls well,  but debt and deficits are not nearly as important as jobs and take-home pay. And  I’m not so sure the flat tax or slashing top marginal income tax rates would be big winners in a 2016 general election.”

As I noted in my critique, this is about the healing power of “and”. The  whole point of starting with the argument for a flat tax is to end up with a tax structure that looks more like Simpson-Bowles and less like the mess we have  today. The implication that Republicans can’t be pro-jobs/economy if they are  pro-balanced budget strikes me as wrongheaded. And I hardly think Republican tax proposals beyond a flat tax consist only of “slashing top marginal rates” – it  is certainly not one of my own priorities, nor has it been part of the GOP  platform since 2003, with more energy focused on preventing rates from going up  or on wholesale tax reform.

Of course Republicans need to become more sophisticated in how they connect  tax reform policy to the challenges Americans face in their daily lives. Better  analytics is not a strategy. But this does not demand that they ditch the  populist goal. You make the case for a flat tax not as a purist aim, but because  it makes logical sense to the people, even if you just end up getting to a  flatter tax because of it.

Pethokoukis again: “The fiscal math has to work, more or less. It doesn’t for  a flat tax. Nor does it for a balanced budget amendment that assumes an  unrealistically low level of spending for an aging society that also wants a  lethal, power-projecting military. At some point, simplicity edges over into  falsehood or fantasy. And I am not sure what problem a balanced budget solves  since you can put the debt on a downward trajectory without one.”

You can lower debt relative to GDP if the economy grows faster than the rate  at which you accumulate debt, but as Jim knows, it is impossible to reduce the  actual amount of debt while running deficits (note: debt-to-GDP has increased  from 57 percent of GDP in 2000 to 103% in 2012). He criticizes balanced  budgeteers as promoting “an unrealistically low level of spending” as Baby  Boomers age – but minus magical economic growth brought to us by unicorns, if  spending cuts are off the table, how exactly do you cut debt relative to GDP  without allowing taxes to rise to what most of us, not just conservatives, would  consider an historically unacceptable level?

As for the fiscal math: If you take the White House’s average annual gross  debt growth assumptions for 2013-2018 (only 5.16% growth per year) and  extrapolate that out until 2030, we would need GDP growth to average about 7.5%  per year to get back down to the 2008 debt-to-GDP ratio of 70% by 2030. That is  simply absurd. And that also anticipates ludicrously low White House debt growth  assumptions for 2013-2018. Between 2000 and 2012, gross federal debt rose at an  average annual rate of 8.5%. If those conditions repeat, we’d need annual GDP  growth of 9.8% each year to get down to 2008 levels of debt-to-GDP. In the out  years (2019-2030), the average annual GDP growth rate would need to exceed 12%.  Just to stay below 100% debt-to-GDP throughout that period would require 5.3%  average annual GDP growth under the rosy assumptions and 7.6% under the  2000-2012 assumptions. That’s quite a fiscal math test.

Back to Pethokoukis: “If someone is worried about paying for their kids’  college, the quality of K-12 education, rising healthcare costs, retirement  savings, stagnant wages, and whether their job is going to be outsourced to  either Asia or RobotLand, what is the GOP offering, exactly? To keep inflation  low and balance the budget — even if the latter means slashing basic research or  unrealistically deep entitlement cuts? To cut top taxes rates with a promise  that rapid economic growth will more than make up for the lost the revenue?  Doesn’t seem appealing to me.”

There are all sorts of concrete ways for the Republican Party to do this while not selling out their larger case on  taxes or spending. As I noted in my initial response, there are all sorts of  ways to achieve other conservative aims and appeal to the middle class by doing  the opposite of cutting entitlements (“We need to gut the IRS by reforming our  tax code, fire anyone and everyone involved in spying on American taxpayers, and  use the savings to shore up Medicare and Social Security” is about as populist  as it gets). What’s more troubling about Pethokoukis’s case for me is that if I  understand him correctly, he’s officially discounted tax cuts, tax reform, and  spending cuts as viable or realistic policy options. This seems a little like  saying we're going to attack your cancer, but we're not going to use  chemotherapy, radiation, or surgery.

The Republican Party needs to understand that shrinking its policy aims to  more modest solutions is not going to be rewarded by the electorate. Yes, they  need to tailor their message better and find policy wedges which peel off chunks  of the Democratic base (winning political strategy is built on an understanding  that every drama needs a hero, a martyr, and a villain). But what’s truly  essential is that the party leadership rid themselves of the notion that  politeness, great hair, and reform for efficiency’s sake is a ballot box winner,  and understand instead that politicians who can connect with the people and  deliver on their limited government promises – not ones who back away from them  under pressure – represent the path forward.

[First posted at Real Clear Politics]

Benjamin Domenech

Benjamin Domenech (bdomenech@heartland.org) is a senior fellow at The Heartland Institute. Domenech... (read full bio)