Gary Bass is the founder and executive director of OMB Watch , a nonprofit research and advocacy group based in Washington, D.C., promoting government accountability and citizen participation in public policy decisions.
The upcoming vote in the House over "mandatory spending" cuts is being hailed as one of the most important votes this year—as it rightly should be. The vote will indicate as much about the direction our country is headed as it will about Congress' spending priorities. And the outcome is likely to be shaped by the courage and integrity of moderate Republicans.
Until recently, with the Bush administration commanding high public approval ratings, conservatives quietly complained as Congress accelerated spending for defense, homeland security, and new entitlements. Behind closed doors, however, they grew bitter that deep cuts to domestic spending had not been accomplished, despite Republican control of both chambers of Congress and the White House. At the same time, conservatives pursued reckless tax cuts, largely benefiting corporate elites and wealthy individuals. Their "have your cake and eat it too" fiscal policies have exacerbated a ballooning deficit and created an unsustainable long-term structural problem in the federal budget.
Now, with Bush's popularity tanking and the House leadership in disarray, conservatives have stood up and taken the gloves off. Shortly after Hurricane Katrina, the House Republican Study Committee, a group of roughly 100 Republican conservatives, launched "Operation Offset"—a potpourri of proposals to de-fund the federal government by slashing budgets or completely removing programs.
This conservative assault came at a time when many believed Congress, faced with glaring domestic need, would suspend yet another set of new tax cuts, particularly those to the wealthy, in order to retain revenues and pay for Gulf Coast reconstruction. As public calls for an end to unrestrained tax and budget cuts increased, the moderate Republicans who hold real sway in Congress appeared poised to assert themselves.
These moderates certainly have public support. Various polls have repeatedly shown that the public believes hurricane recovery costs should be paid for by rolling back tax cuts for the wealthy. In one poll by Greenberg Quinlan Rosner Research for the Democracy Corps, 75 percent of respondents wanted planned tax cuts for those earning over $200,000 per year to be cancelled. The American people are clearly expressing their recognition of the current need for more government, not less.
It's not just polls where this message comes through loud and clear. In Colorado two weeks ago, the "starve the beast" coalition was soundly defeated by an alliance forged between a Republican governor and a Democratic House speaker. Fifty-three percent of Colorado voters supported Referendum C and agreed to give up $3.7 billion in automatic tax refunds over the next five years in order to ease strict limits on state spending on education, health care and transportation.
The voters in Colorado implicitly acknowledged the importance of government services and the need for an adequate revenue base to support these services. This notion of shared sacrifice, a long-standing American value, has been all but absent from this Congress and the current administration. This absence is particularly glaring when considering the realities of our “tax relief” policies: households earning more than $1 million will receive $103,000 in tax break windfalls this year, according to the Tax Policy Center; and, starting Jan. 1, they will get an extra $20,000 from two more tax breaks that benefit only the top 4 percent of wage-earners. Incredibly, the House and Senate are now debating an additional $70 billion tax cut that primarily benefits the wealthy, leaving many to wonder how Congress and the president can be so woefully out of touch with the desires of the American people.
Last Thursday, moderates in the House and Senate stepped up and exercised the power newly at their command. In the House, the vote on harsh spending cuts collapsed as the Republican leadership could not rally enough votes to pass the bill. This spending bill was one of two under the reconciliation process, making $35 billion in mandatory spending cuts, while the other cuts $70 billion in taxes. Despite purporting to be a deficit reduction tool, the reconciliation package will increase deficits by at least $35 billion.
It was assumed that, in light of Hurricane Katrina, Congress might choose to suspend these reconciliation bills. Yet when Majority Leader Tom DeLay was indicted and forced to give up his leadership post, the conservative Republican Study Committee (RSC) saw an opportunity and leaped.
Instead of canceling reconciliation, RSC members decided to up the ante, calling for a 58 percent increase in spending cuts. At first it appeared that their plan was to enact spending cuts across the board, including for defense and homeland security. But quickly the conservative agenda shifted even farther away from shared sacrifice: the cuts would target programs serving low- and moderate-income families, with about one-third of the spending cuts coming from poverty programs. The moderates were troubled by these cuts along with riders attached to the bill, including authorization of drilling in the Arctic National Wildlife Refuge (ANWR)—and their lack of support threatened the bill.
These conflicting pressures began to squeeze the options available to the House leadership team, and the action last week revealed the ugly inner workings of the lengths a desperate leadership will go to ram through misguided, unpopular policies. The GOP was willing to give up ANWR drilling to win moderate votes, but conservatives threatened to vote against a bill without ANWR drilling. Then the Republican leadership agreed—with a wink and a nod to conservatives—that ANWR drilling would be removed for now, but reinserted later in conference. But the moderates continued to withhold their support for the bill because of the cuts to Medicaid, student loans, food stamps and other low-income supports. With members anxious to return home for Veteran's Day, the Republican leadership gave up and withdrew the bill. Voting on the bill has been rescheduled for this Thursday.
In the Senate, a similar principled stand by a moderate Republican derailed efforts to pass more tax cuts for the wealthy—but an equally sneaky bait-and-switch may be in the works here as well. Sen. Olympia Snowe, R-Maine, rejected extending the tax cuts on capital gains and stock dividends at a time when Congress is already enacting spending cuts affecting poor Americans. Senate Finance Committee Chair Charles Grassley, R-Iowa, accommodated Snowe’s concerns in order to move the tax cut bill out of committee, but the other Republicans reportedly went "ballistic" over dropping capital gains and dividends cuts. After postponing the markup a few days, it appears Grassley has executed a similar “wink and nod” maneuver with conservatives on the Finance Committee. The tax cut bill was approved yesterday without the capital gains and dividend cuts—but not so subtle assurances were given that they would be reinserted at a later time.
Fierce negotiations are underway in the House right now and enormous pressure is being applied to the moderates to cave. According to columnist Robert Novak, conservatives are "outraged" by the "coddling" of the moderates. "[W]istful Republicans [are] longing for the strong arm of suspended majority leader Tom DeLay." Conservatives have already made implicit threats of holding a vote for new House leadership in January or supporting more conservative Republicans against these moderates in the 2006 elections if spending cuts are not enacted this year.
With conservative Republicans increasingly advancing policies outside the mainstream, moderate Republicans are left with the burden of tempering the direction of future policy. It is clear that some combination of tax and spending cuts will continue to be pushed this year. The hope among those observing from the middle is that the moderates will stick with common sense and the will of the public and reject the radical minority's push to institute an ideological agenda of shrinking government.
Moderate Republicans in the House obviously have the power now to make an important statement about the immediate needs and proper priorities of the country by defeating the budget reconciliation bill this week. It remains to be seen, however, if they will have the integrity or the courage to stand up to their far-right colleagues.
