The Art of the Possible

posted at 11:25 am on November 23, 2011 by Karl

At New York magazine, Jonathan Chait asks, “When Did Liberals Become So Unreasonable?“, while David Frum asks, “When Did the GOP Lose Touch With Reality?” After accounting for the bias inherent in putting up Frum to write about the right, a common theme emerges, i.e., movement ideologues are almost invariably disappointed by the failure of the parties to sufficiently enshrine their respective ideologies in policy (Note: I’m not using ideologue as a pejorative, but to distinguish movement-types from basic partisans). This happens for a variety of reasons, from petty corruption to the checks built into our Constitution.

This is the basic backdrop against which my recent back-and-forth with Ramesh Ponnuru occurred. He and I are in basic agreement that Republican losses in 2006 and 2008 had much less to do with the GOP being insufficiently conservative than with the deteriorating popularity of invading Iraq and the deteriorating economy (underscored by the Wall Street panic of ’08). We disagree over whether a different policy emphasis would matter much. Ponnuru’s examples tended to be drawn from 2000 and 2004 — very close elections in which many factors may be argued to have mattered. In 2012, the economy is likely to be so dominant an issue that second-tier issues are unlikely to be decisive.

I suspect we may also disagree about the degree to which Ponnuru would be disappointed if the GOP took his advice on wage stagnation and policy appeals to the middle class.

One of the most obvious reasons for wage stagnation is the growth of health care costs. Ponnuru backs disconnecting health insurance from employment, but realizes how many people would resist that big a change to their health insurance arrangements, just as they resisted Obamacare. Thus, he backs an incremental approach offering an insurance tax credit to those not covered by their employer.

However, when Ponnuru writes about appealing to the middle class, he occasionally advances a more ambitious policy of expanding the child tax credit from $1,500 per child to something closer to $5,000. This is taken from a proposal by Jacob Stein, who proposed raising the credit to $4,000, offsetting both income and payroll taxes of middle-class families. Ponnuru’s column did not price the policy, but Stein estimated his lesser version as reducing revenue by about $200 billion per year. Like Stein, Ponnuru would make up the difference by eliminating tax breaks and lowering the floor on the top tax bracket.

But a little cocktail napkin math suggests the difficulty of turning that proposal into law. Stein’s proposal is roughly $2 trillion over a decade; Ponnuru’s would exceed that by a non-trivial amount. Most of the budget reform plans (a la the Simpson-Bowles recommendations) get only about half that amount from eliminating tax breaks. So the other half has to come from tax increases, which may explain why the GOP hasn’t jumped on the proposal (while the Dems need the revenue from eliminating tax deductions to stave off entitlement reform).

Stein acknowledges that “[g]iven the loss of the state and local tax deduction, his proposed tax hike will hit upper-middle-class taxpayers who do not have children in the home and be particularly acute for high earners from high-tax states.” I could cynically chuckle at the degree to which this sticks it to Blue state demographics. But if I was being cyincal, I would also recognize that upper-middle class professionals are a demographic the GOP would like to wrest back from the Democrats, and that it’s a demographic that disproportionately votes and donates. Moreover, the elimination and/or scaling back of the tax code’s vast web of deductions presents the basic political problem Ponnuru recognized when he was faced with just the tax-deduction for employer-provided health insurance, but multiplied.

In sum, if GOP candidates stopped tossing out red meat proposals to eliminate the EPA and started pitching Ponnuru’s proposals to address the concerns of the middle class, we might find selling and enacting the latter not all that much easier than enacting the former.

I make this point not to elicit another round with Ponnuru myself, but to suggest it as a useful basis for wonks to better understand and dialogue with people like Stacy McCain. The other McCain, rebutting Frum, nods in the wrong direction of blaming George W. Bush’s compassionate conservatism for GOP losses in the 2006-08 period (though he rightly gripes that movement ideologues take too much of the blame for Bush’s more statist impulses). And McCain is too glib in his view of the invasion of Iraq (though there’s certainly a case it was not conservative, there’s also a case against too much hindsight). But McCain has a stronger point:

Frum is a wonk very much concerned with the question of what legislative and policy initiatives can be feasibly enacted (and politically defended) by Republican elected officials. That’s a very different thing than declaring, broadly, what the ultimate objectives of the conservative movement should be.

Although I much prefer Ponnuru over Frum as wonks go, it’s a point Ponnuru should consider. As McCain notes, progressives (and Democrats) have pushed socialized medicine for well over 50 years, even though it’s not a popular plank — and get big bites like Medicare or Obamacare when the historic opportunity presents itself. Conversely, McCain may want to rethink his disdain for more incremental reforms of bureaucracies he opposes on principle, as progressives and Democrats work hard on smaller increments when historic chances are not present — and even then, enacting incremental reform can be tricky.

