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Reducing Spending: Strategy vs. Brute Force   April 11th, 2011
A calculated strategy can be more effective than brute force       


More observations...

    UPDATE 4/12/2011: The day after I posted this article, the $38.5 billion budget deal was shown to be mostly a farce. So while I stand behind what I originally wrote below in terms of overall strategy--the current FY2011 budget cuts, whatever amount, are going to be irrelevant to the big picture. The debt limit and FY2012 debates will be far more important. Having said that, that does not excuse a deal that is insulting and deceptive. As such, I now believe that the $38.5 billion budget deal should be rejected.

After the government shutdown was averted last Friday, I wrote that conservatives should pause before going on attack mode on Republican congressmen for agreeing to less than optimum spending cuts.

Over the weekend the expected criticism of conservatives has developed. And I have to take issue with at least some of the arguments being made. As an example, Dick Morris wrote:

It's no deal, it's a sellout

John Boehner has just given away the Republican victory of 2010 at the bargaining table. Like the proverbial Uncle Sam who always wins the war but loses the peace, he has unilaterally disarmed the Republican Party by showing that he will not shut down the government and will, instead, willingly give way on even the most modest of cuts in order to avoid it. He now has no arrows left in his quiver.

Morris's observation is speculation, not fact. He assumes that Republican leaders averted a shutdown out of fear, and that fear now means Democrats "know" that Republicans won't have the backbone to shut it down in the future.

However, there's another possibility. Republicans got everything they could from Democrats without a shutdown because a shutdown is the "nuclear option." Rather than Morris' conclusion that Boehner now has no arrows left in his quiver, I think the reality is that Boehner still has the "nuclear" arrow in his quiver for when it matters.

This was just the first of three battles we'll have on spending this year.

FY2011 Spending

Since Democrats were afraid to pass a budget last year, the country has been operating without a budget since October 2010. If Democrats had done their job, there'd be nothing to cut right now. The budget would have already been approved.

Luckily, Democrats didn't pass a budget which gave Republicans an opportunity to cut something immediately. Anything that could be cut in FY2011 was simply a bonus... an appetizer we were able to partake in due to Democrats' failure to govern responsibly in 2010. They left the door open, and Republicans took advantage of that.

$38.5 billion was cut last Friday without a shutdown. This isn't as much as the $100 billion originally planned, nor the $61 billion later hoped for. But the reality is that whether it had been $100 billion, $61 billion, $38.5 billion, or zero, it wouldn't matter at all in terms of the long-term outlook of our country's fiscal course.

Republicans could have fought hard, shut down the government, and after weeks maybe come up with $61 billion... maybe even $100 billion. And the fact of the matter is that it wouldn't have mattered at all in the grand scheme of things.

And after shutting down the government for days or weeks, it would've been a roll of the dice as to whether the public would end up supporting Republicans and still have the stomach for the upcoming fights that are far more important.

Debt Limit

By mid-May we'll hit the debt limit, and discussion of raising that limit has already begun. Obama is hoping for a "clean" bill on raising the debt limit. That means he wants the limit raised with no conditions or strings attached.

Speaker John Boehner has rejected that idea. "The president says I want you to send me a clean bill. Well guess what, Mr. President, not a chance you're going to get a clean bill. There will not be an increase in the debt limit without something really, really big attached to it."

I think everyone should understand very clearly: The debt limit will be raised. Period. Don't think for a moment that we're going to get passed this without raising the debt limit. It's impossible. A car doesn't go from 100mph to 0 in a split second without hitting a brick wall with all the resulting carnage. Likewise, refusing to raise the debt limit would mean going from a $1.6 trillion annual deficit to zero, overnight. The carnage of doing that would shock the economy with very serious results.

Anyone that follows my writing knows that I'm 100% in favor of fiscal responsibility and eliminating deficit spending. I've written many articles on the frightening consequences if we fail to do that.

But even though I'm in favor of reduced government spending, eliminating the deficit, and in favor of fiscal responsibility, refusing to raise the debt limit is not fiscally responsible. We need a controlled deceleration in spending--not a catastrophic collision between a tomato and a brick wall, which is what failing to raise the debt limit would resemble.

However, that doesn't mean we lose. The debt limit is one of the biggest arrows in our supposedly-empty quiver.

In return for raising the debt limit, Boehner has confirmed that Republicans will be asking for something in return. "Something really, really big."

