After 22 days of infighting, the Republican majority in the House of Representatives finally elected a new Speaker on Wednesday, October 25th. The new leader of the House, Representative Mike Johnson from Louisiana, has been in Congress less than seven years, which is not much for a speaker. He has limited House leadership experience; the closest he has gotten to any prominent position is deputy whip. He has also served as vice chair of the Republican caucus in the House.
From an outsider’s perspective, it is surprising to see such an inexperienced person be elevated to what is arguably the second toughest job in American politics (second only to the president). Far more experienced men met with varying factions of resistance, which raises an interesting possibility: rather than emerging as a strong unifier, Mike Johnson became the candidate of choice simply because, as The Hill points out, the Republicans had been worn down by their own infighting.
They simply reached a point where they just wanted to be done with the whole speakership issue.
That does not mean that Mike Johnson cannot be a successful speaker. On the contrary, when you start off in a position like his, with no real expectations that you will achieve anything, every accomplishment is a major victory. To be fair, though, Johnson has a job ahead of himself that is nothing short of daunting: he is going to try to govern a House of Representatives that is filled to the brim with people who have been there decades before he first got elected, and who spend their entire days scheming, manipulating, and hatching plans to get what they want.
As if that was not enough, Mike Johnson will have to wake up every morning to a thin majority: barring any Democrat crossover votes, every bill he tries to get past for his party can only lose four votes before it is defeated. And defeated bills are to a Speaker of the House what cockroaches are to a Guide Michelin restaurant.
To Johnson’s credit, it seems as though he is determined to not go down in the flames of party infighting like his predecessor did. In his first address to the House as Speaker, Johnson made clear that he understands the urgent need to ‘show for it’ and deliver legislation. He also seems to have positioned himself well to get a flying start on his speakership:
The greatest threat to our national security is our nation’s debt, and while we have been sitting in this room … the debt has crossed almost $33.6 trillion. In the time it is going to take me to deliver this speech, it is going to go up another $20 million. … We have to get the country back on track.
He preceded this comment with a reference to how government spending has provoked inflation. Both these remarks will sit well with the fiscally conservative wing of the Republican House caucus, part of which was behind the ousting of former speaker Kevin McCarthy. As this report has pointed out previously, McCarthy’s downfall was directly linked to his inability or unwillingness to bring federal government spending under control.
Mike Johnson appears to understand what it will take to keep him in the Speaker’s seat. He needs to show that he is serious about fiscal conservatism. That is not a problem for him—his heart is definitely in the right place when it comes to reining in government spending. But what is going to be a problem is his path to some sort of delivery on the issue of the government debt.
If we have learned anything from the past three weeks with the Republican leadership in shambles, it is that the 221-member strong Republican majority is far from united on how to deal with the crisis that is the government debt. If they were united, they would have already put forward a plan to comprehensively reform government spending. They would have worked tirelessly to implement that plan, regardless of how strong the Democrat opposition would be.
This lack of unity on fiscal policy is going to be Speaker Johnson’s most enduring headache. He has de facto already acknowledged this: in order not to be left behind by his own promise to take on the combined problem of government overspending and debt, Speaker Johnson promised in his speech
to establish a bipartisan debt commission to begin working on this crisis immediately. Immediately.
This idea sounds refreshing and bold, but it is not at all new. Fiscal conservatives have been floating it for a while, with Romina Boccia over at the Cato Institute as a leading proponent. She made this proposal already back in May:
As Congress and the Biden administration grapple with how to raise the federal debt ceiling in the next few weeks, they should work together on a fiscal plan to stabilize the growth in the federal debt. One part of such a plan could be the creation of a Base Realignment and Closure (BRAC)-like fiscal commission.
The reference to a BRAC-like commission is unrelated to fiscal policy. It is a commission created by Congress to take on the politically very sensitive issue of what military bases should remain open, move, or close. Since Congressmen tend to be protective of the bases in their own districts, and since this protective attitude caused a gridlock in any attempts to bring down the costs of military bases, Congress decided to hand over the problem to an impartial body.
Romina Boccia picked up the idea of a similar commission to solve the debt problem, from a memorandum issued by the so-called Problem Solvers Caucus in Congress. This is a group of centrist legislators whose purpose is to overcome the standstill that Congress often finds itself in as a result of vibrant partisanship. The Problem Solvers Caucus is therefore an interesting source for this debt commission idea: it means that there already is bipartisan interest in creating such a commission.
