At National Review, Kevin Williamson says a typical Washington compromise — Republicans agree to raise the debt ceiling, Democrats agree to extend the current tax rates — isn’t a good outcome. Here’s what he suggests instead:
My best guess is that the debt ceiling is going up. Nobody reasonably expects a Republican House to be able to prevail upon a Democratic Senate and President Obama to balance the budget today. But Republicans can — and must — insist on a real deficit-reduction program that is very largely focused on spending cuts rather than tax hikes, one that has some real teeth on the enforcement end of things. The timeline doesn’t have to be tomorrow, but it had better not have a 20-year grace period, either: Real cuts should start kicking in right now, and the deficit should be significantly reduced within five years and radically reduced within ten.
Both politically and economically, I still think the Simpson-Bowles proposal is the best starting point. House Republicans can and should remind voters every day that the deficit-commission chairmen appointed by President Obama have recommended an array of spending cuts, and then get to work. They can pass the cuts as a package or they can force them through one at a time, but get going now: The fact that these are Obama-appointed chairmen is politically powerful at this moment, but if the full panel waters down its recommendations, that will take away some of the fire. Now is the time to move the ball forward.
And, speaking of Simpson-Bowles and the Bush tax cuts, I much prefer a Simpson-Bowles tax system (no deductions, top rate of 23 percent) to the Bush tax regime (crazy complicated deductions, top rate 35 percent). So, House Republicans could say, “Hey, look, we’re offering you jokers a bipartisan olive branch: We’ll drop the whole argument about the Bush tax cuts if we can go straight to implementing the bipartisan Simpson-Bowles program, for which we thank the chairmen and President Obama, who appointed them.” No, Simpson-Bowles is not perfect: But passing it does not preclude passing additional spending cuts down the line or additional reforms of our tax system. And if you want to get something in exchange for raising the debt ceiling, a program that actually lowers the deficit would be appropriate.
Sounds pretty good to me. But Williamson ends on a note that doesn’t get mentioned very often:
Why now? Why move so aggressively? Here is one reason: We are not out of the fiscal woods yet, by a long shot, and the Greco-Irish disease is going to make a showing in California, Illinois, New Jersey, and elsewhere. We had better have a real plan for controlling the national debt in place before we have to deal with the coming state meltdowns.
It doesn’t take much boldness to predict that federal bailouts for individual states will be the mother of all political fights. You’ve seen the statistics that states like Georgia spend less per capita than other states. What will happen when the citizens of this and other states that haven’t overspent, and require their legislatures and governors to balance their budgets, are asked to bail out their highly irresponsible neighbors?
The states in the biggest trouble — the three that Williamson mentions, along with the likes of New York — are also the biggest states. Take California, New York, Illinois and New Jersey for starters, and already a quarter of the members of the U.S. House are represented (at least before reapportionment takes place). But the math in the Senate is very different. Anyone who’s ever questioned why the Idahos and North Dakotas of the world have as many U.S. senators as the Californias and New Yorks should look no further than an issue like this.
That said, the implications of these states’ debt for the rest of us, in the form of the value of the dollar, are analogous to what we’ve seen in Europe with the Greek and Irish bailouts. Germans and Finns didn’t benefit from overspending by Athens and Dublin, but they are bound together by a single currency. Doing nothing about a Golden State meltdown may not be a plausible option.
Our situation is better than theirs in a lot of ways. But the tea party rallies we’ve seen over the past year and a half will look like patty-cake compared to the protests you’ll see in, say, San Francisco if Washington tells Californians they have to slash their education budget or give public-sector pensions a sizable haircut if they want a bailout — or in Atlanta if Washington bails out California without such conditions.
Any member of Congress who prefers to avoid that situation better start by getting serious about putting our national finances in order, and now.