What might that be? I don't know. I'm not a Congressional Republican. :) But if I had to guess, Republicans could demand a vote on a balanced budget amendment.

Passing a balanced budget amendment would be the gift that keeps on giving forever. It would be far more important than anything else Republicans could do in the minority this year.

FY2012 Budget

The final fight of the year is the fight for a reasonable FY2012 budget. This is where long-term spending plans can really be addressed. This is what the government should be shut down over, if necessary, and it's where our long-term agenda items should be addressed--such as defunding Obamacare, Planned Parenthood and NPR.

Any of those issues could have been made all-or-nothing battles last Friday, but all those decisions could have been reversed in the FY2012 budget later this year.

Instead, these battles should be included in the mammoth job of approving a FY2012 budget. Democrats will have to defend trillion-dollar deficits, Obamacare, Planned Parenthood, NPR, and everything else. They'll be overwhelmed. And once our agenda items are in place (such as defunding Obamacare, Planned Parenthood, NPR), those will essentially be two-year policy decisions. That's because any Democrat that wants to start funding those things the next year will have to make those arguments in an election year. That'll make those points campaign issues.

Regardless of what Republicans choose to fight for in the FY2012 budget, their work will be significantly easier if the debt limit battle will have produced a balanced budget amendment.

We're Framing the Debate

Not only do Republicans still have a good chance to get what we want with careful strategy, we're doing something that I haven't seen in years.

We're framing the debate. We're setting the agenda. And Democrats are being forced to accept our agenda.

About two weeks after Obama was elected president, he said "Americans shouldn't worry about the federal deficit for the next couple of years."

In July 2009, Vice President Biden said, "You're telling me we have to go spend money to keep from going bankrupt? The answer is yes, that's what I'm telling you."

Now, Sen. Harry Reid is saying "We have agreed to an historic amount of cuts for the remainder of this fiscal year." And media is reporting that President Obama will finally lay out his plan for deficit reduction this week.

It goes without saying that Reid isn't happy with the spending cuts we got last Friday. And we can probably safely assume that Obama's "deficit reduction" plan won't reduce the deficit enough, and it'll probably include tax increases (though that would be an interesting scenario since he just agreed to the Bush tax cuts extensions a few months ago).

But the fact of the matter is that leaders of the Democrat party--including the president--have accepted the Republican premise that we need to cut the deficit.

Now the question isn't whether or not we should spend more money. We shouldn't. The question isn't whether or not we should reduce the deficit. We should. The question the two parties will be debating is how much to cut.

That's huge. We've come a long way from the Democrats promoting their "stimulus" spending and suggesting we need to spend more money to keep from going bankrupt. Whether they've accepted the reality that we could have a bond crisis at any time or whether they've just accepted the political reality that Americans won't tolerate these monster deficits anymore, Democrats are now claiming they're on the deficit-cutting bandwagon. They've accepted the Republican premise.

Strategy Over Brute Force

I do not accept the conclusion that we've lost the war to reduce spending simply because we didn't get everything we hoped for last week.

If Republicans controlled the House, Senate, and the presidency, then I would be very upset about what just happened. But we're still in the minority which means things need to be accomplished intelligently with strategy, not with brute force. The spending problem didn't happen overnight and it won't be solved overnight--certainly not over a matter of $100 billion.

Not every battle is (nor should be) a battle to the death, and it doesn't make sense to fight every fight. You pick your fights, you fight the ones you can win, and you win the fights where victory will yield the best results. This fight wasn't it. The best-case scenario would have been a result that wouldn't have changed our long-term fiscal course but could have weakened our position to fight for the things that really matter.

As I wrote last Friday, I'll be perfectly ready to be upset if our Republican congressmen don't stand strong when they battle over the debt limit and the FY2012 budget. Perhaps Morris is right and this is just a first indication we have weak Republican leaders that are not strong enough to fight for what needs to be done. But we simply don't know that yet.

And, based on the fact that Democrats are accepting our premise and Boehner is already promising there will be something "very big" attached to the debt limit increase, I think the current evidence suggests otherwise.

I don't think our Republican leaders are stupid. I think they understand that our country is facing an imminent debt crisis. I also think they understand the mood of the country when it comes to reducing the deficit and are aware of the electoral consequences if they fail to fight the good fight.

So let's give them the benefit of the doubt for now.

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