On June 8th, a few days after Congress suspended its own statutory spending-control instrument—also known as the debt ceiling—then-Speaker Kevin McCarthy also expressed interest in a debt commission. In early August, Boccia noted the Speaker’s interest in the issue. She explained:
Within mere days of the debt limit deal crossing the finish line, House Speaker Kevin McCarthy (R-CA) floated the idea of a BRAC-like fiscal commission to address the critical part of the federal budget that was left completely out of the debt limit negotiations: rapidly growing entitlement spending.
A debt commission sounds like a good idea, does it not? Call in outside experts, give them the time and the room to dig deep into the problem, and produce a solution that is free of ‘politics’ in any form.
Yes, this idea sounds good, but there is one catch with it. Two catches, actually. Let us start with the most obvious one.
This commission idea has already been tried. One of the first major acts that Barack Obama took as president was to appoint “The National Commission on Fiscal Responsibility and Reform”, better known as the Simpson-Bowles Commission after its most prominent members, former U.S. Senator Alan Simpson and former White House Chief of Staff Erskine Bowles.
Obama gave Simpson-Bowles approximately the same task as Romina Boccia and Kevin McCarthy would like to give a new debt commission. Therefore, it is particularly interesting to remember what kind of solutions the Simpson-Bowles commission included in its dramatically titled report, ”Moment of Truth.” In it, they presented a long list of tax and spending reforms that, per their own assessments, would significantly improve the year-to-year fiscal performance of the federal government.
A careful analysis of the Simpson-Bowles report (which The European Conservative will return to in a coming article) suggests that their policy reforms would not have been as successful as they suggested. However, before we preview a coming analysis of why that is the case, it is worth noting that none of the proponents of a new debt commission have explained how they would secure a more successful outcome of their commission than what came out of the Simpson-Bowles commission. Their report, namely, was quickly archived and forgotten by both Congress and the president.
And we are all very surprised. Here is why.
The second catch with this new commission idea is that it expects Democrats to somehow concede ideological territory to the Republicans. The policy recommendations from a new bipartisan commission will, of course, be bipartisan. This means that both sides of the ideological aisle have to agree to its content.
If that is going to happen, Democrats will have to give up their ideological attachment to the welfare state. That is not going to happen: the welfare state has significant ideological value to the left. At the same time, it accounts for approximately two-thirds of the federal budget, and it uses all that money for the purposes of economic redistribution. This means that two-thirds of all the money spent by the federal government is used to reduce so-called economic inequality.
The spending programs that give lower-income families cash and in-kind services dole out trillions of dollars every year. Not only does this flood of social benefits allow politicians to ‘buy’ support from voters, but it also cements left-wing ideology—call it liberalism, progressivism, or socialism—into the very institutions of the federal government. In other words, Democrats have two very deeply felt reasons to defend those programs against any kind of reform.
At the same time, such reforms are badly needed. When government gives people free cash and services, it weakens the incentive to work among the recipients of those benefits. This reduces workforce participation and slows down economic growth.
Adding insult to injury, federal income taxes are highly progressive. They put the bulk of the tax burden on high-income earners, making them disproportionately responsible for funding the welfare state. Rapidly rising marginal taxes—a logical consequence of highly progressive taxes—encourage people to stay in low-paying jobs while discouraging career development, entrepreneurship, and higher education.
All in all, the current fiscal structure of the federal government leads to low economic growth. This, in turn, per the Laffer Curve leads to less tax revenue than would have been the case with lower rates and higher economic growth. Hence the perennial deficit in the federal budget.
The conclusion from this foray into the fiscal mechanics of the welfare state is that Congress will not be able to permanently end its budget deficits until it fundamentally rewrites the purpose of the American welfare state. The Heritage Foundation has some good ideas on how this could be done; my own, similar policy reform ideas were published in 2012.
There are no circumstances under which Democrats in Congress would accept any reforms that ended economic redistribution as the purpose of the welfare state. The federal government is fiscally configured to put their ideology to work; if they allowed reforms that changed the ideological profile of the welfare state, i.e., allowed the welfare state to become conservative instead of progressive, liberal, or socialist (depending on what label we fancy), the very reason for the Democrat party to exist would evaporate.
