One of the great ironies of this year is that the Tea Party’s success will likely lead to utter failure on one of its two top goals: Bringing the federal deficit under control.
We don’t have to wait for the Nov. 2 results to know that the Tea Party has pretty much put the final nail in the coffin of President Obama’s debt commission. That bipartisan panel was already fighting an uphill battle, but the hill it’s trying to climb now has no top -- the commission really has nowhere to go.
Nearly all commission members, outside economists, budget analysts and others who have spent their professional lives wrestling with the deficit agree that the only way to get the national debt under control is to come up with a bundle of measures -- cuts in congressional spending bills, controls on health care costs, changes to all of the big entitlement programs (including some trimming of benefits for future Social Security recipients) and -- increases in revenue. Neither spending cuts nor tax increases alone will get the job done—it is simply not possible to cut deeply enough or to raise enough revenue without crippling the economy. So, any solution will require a lot of very difficult and politically hazardous decisions. And that means it has to be a package deal -- an all- or-nothing proposal that forces compromises.
From the start, however, special interests have worked hard to take one element or another off the table. Advocates for the elderly insist that Social Security shouldn’t be touched. Conservatives say they won’t consider raising taxes. They won’t take a no lightly. One of the co-chairmen of the debt panel -- former GOP Sen. Alan Simpson of Wyoming -- found himself in terrible hot water recently when he lost his temper in an e-mail to an opponent of Social Security changes. He may have been wrong to lose his temper, but his frustration is understandable. Simpson, a conservative by any definition, said that he didn’t take the job to raise taxes but he can’t see any way to get to the goal without including some tax hikes. Similarly, the Democratic co-chairman, Erskine Bowles, warns his fellow party members that they must accept big spending cuts -- including entitlement cuts -- because the country can’t tax its way out of deficits.
The Tea Party insists, however, that a balanced budget can be achieved only by reducing spending. No one who wants to get reelected will disagree publicly, as longtime budget analyst Stan Collender of Qorvis Communications pointed out in a prescient blog (opens in new tab). If there’s one safe prediction after the tumultuous primaries, it is that every Republican will have to spend the next two years protecting his right flank from an attack in the 2012 primaries. That bars the possibility of compromise on a whole range of issues, but especially on taxes. And it means that the debt commission’s recommendations will be dead on arrival.
The election is likely to lock in the views of politicians in both parties, preventing Democrats from yielding any ground on liberal issues and Republicans from ceding territory on their priorities. The next two years will not produce much movement on anything -- a GOP House may not even be able to muster enough votes to pass the most slimmed-down spending bills. But that’s the way the Tea Party seems to want it. Better gridlock, its members say, than tax increases.
But that means the Tea Party won’t come close to achieving its ambition of a balanced budget. And the longer it takes to get serious about that task, the harder it will get.
Kiplinger's Weekly Earnings Calendar
stocks Check out our earnings calendar for the upcoming week, as well as our previews of the more noteworthy reports.
By Karee Venema • Published
Doing Your Retirement Income Planning in the Right Order Matters
A strong retirement income strategy considers many factors, including the retiree’s unique financial resources and needs. How and when you tackle them is critical.
By Jerry Golden, Investment Adviser Representative • Published
The Biden Tax Plan: How the Build Back Better Act Could Affect Your Tax Bill
Politics Depending on your income, the Build Back Better Act recently passed by the House could boost or cut your future tax bills.
By Rocky Mengle • Last updated
Kiplinger's 2020 Election Forecast
Politics For nearly a century, The Kiplinger Letter has forecasted the outcome of presidential elections to keep readers informed of what's coming and what it means for them. Here's our call for 2020.
By The Kiplinger Washington Editors • Published
The 2020 Election and Your Money
Politics We’ve assessed how the presidential candidates’ stances on financial issues will affect your wallet.
By the editors of Kiplinger's Personal Finance • Published
5 HEROES Act Provisions with a Good Chance of Becoming Law
Politics The massive federal stimulus bill just passed by the House of Representatives is "dead on arrival" in the Senate. But a few proposals in the bill have enough bipartisan support to eventually become law.
By Rocky Mengle • Published
Vote by Mail: A State-by-State Guide to Absentee Ballot Voting
Politics With health authorities recommending people continue to social distance, the idea of voting by mail is becoming an increasingly hot topic.
By Rivan V. Stinson • Last updated
9 Ways COVID-19 Will Change the 2020 Elections
Politics The 2020 election will be like no other in history, as the COVID-19 pandemic will upend the business of politics as usual.
By Sean Lengell • Published
How to Run for Local Office
Politics If you’ve ever thought that you could do a better job than the elected officials currently in office, here’s how to launch a campaign—and win.
By Kaitlin Pitsker • Published
Ranking the Top Democratic Presidential Candidates for 2020
Politics The 2020 Democratic presidential nominating contest has attracted unprecedented interest.
By Nicole Duran • Last updated