The GOP: Getting Serious About Governing?

I have noted before that the contemporary GOP seemed to be AWOL in the war of ideas, citing John Boehner’s recent remarks in Cleveland as exhibit A. Now it appears that the GOP is attempting to shake its recent label as the “Party of No” by releasing a 20 page document entitled A Pledge to America (draft text here) presenting a host of reforms that a Republican controlled Congress would pursue (see a brief overview at Politico).

This certainly is an improvement over the overly general statements of the past. There are some interesting ideas here and I think the electorate is well served when parties provide a unified front and make commitments to relatively specific proposals.  I am concerned that the Pledge promises to reduce the deficit largely through caps on non-security related discretionary spending (everyone knows that the engine of growth is and will be entitlement spending). And on entitlement spending, the Pledge is overly vague:

Reform the Budget Process to Focus on Long-Term Challenges: We will make the decisions that are necessary to protect our entitlement programs for today’s seniors and future generations. That means requiring a full accounting of Social Security, Medicare, and Medicaid, setting benchmarks for these programs and reviewing then regularly and preventing the expansion of unfunded liabilities (p. 11).

I suppose in an electoral season, this is about the best that one can hope for. Anything more specific would give rise to a geriatric revolt.

There are a number of promised reforms in process, including allowing members of any party to offer amendments on any bill that would reduce spending.  Assuming that parties are procedural cartels that control access to the agenda (see Cox and McCubbins, Setting the Agenda) and given the recent history when the GOP as majority party used rules rather ruthlessly to control business in Congress (see Hacker and Pierson, Off Center), I can’t imagine that this promise will be realized.

There are a few nods to social conservatives (e.g., “We pledge to honor families, traditional marriage, life, and the private and faith-based organizations that form the core of our American values” in the preamble). But this document seems to be driven by fiscal conservatives with hopes of appealing to the Tea Party independents.

Undoubtedly, few will read the Pledge (it is far too convenient to listen to the talking heads spinning a document that they too have never read). But I recommend it to Pileus readers and look forward to any reactions.

13 thoughts on “The GOP: Getting Serious About Governing?

  1. A message to tea partiers and other questioners:

    In the land of the free and the home of the brave, the banks are not free and are instructed to be coward, all as a result of the orders given by the Basel Committee.

    A visitor from outer space, when observing its bank regulations, would most likely conclude that the US is communistic and dumb-dumber.

    Communistic because current bank regulations require a bank to hold 100% of the standard capital requirement when lending to a small business or entrepreneur, but only 0% of it when lending to its triple-A rated government.

    Dumb because getting out of this economic imbroglio requires a new generation of jobs and the small businesses and entrepreneurs have the best chances of finding these; and dumber because no bank crisis have ever occurred from excessive lending to small businesses and entrepreneurs perceived as risky, they have all resulted from excessive lending to what is perceived as not risky and later turn out to be risky… like over-indebted triple A governments.

  2. An amusing read. Just a short note:

    We pledge to roll back spending to pre-bailout, pre-stimulus levels. Good idea. Reduce spending by about 1 trillion US$ per anno or to say it in another way reduce GDP by about 7%. That means growth of -5.5% per anno or by multiplier effect probable more like -14%. A full-blown depression will surely create a lot more jobs. At least in soup kitchens and homeless shelters.

    1. If we were really smart, we’d just give all our gross product to the government to spend instead of just spending it ourselves – so we could bask in the fruits of the great multiplier.

      1. You seem to have an issue with accounting. Do you think we must re-write the glorious 500+ year history of double book entry?

        If the government spends 1 trillion US$ in one period in excess of its tax revenue this money does not disappear in a black hole. It shows up in banks reserve accounts. For an operational perspective you might consult a bond trader.

        The government first spends this trillion by crediting bank accounts. Then due to institutional settings it issues treasuries in exchange for this trillion. This is what bond trader call “a wash”.

        This exchange of financial assets bank reserves for treasuries is basically a maturity transformation and to the liking of the private sector because it prefers holding financial assets that bear an interest.

        Some unnerving people like me talk about this trillion in the context of private sector financial wealth.

      2. Because I have a problem with large amounts of deficit-spending I must have an issue with accounting? I think not.

        I think you largely missed my point. If you think the government borrowing and spending $1 trillion is great (over-all) for the economy, then why not $2 trillion, $10 trillion, etc.? In other words, I think there are some longer-term consequences _possibly_ worth considering.

    1. Cool link! The true radicals. I would love to see a pledge along this line of thinking being tried out in reality. My guess: After 2 years there will be a revolution under the rallying cry: Give us socialism.

  3. Ryan,

    A short note: I’ve nothing against libertarians. But the question of size and purpose of government is a political, philosophical, maybe ethical question which should be discussed in the proper domain. For me it makes no sense to conflate these domains with economics. Current monetary arrangements are compatible with small and big government. I don’t think it’s a good thing to come up with pseudo-scientific economic arguments just to bolster a specific political view.

    Now of course government spending is constrained in regard to what real resources are available in exchange for financial assets. If you have a 1.2 trillion US$ output gap and many households trapped in what I would term debt peonage then government can fill this gap or not. Either way deficits will rise. In the later due to automatic stabilizers (tax revenue goes down and welfare spending rises). This is what I consider a “bad” deficit.

    If you want government do nothing and balance budget you must do away with welfare payments and social security expenses. And I hope we can agree, that whether this should happen is a political question.

    1. Stephan – I somewhat agree. I wasn’t trying to turn my comments into something purely political. I was trying to appeal to the macro-economic consequences of artificially servicing the debt. The shell-game has real consequences – ones that aren’t specifically political. If you want to know more specifically where I’m coming from, I’m somewhat in line with Arnold Kling on much of this. I’m sure he does the arguments better service than I can here without writing a book’s worth the text.

  4. Ryan,

    I see. I don’t want to comment on Kling macro-economics. Only so much: Opposite to Kling I’ve eventually worked in Finance. And from my experience if you balance the federal budget and pay down federal debt the first thing which will happen is: you wake up in the morning and find an assembly of Wall Street bankers on your front-lawn wielding pitch-forks and crying we want our treasuries back.

    1. I think you pinned the exact point of contention. You’re looking at things from a finance-perspective. I’m not making any general arguments about deficit-spending from that perspective – in fact I’m not really contending any of the points you’ve made. Kling is also not arguing from a finance-perspective. And rightfully so, because his points have nothing to do with whether a government action looks feasible or even preferable on a balance sheet. He’s concerned with the broader macro-economic impact on market incentives; the actual structure of the economy itself. If you don’t feel the need or want to address those issues, that’s fine. But I (like he) am not making arguments based on how financially sound fiscal spending happens to be on paper…whether funded through deficit or not.

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