For this reason, no debt commission can permanently solve the debt problem on a bipartisan basis. Alan Simpson and Erskine Bowles recognized this. Their report is full of reform ideas, but most of their ideas preserved the current ideological purpose of the federal government’s spending programs; in some cases, they even proposed to reinforce the federal government’s function as a machine of economic redistribution.
Nothing came of the Simpson-Bowles commission. What makes Romina Boccia, Kevin McCarthy, and Speaker Mike Johnson think they can have more success?
New Speaker, Same Old Ideas
After 22 days of infighting, the Republican majority in the House of Representatives finally elected a new Speaker on Wednesday, October 25th. The new leader of the House, Representative Mike Johnson from Louisiana, has been in Congress less than seven years, which is not much for a speaker. He has limited House leadership experience; the closest he has gotten to any prominent position is deputy whip. He has also served as vice chair of the Republican caucus in the House.
From an outsider’s perspective, it is surprising to see such an inexperienced person be elevated to what is arguably the second toughest job in American politics (second only to the president). Far more experienced men met with varying factions of resistance, which raises an interesting possibility: rather than emerging as a strong unifier, Mike Johnson became the candidate of choice simply because, as The Hill points out, the Republicans had been worn down by their own infighting.
They simply reached a point where they just wanted to be done with the whole speakership issue.
That does not mean that Mike Johnson cannot be a successful speaker. On the contrary, when you start off in a position like his, with no real expectations that you will achieve anything, every accomplishment is a major victory. To be fair, though, Johnson has a job ahead of himself that is nothing short of daunting: he is going to try to govern a House of Representatives that is filled to the brim with people who have been there decades before he first got elected, and who spend their entire days scheming, manipulating, and hatching plans to get what they want.
As if that was not enough, Mike Johnson will have to wake up every morning to a thin majority: barring any Democrat crossover votes, every bill he tries to get past for his party can only lose four votes before it is defeated. And defeated bills are to a Speaker of the House what cockroaches are to a Guide Michelin restaurant.
To Johnson’s credit, it seems as though he is determined to not go down in the flames of party infighting like his predecessor did. In his first address to the House as Speaker, Johnson made clear that he understands the urgent need to ‘show for it’ and deliver legislation. He also seems to have positioned himself well to get a flying start on his speakership:
He preceded this comment with a reference to how government spending has provoked inflation. Both these remarks will sit well with the fiscally conservative wing of the Republican House caucus, part of which was behind the ousting of former speaker Kevin McCarthy. As this report has pointed out previously, McCarthy’s downfall was directly linked to his inability or unwillingness to bring federal government spending under control.
Mike Johnson appears to understand what it will take to keep him in the Speaker’s seat. He needs to show that he is serious about fiscal conservatism. That is not a problem for him—his heart is definitely in the right place when it comes to reining in government spending. But what is going to be a problem is his path to some sort of delivery on the issue of the government debt.
If we have learned anything from the past three weeks with the Republican leadership in shambles, it is that the 221-member strong Republican majority is far from united on how to deal with the crisis that is the government debt. If they were united, they would have already put forward a plan to comprehensively reform government spending. They would have worked tirelessly to implement that plan, regardless of how strong the Democrat opposition would be.
This lack of unity on fiscal policy is going to be Speaker Johnson’s most enduring headache. He has de facto already acknowledged this: in order not to be left behind by his own promise to take on the combined problem of government overspending and debt, Speaker Johnson promised in his speech
This idea sounds refreshing and bold, but it is not at all new. Fiscal conservatives have been floating it for a while, with Romina Boccia over at the Cato Institute as a leading proponent. She made this proposal already back in May:
The reference to a BRAC-like commission is unrelated to fiscal policy. It is a commission created by Congress to take on the politically very sensitive issue of what military bases should remain open, move, or close. Since Congressmen tend to be protective of the bases in their own districts, and since this protective attitude caused a gridlock in any attempts to bring down the costs of military bases, Congress decided to hand over the problem to an impartial body.
Romina Boccia picked up the idea of a similar commission to solve the debt problem, from a memorandum issued by the so-called Problem Solvers Caucus in Congress. This is a group of centrist legislators whose purpose is to overcome the standstill that Congress often finds itself in as a result of vibrant partisanship. The Problem Solvers Caucus is therefore an interesting source for this debt commission idea: it means that there already is bipartisan interest in creating such a commission.
