Praise and Shame for the Tea Party

To many, they’re the “bad guys” of the debt dispute. But they’re responsible for rousing an Obama who had previously been passive about America’s budget deficit.

Please don’t forget: America has a debt crisis. It’s a real debt crisis and it won’t disappear just because after a bitter struggle the president and the leaders of both parties agreed on how to address it.

We assume that the compromise reached Sunday night will pass the Senate and, with a bit more difficulty, the House of Representatives. Despite that, America’s mountain of debt will continue to grow next year. Spending will remain higher than income, but the deficit won’t skyrocket to new heights; it will just sort of meander more slowly in that direction.

Up to $2.5 trillion in spending will be cut from the U.S. budget over the next decade. Obama said that represents “the lowest level of annual domestic spending since Dwight Eisenhower was president.” But this proud comparison is daring.

Eisenhower lowered the national debt from the 70 percent of GDP he inherited upon taking office to 60.4 percent during the first Congressional session and to 55.2 percent during the second — despite the Korean war that he had to end during his term. The IMF now calculates that U.S. indebtedness is now at 98.6 percent of GDP.

It’s also a reality that Obama and the Republican Speaker of the House, John Boehner, were close to concluding an ambitious agreement two weeks ago that would have reduced the deficit by $3.5 trillion.

Despite all the relief expressed about the current compromise, it should be noted that more was needed and that more could have actually been accomplished. Agitators on both sides prevented that. Both liberal Democrats who defended a bloated and inefficient social services system and, above all the tea-party-movement-backed Republicans who took a hard stance against any additional revenue increases.

On the other hand: It was — as horrible as it is to say — the tea party Republicans who were responsible for shaking Obama out of his passive attitude toward the deficit question. As late as February, the president had produced a budget plan that foresaw at least $1 trillion in cuts over the next decade. With such an unambitious plan, the debt mountain would have continued to grow. The Congressional Budget Office calculated that given unchanging tax revenues and expenditures, the debt ratio would have risen to 101 percent of GDP by 2021.

So cheers for the tea party movement — and shame on the tea party movement at the same time. The protest movement against “big government” may have forced Washington to break its destructive practice of routinely taking on new debt, but with its ideological campaign against any form of government involvement, it failed to achieve the necessary big prize.

Their categorical rejection of tax increases, even to the point of refusing to plug tax loopholes, will lead to imbalances. The middle class and the socially disadvantaged would suffer if less money were distributed in the public arena, if subsidies were cut and public employees laid off. It would be not only fair but politically imperative to ensure those with annual incomes above $250,000 also participated in the burden sharing, not to mention the nonsensical tax breaks granted to certain industries.

But the actual compromise contains a “trigger,” a semi-automatic method to initiate tax increases should Republicans and Democrats fail to reach agreement on cutting a further $1.5 trillion. And what we’ve seen over the past few weeks seems to indicate that there’s not much hope that such agreements will be possible.

The other major mistake made by the Republicans, even disregarding those affiliated with the tea party movement, was not making any serious attempt to exclude the defense budget from the trigger process. High defense expenditures are absolutely essential to a superpower. But the structures in this sector have been cast in concrete for decades. Many items bearing the “national security” stamp are, in reality, “regional employment opportunities.” In order to get control over this military-industrial complex, representatives have to be honest and separate the essential needs from the nice-to-haves.

The Republicans Leave the Field Victorious

After his initial disinterest in a permanent budget balancing strategy, Obama championed a “balanced” approach. He suggested a four-to-one ratio of spending cuts to tax increases, with the defense budget sharing in the sacrifice in addition to cutting social programs. Even though he finally had to give in to Republicans on many of the budget cuts, he may have impressed independent voters. That’s why Obama probably has a very good chance of being reelected in 2012.

But it’s the Republicans who leave the playing field victorious, having gotten more than the Democrats. Often resorting to near-blackmail tactics, they knew how to style themselves as the anti-tax party and as the guardians of fiscal stability. They now have the potential to retake the Senate in the 2012 elections just as they retook the House in 2010.

The Good of the Country vs. the Good of the Party

A Democratic President and a Republican Congress: Such a combination need not inevitably lead to gridlock. It can also mean efficiency, as Bill Clinton proved. A smarter, more daring Obama in a second and final term and a confrontational but unified Congress could continue the reforms now being initiated.

Republicans have more authority to pare down the defense budget in its current form and Obama would be in a position to reform the welfare system so that payments will be made to those who truly need help rather than to those who are simply entitled to it.

That could be the grand project for Obama version 2.0, but it’s contingent on Republicans putting the good of the nation ahead of the good of their party. Their representatives have to have the courage to reject the ideologically rigid tea party movement’s agenda as unworkable. In the end, voters are more likely to be impressed by the rationality of political compromise than they are by the rhetoric of fantasy.

Just another reminder: The United States has a debt crisis.