In 1968, George Wallace groused, “There’s not a dime’s worth of difference between the Republicans and Democrats.” No one would say that anymore. Today, the difference between the parties is worth $12 trillion.
Now, Democrats are the party of profligacy, and Republicans the party of fiscal responsibility. If there were any doubts about this new reality, they should have been dispelled by the events of the momentous week from February 11 to February 18, 2011.
On Friday, February 11, Indiana governor Mitch Daniels addressed the Conservative Political Action Conference in Washington, D.C. In a long and meaty speech, Daniels implored conservatives to embrace “fundamental change” and begin work on the only thing that will allow the United States to reverse its steep plunge into insolvency: entitlement reform. “We know what the basic elements must be,” Daniels said:
These programs should reserve their funds for those who are most in need of them. They should be updated to catch up to Americans’ increasing longevity and good health. They should protect benefits against inflation but not overprotect them. Medicare 2.0 should restore to the next generation the dignity of making their own decisions, by delivering its -dollars directly to the individual, based on financial and medical need, entrusting and empowering citizens to choose their own insurance and, inevitably, pay for more of their routine care like the discerning, autonomous consumers we know them to be.
That Daniels chose to address entitlement reform in his speech is encouraging. That he offered specific proposals—means testing, adjusting the eligibility age, Medicare vouchers—is important. That he did so not only as the governor of Indiana but as a possible 2012 presidential candidate is remarkable.
For years, politicians have warned in apocalyptic terms about the growing national debt. But most of those willing to propose solutions have been former politicians operating from the safe confines of a commission or college campus.
But Daniels says our fiscal situation is so dire that avoiding the topic is no longer an option. And the current occupant of the White House, he notes, is not interested in making these tough choices.
President Obama confirmed as much when he presented his 2012 budget proposal on Monday, February 14. Not only did the budget include new funding for pet Obama priorities—$53 billion for high-speed rail—it didn’t touch entitlements. Under the White House’s plan, the federal government would spend $3.819 trillion in 2012—$1.645 trillion more than it would take in. When Obama was elected, the public debt totaled $6.3 trillion. By the end of his first term, it will have nearly doubled, to $11.9 trillion.
The White House was roundly criticized for its unseriousness, prompting the president to hold a press conference to quiet his critics. It didn’t work. Obama explained that addressing entitlements would require Republicans and Democrats to come together and set politics aside in favor of real solutions—precisely what his bipartisan deficit commission had done, only to have its recommendations ignored.
Monday evening, at a well-attended whip meeting for House Republicans, California representative Kevin McCarthy, the majority whip, announced to his colleagues that the leadership had decided to embrace entitlement reform. On Tuesday, the leadership released a statement promising to lead where President Obama had failed to do so. The GOP budget, they wrote, “will include real entitlement reforms so that we can have a conversation with the American people about the challenges we face and the need to chart a new path to prosperity.”
As a practical matter, this meant that Paul Ryan, the chairman of the House Budget Committee, would be allowed to include entitlements in his 2012 budget, due out later this spring. As a political matter, House Republicans had decided to touch the untouchable—a courageous decision that carries high risk.
They did not make the decision lightly. Ryan had been engaged in discussions with GOP leadership—and pollsters, political strategists, policy experts, and budget mavens—since November’s election. Several pollsters advised against tackling entitlements before the 2012 presidential election, and House GOP leaders were nervous.
But conservatives in the House, particularly freshman Republicans, believe that they won the 2010 midterms because of their commitments to cut spending and balance the budget. When the GOP leadership suggested they would not be able to cut $100 billion in nondefense discretionary spending from this year’s budget, as they’d promised in the GOP “Pledge” before the election, the freshmen revolted, forcing the leadership to come up with enough cuts to hit their mark. These spending cuts are drastic and necessary, but they cannot alter the current trajectory of the debt. Only reforming entitlements can.
The decision to grasp the nettle changes everything—for this Congress and for the presidential election. Within eight weeks, House Republicans will have proposed specific entitlement reforms. A major fight in Congress is inevitable, and Republicans will be forced to defend their plan. Can a GOP presidential candidate run against them? Perhaps, but only if he or she has specific entitlement reforms to propose instead.
The media mostly missed the significance of the House GOP announcement. But on Wednesday, February 16, reporters packed into a large room at the American Enterprise Institute to hear New Jersey governor Chris Christie declare: “It’s time to do big things.”
Christie demanded that his party stop pretending that entitlement reform can wait. Instead, Republicans should do what voters elected them to do: lead. With his trademark bluntness, he said, “If we’re not honest about these things—on the state level about pensions and benefits and on the federal level about Social Security, Medicare, and Medicaid—we are on the path to ruin.”
Not all of the action was in Washington, however. On the night before his speech, Christie had texted words of encouragement to his good friend and fellow conservative reformer Scott Walker, the governor of Wisconsin. In advance of presenting his state’s budget, Walker introduced a “budget repair bill” that included changes to collective bargaining with public employee unions. Walker’s proposal also included a requirement that state employees begin to contribute to their pensions—5.8 percent of their annual salary, near the national average for pension contributions. And the legislation would make state employees pay about 12 percent of their health care premiums, double the 6 percent they had been paying, but well below the national average of more than 20 percent.
This was too much, apparently. Teachers’ unions across Wisconsin urged their colleagues to take an unpaid day off. Thousands of public employees took to the streets of Madison in protest—a crowd organized in part by the Democratic National Committee and Obama for America, Barack Obama’s 2008 campaign group. The president weighed in, too, calling it “an assault on unions.”
On Friday the 18th, Walker, who ran for governor on a promise to cut state government dramatically, politely told the president to mind his own business. “We’re focusing on balancing our budget. It would be wise for the president and others in Washington to focus on balancing their budget, which they’re a long ways from doing.”
There are exceptions to this new pattern of partisan contrast. New York’s new Democratic governor, Andrew Cuomo, is pushing a plan for fiscal restraint that might have come out of Christie’s office in Trenton. But the exceptions only dramatize the broader truth. Democrats are still spending the way President Obama said he would when he won in 2008. Republicans are working to cut government the way they said they would when they won in 2010. As for 2012, it’s shaping up to be one of those years when the voters face a choice, not an echo.