On June 8th, a few days after Congress suspended its own statutory spending-control instrument—also known as the debt ceiling—then-Speaker Kevin McCarthy also expressed interest in a debt commission. In early August, Boccia noted the Speaker’s interest in the issue. She explained:
A debt commission sounds like a good idea, does it not? Call in outside experts, give them the time and the room to dig deep into the problem, and produce a solution that is free of ‘politics’ in any form.
Yes, this idea sounds good, but there is one catch with it. Two catches, actually. Let us start with the most obvious one.
This commission idea has already been tried. One of the first major acts that Barack Obama took as president was to appoint “The National Commission on Fiscal Responsibility and Reform”, better known as the Simpson-Bowles Commission after its most prominent members, former U.S. Senator Alan Simpson and former White House Chief of Staff Erskine Bowles.
Obama gave Simpson-Bowles approximately the same task as Romina Boccia and Kevin McCarthy would like to give a new debt commission. Therefore, it is particularly interesting to remember what kind of solutions the Simpson-Bowles commission included in its dramatically titled report, ”Moment of Truth.” In it, they presented a long list of tax and spending reforms that, per their own assessments, would significantly improve the year-to-year fiscal performance of the federal government.
A careful analysis of the Simpson-Bowles report (which The European Conservative will return to in a coming article) suggests that their policy reforms would not have been as successful as they suggested. However, before we preview a coming analysis of why that is the case, it is worth noting that none of the proponents of a new debt commission have explained how they would secure a more successful outcome of their commission than what came out of the Simpson-Bowles commission. Their report, namely, was quickly archived and forgotten by both Congress and the president.
And we are all very surprised. Here is why.
The second catch with this new commission idea is that it expects Democrats to somehow concede ideological territory to the Republicans. The policy recommendations from a new bipartisan commission will, of course, be bipartisan. This means that both sides of the ideological aisle have to agree to its content.
If that is going to happen, Democrats will have to give up their ideological attachment to the welfare state. That is not going to happen: the welfare state has significant ideological value to the left. At the same time, it accounts for approximately two-thirds of the federal budget, and it uses all that money for the purposes of economic redistribution. This means that two-thirds of all the money spent by the federal government is used to reduce so-called economic inequality.
The spending programs that give lower-income families cash and in-kind services dole out trillions of dollars every year. Not only does this flood of social benefits allow politicians to ‘buy’ support from voters, but it also cements left-wing ideology—call it liberalism, progressivism, or socialism—into the very institutions of the federal government. In other words, Democrats have two very deeply felt reasons to defend those programs against any kind of reform.
At the same time, such reforms are badly needed. When government gives people free cash and services, it weakens the incentive to work among the recipients of those benefits. This reduces workforce participation and slows down economic growth.
Adding insult to injury, federal income taxes are highly progressive. They put the bulk of the tax burden on high-income earners, making them disproportionately responsible for funding the welfare state. Rapidly rising marginal taxes—a logical consequence of highly progressive taxes—encourage people to stay in low-paying jobs while discouraging career development, entrepreneurship, and higher education.
All in all, the current fiscal structure of the federal government leads to low economic growth. This, in turn, per the Laffer Curve leads to less tax revenue than would have been the case with lower rates and higher economic growth. Hence the perennial deficit in the federal budget.
The conclusion from this foray into the fiscal mechanics of the welfare state is that Congress will not be able to permanently end its budget deficits until it fundamentally rewrites the purpose of the American welfare state. The Heritage Foundation has some good ideas on how this could be done; my own, similar policy reform ideas were published in 2012.
There are no circumstances under which Democrats in Congress would accept any reforms that ended economic redistribution as the purpose of the welfare state. The federal government is fiscally configured to put their ideology to work; if they allowed reforms that changed the ideological profile of the welfare state, i.e., allowed the welfare state to become conservative instead of progressive, liberal, or socialist (depending on what label we fancy), the very reason for the Democrat party to exist would evaporate.
For this reason, no debt commission can permanently solve the debt problem on a bipartisan basis. Alan Simpson and Erskine Bowles recognized this. Their report is full of reform ideas, but most of their ideas preserved the current ideological purpose of the federal government’s spending programs; in some cases, they even proposed to reinforce the federal government’s function as a machine of economic redistribution.
Nothing came of the Simpson-Bowles commission. What makes Romina Boccia, Kevin McCarthy, and Speaker Mike Johnson think they can have more success?
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