Republicans Need a Graceful Exit Strategy, Now
As the shutdown grinds into its second week, I thought it might be useful to lay out why I think Republicans should look for a graceful exit as quickly as possible, rather than trying to use the shutdown -- or God forbid, the debt ceiling -- to extract unlikely concessions.
I know that many of my conservative readers do not believe this, but I share many of your goals. I would like a smaller government that does less stuff. I oppose the Affordable Care Act.
Yet I am opposed to the shutdown because I think it does real institutional damage to the country, and because I don't think it will work. It is damaging the Republican Party's prospects, while not noticeably increasing the chances that government will shrink.
I understand the frustration. Government is much bigger, and stupider, than it would be in a world designed by me. It does too much, and too little of it well. Democrats are working on a huge expansion of an entitlement state that we already can't afford.
But -- as I frequently say to liberals who get huffy about my opposition to Obamacare -- the fact that there is a problem does not mean that there is a solution. The fact that you are really angry about what has happened over the last four years and passionately wish to undo some of the damage does not mean that a way exists for you to do so. Do not fall prey to that fatal political syllogism:
1. Something must be done.
2. This is something.
3. Therefore, this must be done.
That logic is, after all, what brought us the giant Rube Goldberg apparatus of Obamacare.
Here are the reasons that this particular "something" -- the shutdown -- should not be done:
1. The public doesn't like it. Look what's happened to President Barack Obama 's poll ratings over the last few days:
That's the shutdown. It looks to me as if the public is rallying behind the president, breaking the downward momentum of his approval ratings. Fair or not, the public is mostly blaming the Republican Party for the shutdown. You can complain that this is because of the news media's bias, but here's the thing: It doesn't matter why the public blames the Republican Party. You go to war with the media you have, not the media you think you would have in a fairer world. If people blame the Republicans, they will be the ones to pay the price in the next election.
2. The administration cares more about Obamacare than anything else. In fact, it feels as intensely as the Republicans about Obamacare. President Obama will shut down the government and breach the debt ceiling rather than repeal it, not least because doing so would mean giving up any hope that the thanks of a grateful nation for its awesome new health insurance might make up for the last three years of political misery.
Democrats may be willing to carve off some bit they don't really care about, like the medical-device tax. But is it worth shutting down the government -- or breaching the debt ceiling -- to get rid of a tax that raises 0.1 percent of federal revenue?
QuickTake: The Debt Ceiling
3. The shutdown is eclipsing the horrifyingly inept rollout of the federal exchanges. Republicans should be basking in schadenfreude while a grief-stricken administration watches its poll numbers plunge. Instead, Obama and his deputies are getting front-page stories every day where they get to claim to be the grown-ups in the room. Again, I don't care whether this is because the mainstream media is biased, unless you have a negotiation scenario where the MSM disappears at the stroke of midnight and is replaced by the staff of the National Review and the Daily Caller.
4. The markets won't like it. If markets decide to raise our borrowing costs, then this is definitely not going to strike a blow for fiscal responsibility. Money will have to be taken from something else to pay those interest costs. That "something else" may well be the pockets of taxpayers -- especially if the shutdown results in more Democrats being elected in 2014.
Remember that if markets get spooked, the cost goes up not just on our future debt, but also on our existing debt, which periodically has to be rolled over into new debt (unless you have $10 trillion on hand that you'd like to contribute to pay that old debt off). Our borrowing costs can rise even if we stop borrowing entirely.
A number of Republicans seem to be telling themselves that all this actually sends a welcome message to the market that we're serious about controlling spending. CongressmanTed Yoho voiced the purest form of this belief, when he said that:
"I think we need to have that moment where we realize [we're] going broke," Yoho said. If the debt ceiling isn't raised, that will sure as heck be a moment. "I think, personally, it would bring stability to the world markets," since they would be assured that the United States had moved decisively to curb its debt.
I ran this by a financial guy of my acquaintance, one who is responsible for how quite a lot of money gets invested in debt. He's also quite conservative. Here's his take on the debt ceiling:
"Breaching" the debt ceiling wouldn't do much at all, everyone expects issuance to increase by some means. Defaulting would not calm the markets, obviously. If the perception were that payments are delayed while the political process grinds to a foreseeable end, it won't be too bad. If there is a perception we are institutionally adrift, Katie bar the door.
It would calm the markets if we engaged in an orderly process of deficit reduction while still providing copious amounts of "risk free" paper to them.
I concur, this statement is moronic in isolation and it is difficult to imagine a context in which it might sound like wisdom.
The markets do not care about whatever trivial amount of spending Republicans might succeed in cutting by these maneuvers. They don't care whether the federal government spends 25 percent or 28 percent of gross domestic product. What they care about are the odds that they will get paid. And signaling that the two parties are completely unable to conduct the normal business of government is a good way to highlight a risk that they might not get paid.
The reason markets haven't freaked out already is that they think that both sides will eventually reach some sort of not-very-exciting compromise. If Republicans and Democrats refuse to do this -- well, as my correspondent says, "Katie bar the door"
5. You don't actually want to prioritize payments the way you say you do.
I went through the government and prioritized stuff the way that I thought Republicans would like: not touching Social Security, Medicare or Medicaid, leaving border patrol intact, paying veterans' benefits and so forth. Here's a list of things that didn't make the cut.
The price for paying military families, keeping old-age entitlements and unemployment insurance intact, opening the national parks, keeping the highways running and so forth is that all aid to education at every level stops immediately, from your local school district to any college students you might know who were planning to pay their tuition with student loans. Food stamps and Section 8 vouchers go to zero, and shortly thereafter, hungry and homeless kids show up on the evening news. Farm subsidies also go away, which is going to have interesting repercussions for Republicans from farm states. Bye-bye disaster relief: Florida and Texas, you're on your own. Good luck next hurricane season. All research and development is shut down, including the National Aeronautics and Space Administration. All military procurement and construction stops, so I sure hope that none of the House members have military bases or contractors in their district.
Now, maybe you think that this budget is desirable. But no one who has paid attention to Washington for more than a minute could think it was feasible. Too many districts would get big cuts, immediately. Which means that Republicans are going to have to raise the debt ceiling.
The question, then, is how to do it gracefully. My advice, for what it's worth, is to ask for something you can get, and then settle for that. Be realistic about what Democrats are going to agree to -- and the answer is not "completely dismantling Obamacare," however wonderful that would be.
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Megan McArdle at firstname.lastname@example.org