Divided government is our friend
Here’s one of Washington’s rich ironies: Many of us might see divided government as a recipe for stalemate, but it’s actually wonderful for reducing the deficit.
Just look at three of the last four major deficit deals: 1990, 1997 and now this year. They happened when Democrats and Republicans split control of Washington.
The exception is the pact Democrats passed in 1993, when they controlled the White House and Congress. Otherwise, deficit breakthroughs have occurred with the kind of partisan tension and high-wire acts we’ve seen the last few weeks. Given the threat that the inordinately large deficit and debt pose to our economy, maybe we should think of splitting tickets at the polls.
In 1990, Republican George H.W. Bush was president, and Democrats controlled Congress. After considerable friction, the sides produced an accord that included serious spending caps for the first time.
In 1997, Democrat Bill Clinton was president, and Republicans controlled part of Congress. A square-off previously resulted in a government shutdown, but they got past that to enact a deficit reduction bill that led to a budget surplus, something that seems unimaginable now.
The latest divided government product is the budget deal Demo-crats and Republicans struck late last Friday. They worked until both parties almost fell off the high wire in trying to avoid a government shutdown. Then, presto, like circus performers, they climbed back down with a deal in hand.
Republicans got $38 billion in discretionary domestic spending cuts for the rest of this year’s budget, which equals $500 billion in savings over a decade. In return, they gave up on getting $61 billion in one-year cuts.
Democrats showed they, too, would cut programs over which Congress has control. In return, they kept Republicans from gutting federal funds for Planned Parenthood.
This is a great outcome for both parties since each can claim credit. It’s a superb result for President Barack Obama since he can look like a pragmatist. And, most important, it’s a major breakthrough for the country since we need to show our creditors that we’re controlling spending.
The deal Obama helped broker also resulted in a fairly balanced approach, which never would have happened if only one party ruled Washington. Because of the tug-of-war, the product wasn’t tilted toward one party.
Actually, this is the second recent major victory for divided government. After November, when voters put Republicans in charge of the House, the parties traded back and forth until they reached a tax deal.
The White House and Congress wisely extended the Bush-era cuts so a big tax hike wouldn’t further derail the economic recovery. They also wisely did not make those cuts permanent. By only extending them, they gave both sides time to swap them out for a better tax code.
GOP Rep. Paul Ryan of Wisconsin took the first step last week toward that better code. His plan would simplify rates and close loopholes.
That’s a big move since a simpler code would be easier for individuals to follow and allow businesses to put their man-hours into more productive uses than deciphering tax laws.
But Democrats also are right that any major tax reform must produce revenues to whittle down the $14 trillion debt. And Ryan’s plan is revenue-neutral, as they say in Washington.
A good rule of thumb is that tax revenues should supply about 25 percent of the funds needed to offset the debt. The remaining 75 percent must come from further spending reductions in entitlement programs like Medicare and, yes, from defense spending.
So, look for more tug-of-war once Congress takes on the debt, which it must do this year to avoid a collision with the federal debt limit. But there’s hope in this counter-intuitive reality: Divided government again could be our ally.
William McKenzie is an editorial columnist for the Dallas Morning News.