Does the GOP really want to slash spending in a weak economy?
The other day, I asked a Washington consultant whether his Wall Street clients wanted Congress to cut federal spending by at least $100 billion next year, as House Speaker-to-be John Boehner promises. Although these financiers contributed big bucks to support the very GOP congressional candidates who campaigned on smaller government, they didn’t seem quite so enthusiastic about an immediate war on spending. Said my friend, “Not now. They are still very worried about the economy.”
Therein lies one of the great challenges for congressional Republicans. And it got me wondering whether spending cuts will be for the GOP what health reform was for President Obama: The right idea at the wrong time. And, like the health law, will small government look far better to voters at 30,000 feet than it does up close and personal?
No doubt the GOP wants to shrink government. And there isn’t much doubt that some voters agree with them. But is this the time? Will voters be quite so enthusiastic once they realize spending cuts mean more than eliminating ever-popular waste, fraud, and abuse? Will they embrace actual reductions to those government services and benefits that they have grown to love? And, most important, will they accept these government spending cuts in the teeth of a still-sluggish economy?
It is increasingly clear that with the coming Republican control of the House, the days of fiscal stimulus have come to an end. The job of boosting growth will be left entirely to the Federal Reserve, which has only unconventional and largely untested resources such as quantitative easing (QE2) with which to work. But it is one thing to say Congress is done with fiscal stimulus. It is quite another to actually tighten fiscal policy at a time when the economy remains too weak to create jobs.
Brave claims to the contrary, Republicans have no mandate to cut spending in a serious way—no more than Democrats had a mandate to pass the health law they did. According to an Oct. 27-30 Pew Foundation survey, even among likely voters the “job situation” was nearly twice as important as the deficit. That suggests an awful lot of people want government to do more to create jobs, not less.
However, if the GOP does not act quickly on spending, it risks alienating a fidgety base that wants action right away. In this way, massive immediate spending cuts are to conservative activists what a single payer health system was the Democratic hard-core. This would be the same disappointed Democratic base that tuned out in 2010.
Power in Washington has become evanescent (just look at the past three elections). Obama felt the need to push health reform while at the height of his influence. GOP activists may feel the same way about spending. They should be wary.
This isn’t to say that some immediate well-targeted spending reductions are a bad idea. They are not. But the mindless across-the-board cuts (excluding, of course, defense, veterans benefits, homeland security, and Medicare), the GOP has in mind seem both clumsy and counterproductive in today’s economy.
Just as Democrats paid a steep price for pursuing health reform at a time of high unemployment, so may Republicans pay dearly if they try to rapidly shrink government while the economy remains weak. Ideological purity is one thing. But it rarely trumps bad timing.
More than two thousand years ago, Rabbi Hillel asked, “if not now, when?” The answer, perhaps, is “when the economy gets better.”
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