New Hampshire Sen. Judd Gregg and Indiana Sen. Evan Bayh are retiring from the Senate, handing over their desks next month. This might explain why both senators seem so thrilled about the coming fiscal Ragnarok.
In an interview on CNBC on Monday, live from the post-partisan launch of No Labels, Bayh said that Democrats and Republicans could come together to attack the debt if there was "a precipitating event of some kind." Gregg jumped in. "The event`s going to be the debt ceiling," he said. "We`re going to hit this debt ceiling sometime in April. I believe, genuinely believe that there is going to be significant action in discretionary control, in Social Security, in entitlement reform and in tax reform. … And it's going to all occur and the forcing mechanism is going to be the debt ceiling." Bayh nodded. "I agree with Judd 100 percent."
Easy for them to say, since they won't be around for the tough votes. But plenty of people who will be around for those votes are saying the same thing. The current tax cut deal moves us closer to hitting the current debt ceiling of $14.2 trillion, which moves the analysts at Moody's closer to downgrading America's bond rating.
This might seem like more of a reason to oppose the tax deal than a reason to force an apocalyptic debt ceiling vote. And some Democrats are using it as one. Sen. Mark Udall (D-Col.) asked if the Senate was suspended in a "parallel universe," since it had so quickly forgotten all the warnings about debt coming out of the Simpson-Bowles commission. "The president's fiscal commission called our national debt a 'cancer' that is threatening our country from within!" said Udall. It sure did. And so did Udall. Nobody in Washington gets anything done anymore without explaining how the failure to do it will cause an extinction-level event.
There's nothing new about hyping a potential crisis to get political allies to sign on to your agenda. It's just happening more frequently now, and with higher stakes, for two big reasons.
The first is that Americans are growing gloomier about the future. Polls on whether the country's on the right or wrong track have leaned toward "wrong track" for roughly five years. A new Allstate/National Journal poll found that one in five Americans expected their economy to be the strongest in the world this century; half expected us to lose out to China. In the 2008 campaign, Barack Obama said the higher-income Bush tax cuts needed to go to prevent us from getting further in hock to China; in the 2010 campaign, now-Sen. Mark Kirk of Illinois went so far as to watch a Treasury debt auction and return from it warning of a coming default. It's not hard to convince Americans that bad policy will turn us into a second-rate power, because they think it's already happening.
The second reason is that liberals and conservatives believe that the other team is trying to provoke a crisis. Liberals have thought this for a while. In 1978, at the dawn of the supply-side tax movement, future Federal Reserve chairman Alan Greenspan made the case for deep tax cuts by saying they'd force future policymakers to make tough spending decisions. "The basic purpose of any tax cut program in today's environment," said Greenspan, "is to reduce the momentum of expenditure growth by restraining the amount of revenue available and trust that there is a political limit to deficit spending." That idea later became known as "starving the beast," and liberals hear it working whenever Republicans talk about massive spending cuts being forced on the next Congress because of the debt ceiling.
Conservatives think liberals are trying the same thing. In the 1960s, left-wing scholars Richard Cloward and Frances Fox Piven argued that more Americans should go on welfare in order to overload the system and force the federal government to "advance a federal solution to poverty that would override local welfare failures, local class and racial conflicts and local revenue dilemmas."
In 2009 and 2010, many conservatives began to argue that Cloward and Piven's vision had come true, and it had worked. The financial crisis, they said, was brought about by leftists forcing banks to make bad loans, in the hope of bringing on … well, a financial crisis. Glenn Beck explained it dozens of times on his Fox News show. "Cloward and Piven instructed activists that if a crisis did not exist, promote or manufacture one by exaggerating some unthreatening predicament," he said in January. "Global warming anyone? And, to an extent, health care?"
The result of all this is that everyone—hardcore conservatives, sensible moderates, Socialist former mayors of Burlington—understands that "staving off a crisis" is the best way to get your message heard. Rahm Emanuel previewed Barack Obama's agenda by saying, "Never let a serious crisis go to waste." Republicans see the debt ceiling vote as a crisis not to be wasted.
"Imagine what would happen if Moody's downgraded the rating before the vote," said one GOP aide, explaining what Republicans might do to make sure the debt ceiling debate starts with serious discussions of deep spending cuts. "That would turn this place upside down."
No one should read too much into the failure of conservative groups—and the vast majority of Republicans—to oppose a tax deal that doesn't pay for itself. It's not supposed to pay for itself. It sets the table for a few months in which conservatives and Republicans can organize around the cuts and assaults on sacred cows that could prevent the need to raise the debt ceiling. That will mean more YouCut-style contests for user-driven spending reductions, but it will mean larger, more serious attacks on entitlements, too. You can't really have that debate unless you're trying to stave off a crisis.