Friday, December 31, 2010

Welcome, Republican Governors

Most news accounts I have read focus on the incoming Republican Congress and do not say much about all the incoming Republican governors. Newspapers in each states may discuss their individual governor, but I have not seen much national coverage on Republican governors in general. This is a shame because I believe that Republican governors are significant as a general phenomenon. They come to power at a time states are facing severe budget cuts, and they will have to determine how to make them.

While I rejoice in seeing some truly crazy candidates, I am glad, really, to see so many mainstream Republicans elected as governor. My reasons for rejoicing are obvious. States are facing enormous budget shortfalls. Thus far, the federal government has spared states the worst by offering stimulus money, but Republicans (except for ones in state government) have made clear that this is no longer politically acceptable.*

(NOTE: These maps differ substantially in the deficits they show because one refers to total deficit and one to deficit in the general fund. The states with general fund deficits much larger than total deficits are ones that segregate large portions of their budgets as unalterable).

So Republican governors are stuck. This is, after all, what they wanted. In fact, Republicans have been working for the past three decades to bring this about. Republicans have learned the hard way that, although everyone applauds the general proposition of cutting government spending, no one likes any actual cuts. So they have spent the last three decades cutting taxes without offsetting spending cuts in hopes of forcing a future fiscal crisis that could force the spending cuts they could never get through on the merits. And now their day has finally arrived. The budget crisis they wanted has come to pass. No doubt they had hoped the Democrats would be in power at the time to be blamed. At least three exceptions (Colorado, Minnesota and New York) have Democratic governors facing major cutbacks, but only because the Republican alternative was completely insane. Most states, however, will have Republican governors to deal with the fruits of thirty years of starve the beast policy. And now the beast is starving. I can't wait to see what happens.


Wednesday, December 22, 2010

Lame Ducks Behaving Badly

I really can understand any Republican who might want to label the post-election sessio as "lame ducks behaving badly." Democrats are taking advantage of the last days of their control of Congress to push through as much of their agenda as possible. I do understand why Republicans may see this as dirty.* I am obviously biased here, because I like the substantive agenda Democrats are pursuing, but let me give them two procedural defenses.

First of all, lame ducks behaving badly are a venerable American tradition. The practice goes back as far as 1800 when, after losing to the Jeffersonians, the Federalist Congress created a huge number of new federal judgeships and John Adams packed them with a bunch of Federalist judges. And it has continued all the way down to Bill Clinton's last minute administrative regulations to achieve what he could not get through Congress.

Second, and more importantly, this really is not as egregious as what Bill Clinton did as a lame duck. What made Clinton's actions so outrageous was that not that they took place in the lame duck period, but that they were frankly an attempt to bypass to legislative process altogether and act as an elective dictator in the face of clear Congressional opposition. This would be objectionable on separation of powers grounds no matter when it took place. That it was an attempt to impose a fait accompli on his successor mere compounds the offense; it does not create it. Congress, in passing a bunch of bills during the lame duck session that they could not pass with an election pending, is exercising legitimate, constitutional legislative powers, even if the etiquette is not so good. Granted, in his showdowns with a Republican Congress, President Obama may very well end up trying to sidestep the legislative process and do administratively what he could not get through Congress. But let's cross that bridge when we come to it.
*It can't help that Democrats are also giving the lie to the assumption that Republicans are much better than Democrats at maintaining party discipline. This rule apparently only applies in the house, not the Senate.


The Budget Deal

I didn't want to jinx the budget agreeement by treating it as a done deal unless it really became a done deal. Now that it is a done deal, I would say that it is as good as anyone could hope for and maybe better. Democrats got what they wanted most -- a one-year extension of unemployment benefits that Republicans seemed determined to fight tooth and claw. The one-year break in Social Security tax is problematic if extended (likely), but about as good as we could hope for in the short run. I fully agree with Megan McArdle that a deal in which Republicans don't get anything they want is utterly unrealistic. But that is what many Democrats were asking.

After continually insisting that unemployment benefits must not be extended without some compensating spending cut, Republicans have agreed to extend them if there is a tax cut. Republicans are now madly scrambling to explain that a tax cut is really the functional equivalent of a spending cut. The war on arithmetic continues. Or, as Jonathan Chait puts is, "Why were Republicans so flexible? They are willing to deal away a lot if they're getting tax cuts for the rich. . . . [I]t's the party's core policy goal, and if you help them attain it they can be surprisingly reasonable."

Of course, this is a wildly fiscally irresponsible agreement. But that's a good thing. When your economy is still struggling to extricate itself from a severe recession, the last thing you need is fiscal responsibility. You need irresponsible counter-cyclical measures. Fiscal responsibility can wait until the economy is stronger. Of course, the Republicans may yet ruin everything by being fiscally responsible after all and pushing for serious spending cuts. And I expect plenty of bipartisan irresponsibility whenever our economy does become strong enough to seriously tackle the budget. (I expect the deficit to be much smaller when our economy recovers, but still dangerously large and unsustainable).

I also wholehearted agree with Matt Yglesias that this is reassuring in at least one regard. Republicans are not trying to sabotage the economy to ensure a victory in 2012. This really is a good faith dispute about the best policy.


I like this post by Megan McArdle, arguing that the reason we are seeing so much extraordinary fiscal irresponsibility right now is that both parties recognize a painful need to balance the budget is coming up and are trying to create irrevocable "facts on the ground" to force the other party to make most of the concessions when that inevitable time arrives. Since I think we can rule out the possibility that anyone has read Keynes or believes that deficits are temporarily necessary, this does, indeed, seem the most likely explanation.