Losing Big

David Super

     President Biden got owned.  Nominally, he got owned by Speaker Kevin McCarthy.  In reality, he got owned by Rep. Matt Gaetz.  Rep. Gaetz had a clear, well-developed long-term strategy that he followed with great discipline.  The Administration had only a set of half-formed, often contradictory, impulses that it followed haphazardly, rarely thinking even one move ahead.  It likely thinks it won several news cycles and is hard at work trying to win another.  Rep. Gaetz set out to win on substance, and the wailing and moaning we are now hearing from the Freedom Caucus is precisely what they ought to do to lock in their huge substantive victories and set the stage for more.  Surely the Members that are paying attention know that they won.  But by withholding their votes, they can force even more Democrats to vote for this deal.

     The details have yet to emerge, but from media accounts it appears the President agreed to a substantial nominal-dollar cut in non-defense discretionary spending for next fiscal year.  When roughly five percent inflation is considered, this will be a deep reduction in the capacity of the federal government to perform its basic functions.  For the following year, nominal non-defense discretionary spending would rise one percent, which after the effects of inflation will mean several additional percentage points of real cuts in its ability to do its job. 

     But it gets worse:  a lot worse.  Media accounts say that veterans’ health care, one of the larger accounts within that category, will be protected.  That means that everything else will have to absorb proportionately deeper cuts to make up for those not going to veterans’ health care.  Numerous other government functions (e.g., Border Patrol, protective details for high officials, utilities for federal buildings) will not be cut, forcing still-bigger cuts in what remains. 

     In addition, if Congress and the President do not agree upon all twelve annual appropriations bills by January 1, the agreement apparently would impose a year-long continuing resolution (CR) with a one-percent across-the-board nominal cut.  This will give Republicans – who can effortlessly hold back one or more bills – enormous leverage in negotiating the content of those appropriations bills.  So not only will the levels be far below those needed to maintain government functions, but the money that is spent will almost certainly be badly misallocated.  It remains to be seen how these pieces fit together, but even the best-case scenario is pretty grim. 

     This result has enormous long-term significance.  First, and most obviously, each year’s appropriations discussions start with the prior year’s spending level.  Merely restoring a program to its now-current level of effectiveness will require the President and Congress to go far above that baseline and invite the label “big spenders.”  Many programs still have not recovered from the “sequestration” cuts President Obama agreed to over a decade ago. 

     More insidiously, underfunding government programs will cause them to function less well.  National parks will close off areas for lack of resources for operations and maintenance.  People will miss flights as TSA lines lengthen, or those flights will get cancelled when air traffic control is overstretched.  People will get sick when contaminated meat gets past USDA inspectors even more overwhelmed than they are today.  The FDA will hold up approvals of anticipated drugs for lack of examiners to review applications.  All this will support the Republican narrative that government is incompetent and “deserves” more funding cuts. 

     Beyond that, the Biden Administration passively accepted – at times even reinforced – Republicans’ profoundly tendentious framings of the issues.  Rather than working to gain public acceptance of the legal theories that could end debt limit hostage-taking once and for all, the Administration planted stories about how it was having trouble taking seriously “out there” theories and the President himself pledged not to use them (and thus obliterating his negotiating leverage). 

     People who would never be foolish enough to say that de-indexing the Internal Revenue Code was not a tax increase are nonetheless accepting the inflation-denialist demand to discuss spending programs only in nominal dollar terms. 

     The Administration ceded without serious contest the mantle of “fiscal conservatives” to Members of Congress proposing huge unfunded business tax cuts that would swamp the effects of these spending cuts.  The approach of Presidents Ronald Reagan and George W. Bush was to ram through large unfunded tax cuts and then later “discover” a “fiscal emergency” that “required shared sacrifice” to address.  Today’s Republicans believe they can get away with pursuing these contradictory agendas simultaneously.  And the Biden Administration is telling them they are right.

     Perhaps most insidiously, the Administration continually accepted Republicans’ characterization of eligibility purges from basic assistance programs as “work requirements.”  None of the Republicans’ main proposals for the Temporary Assistance for Needy Families (TANF) block grant had anything to do with putting anyone to work:  they simply sought to increase the quotas for families that states must purge from their already-shrunken assistance programs in order to avoid creating the work programs states almost unanimously are unwilling to operate. 

     And the so-called SNAP “work requirement” would cut off food assistance after just three months to low-income people between ages 50 and 55 who cannot prove that they are working at least half-time every month.  Minimally skilled people in this age range, which the Social Security Administration describes as “closely approaching advanced age,” commonly see their employment prospects dwindle as they are unable to compete with younger people at hard physical labor.  They may make ends meet with several jobs, often with volatile hours.  If they cannot collect adequate verification of all those hours each month, or if their total hours ever dip below half-time, they are cut off.  Nothing in current law or the Republicans’ proposal requires states to give individuals in need the opportunity to work for continued benefits.  And despite generous financial incentives to offer work slots, only a handful of states even purport to do so.  Yet when most reporters hear about “work requirements,” they assume that only the willfully idle are affected.  And the Biden Administration has made little effort to educate them otherwise – making its capitulation all but inevitable.

     President Biden had a front-row seat for the Obama Administration’s short-sighted, strategically clueless approach to Republican debt-limit extortion.  Apparently he learned very little from it.  He had plenty of time to raise the debt limit on a budget reconciliation bill after the election, needing no Republican votes.  All candidates for Chair of the House Budget Committee last fall were publicly promising debt limit extortion to radically transform the federal government. 

     Failing to raise the debt limit in December might have made sense as part of a plan to invoke the 14^th Amendment or to employ one of the several available technical means of avoiding it.  Unfortunately, the Administration had no plan.  This is the result.  The President should tip his hat to Matt Gaetz.

     @DavidASuper1