Ideologues should expect to be disappointed. Wonks should expect ideologues to be disappointed. Both should expect to be disappointed with each other. That sort of acceptance ought to help keep the focus on the far worse alternative presented by the left.

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The point nobody seems to be making is that every American will have to pay literally thousands more annually in income tax, or take thousands less in government handouts for at least the next twenty years just to absorb the deficit, not counting the unfunded mandates of social security and medicare. Appealing to the middle class is one thing, facing reality is quite another. I’d rather hear about the elimination of entire government departments like the EPA (and the money that would save) than more tax proposals that will be compromised once they hit congress.

Hiya Ciska on November 23, 2011 at 11:53 AM

I’m sorry, but I’m tired of wonks and wonkishness in particular.

golfmann on November 23, 2011 at 11:55 AM

To many faux (message) Republicans spoil the stew.

Speakup on November 23, 2011 at 11:59 AM

That’s a lot of disappointment to throw around.

It can be argued that the left’s big gains from historical opportunism, e.g., Obamacare, will require a proportional pushback instead of oppositional gains around the edges.

A problem with incremental reforms is that the reformer buys-in to the program to be reformed. Reformers become invested in the program, and, for example, you eventually get something like the Medicare Prescription Drug, Improvement, and Modernization Act.

All programs are sold on the lie of costs. Programs consistently bust cost projections by magnitudes. So, the only real discipline in reforms is containing costs, which today means taking back government candy. It’s never popular, which stymies reform at the ballot box. That leaves the only effective reform to be ruination.

And the left is only too happy to take the rest of us down that road.

DGB

Damian Bennett on November 23, 2011 at 12:15 PM

I am sick of “comprehensive” legislation. It invariable creates more problems and has been a driving factor for poisonous partisanship, both inter- and intra-party. Take small bites rather than choking on the whole loaf.

One relatively revenue neutral health policy is treating health care benefits as taxable income while at the same time making the first, say, 10k deductible. After letting that settle out a bit, add a refundable tax credit to increase affordablity at the low end.

I’d like to see the mortgage interest deduction eliminated or at least dialed back severely. Seeing that as a near impossibility, an equivalent amount of rent should be deductible to level the field. Put on a fixed cap to allow inflation to eventually take of the problem.

deadman on November 23, 2011 at 12:41 PM

All programs are sold on the lie of costs. Programs consistently bust cost projections by magnitudes. So, the only real discipline in reforms is containing costs, which today means taking back government candy. It’s never popular, which stymies reform at the ballot box. That leaves the only effective reform to be ruination.

And the left is only too happy to take the rest of us down that road.

DGB

Damian Bennett on November 23, 2011 at 12:15 PM

Wow, that is extraordinarily well stated. The ruin is on the way, we are accellerating toward it, and there is simply nothing we can do to stop it. The issue becomes, how do we salvage a shred of freedom afterwards? Remember, the leftists not only want this outcome, they’ve been planning for the aftermath.

runawayyyy on November 23, 2011 at 12:50 PM

How about just pointing out that the wonks always promise a certain thing (be it benefits, goodies, or social ‘goods’) that have a certain projected cost to them.

Then hold them to that cost and those deliverables.

When they don’t do that, then say that the program is not working out and must be shut down before it goes further astray.

Make all government organs, organizations and programs need to have a re-up over which time they MUST meet their projections to even be considered for being re-upped. Make that 5 years so people don’t get ‘hooked’ on the good or service or goodie being provided.

Do as you say you will do or stop doing it as it is based on a lie.

That isn’t ‘ideological’ but simple, plain ‘tell the truth about what you back and SHOW IT’.

If it is so very good, PROVE IT after 5 years.

ajacksonian on November 23, 2011 at 2:12 PM

Obama Care is still on the books and alongside it the list of exemptions, over a thousand, signals there is something very wrong with Obama Care. When cornered with biting questions we often hear the phrase, “We are a nation of laws”, yet our Congress is anything but lawful. The Presidents Cabinet of czars is a joke, the President is a joke and the economy is the result of decisions made by arm chair economists that know nothing about the economy and it’s failure is blamed on the rich. Some how we need cooler heads in the government with some common sense and logic to straighten this mess out. When confronted with complex problems the first thing that should be considered is to go back to the basics and start there, not in the middle of the problem.

mixplix on November 24, 2011 at 6:34 AM