Five Reasons Republicans Won’t Budge In Fiscal Negotiations

If the last two weeks are any indication, Washington is headed off the proverbial fiscal cliff at year’s end. Numerous pundits have argued that both parties eventually will compromise to avert a 20% increase in federal revenues at the expense of just about every category of taxpayer — not to mention $110 billion in across-the-board spending cuts called “sequestration.” The unspoken subtext on much of this commentary is that it’s the Republicans who need to be flexible, because they lost the election. However, if you look at the political landscape through Republican eyes, it’s hard to see why the GOP would be willing to compromise. Here are five reasons that Republicans are likely to play Thelma to the Democratic Louise and ride right off the cliff.

First of all, many Republicans think the election outcome was a squeaker that says more about the weather than where voter sentiment is headed. There was almost no change in the partisan makeup of Congress and President Obama — despite all the advantages of incumbency — only received about 51% of the vote to Mitt Romney’s 48%. That isn’t the kind of landslide outcome likely to convince losers that they need to rethink their views. Republicans will probably conclude that they have excellent prospects of winning the next time around if they just stick with their principles.

Second, if Republicans abandon their principles on taxes, what have they got left? Over the last dozen years, the GOP has squandered the reputation it once had for fiscal responsibility, sound management of the government and protecting national security. So Grover Norquist’s tax pledge is practically the only Republican franchise that remains — unless you count right-to-life, which has become an electoral albatross among female voters. If Republicans were to agree to tax increases now, they would stand for nothing in the eyes of many voters, and their base would shrink dramatically.

Third, Republicans can cut the deficit in half in a single year without assuming responsibility for increasing taxes by just standing aside and letting all the fiscal provisions currently in law take effect. Those provisions cumulatively would restore federal tax receipts to their historic average of 18% of GDP over the past several decades while reducing federal spending to within one percentage point of its historic 21% average. That would represent a huge improvement in the government’s fiscal position, slashing the structural deficit from a trillion dollars annually to barely half that level, and Republicans could legitimately say they had not voted for any tax increases.

Fourth, there is little evidence that Democrats are willing to offer the kind of spending concessions that would make tax increases acceptable to Republicans. Mitt Romney was at least half right when he argued the Democratic base is made up of people dependent on federal benefits, and the election outcome did nothing to weaken that dynamic. Without some sort of ironclad pledge from the Obama Administration to control spending, such as a balanced-budget amendment to the Constitution, any Republican compromise on taxes could easily be viewed as contributing to a further expansion of the welfare state.

Which brings me to the final reason why Republicans have good reason to go off the cliff rather than giving in to White House pressure. In the end, this debate is about what works and doesn’t work in stimulating the kind of economic growth that makes everything else possible. Republicans believe as a matter of principle that big government stifles growth, and there’s plenty of evidence from the states where Democrats dominate to support that view. You don’t have to buy into all the naive things that supply-side economists say to see that raising taxes is probably going to hurt the economy more than borrowing another trillion dollars from the Middle Kingdom. So in the end, Republicans are likely to stick with their anti-tax convictions because those convictions are grounded in real-world consequences.