Republicans Must Retreat, Not Surrender, on the Fiscal Cliff
It’s time for John Boehner and the House and Senate Republicans now engaged in the fiscal cliff negotiations to learn a lesson from George Washington: when faced with fighting a losing battle, the wisest course is to retreat rather than surrender.
George Washington didn’t get to be the Father of His Country by leading his often outnumbered and outgunned troops on suicide missions. Washington fought few pitched battles in the Revolutionary War, usually unsuccessfully (as at Long Island, Brandywine and Germantown). His signal successes involved surprise attacks (at Trenton) or trapping or cornering his foes without a full-scale open-field engagement (at Boston and Yorktown). Facing numerically superior forces, Washington often preferred to retreat to save his army from disaster, even after successful smaller engagements like the fight at Harlem Heights. Often in 1776 and 1777, as his army unsuccessfully sought to defend New York and Philadelphia from the steadily building British army, Washington would have his troops disengage and slip away in the dark, even at the cost of eventually having both cities captured by the enemy. For much of the war, Washington would resist Congressional entreaties to launch more ambitious offensives (such as an impractical invasion of Quebec), and at times would hastily abandon positions (like at Stony Point) that his men captured but could not defend.
Washington’s evasiveness – and his army’s endurance of hard marches in the snow at Trenton in the winter of 1776 and winter quarters in the bitter cold at Valley Forge in the winter of 1777 – enabled him to keep his forces together until they were strong enough to fight the British to a standstill at Monmouth and until the reinforcement of allied troops from France arrived. Washington’s subordinate Nathaniel Greene conducted a similar campaign in the South, harassing Cornwallis while losing most of his battles (as Greene wrote, “[w]e fight, get beat, rise and fight again”) but remaining on the run, avoiding a decisive engagement until Washington and the French could trap Cornwallis at Yorktown in September 1781.
Washington’s approach didn’t just help his army avoid annihilation or capture until it could grow stronger and obtain outside help. It also staved off an ever-threatened collapse in morale, as Washington’s men avoided more of the kind of disastrous routs that would lead to more desertions and fewer recruits. In time, it bonded Washington to his men, who grew to trust his judgment. Of perhaps particular interest to Boehner and McConnell, it also helped Washington avoid being replaced from his command by an antsy Congress. And in the end, it brought him victory.
The one thing Washington never did in the Revolution was surrender. Only once, at the outset of his military career, did he do that, and it ended in disaster for all involved. In 1754, Washington – then a Colonel in the Virginia militia under the command of the British royal governor – was sent to scout the frontier in what is now Western Pennsylvania, with orders that authorized him to fight anyone obstructing British settlements in the area. Finding the French in possession of a partially constructed British fort, Washington and his Iroquois allies launched an attack (begun under circumstances that are murky to this day) that ended up with the French commander, Joseph Coulon de Villiers de Jumonville, being killed and scalped by the overzealous Iroquois leader, Tanaghrisson, possibly while attempting to negotiate a cease-fire. (“Overzealous” may be putting it mildly – Tanaghrisson split Jumonville’s head open and washed his hands in his brains. Boehner’s and McConnell’s issues controlling their caucus seem mild by comparison.)
The French in the area, under the command of Jumonville’s brother Louis Coulon de Villiers, launched a counterattack along with their own Native American allies, cornering Washington (now abandoned by the Iroquois) at Fort Necessity. Villiers threatened to storm the fort and let the Native Americans scalp Washington and his entire garrison, but since the two countries were not at war, he offered Washington safe passage with his men back to Virginia if he surrendered. The deal also included a prisoner exchange at the conclusion of Washington’s withdrawal from the area. Badly outnumbered, with rain soaking his ammunition and his men breaking into the fort’s liquor supplies, Washington capitulated – and signed terms written in French by a vindictive Villiers that would haunt him:
All Washington had to do was sign the terms of capitulation.
Washington, due to a mistranslation, thought he was confirming that his men killed Jumonville, or so he insisted the rest of his life. The actual French word, “l’assassinate,” was more loaded, meaning murder rather than just kill. To make things worse, the document also mentioned that Jumonville had been on a mission to deliver a communication from the French government to the British government; in other words, a diplomatic mission. Washington might have learned this earlier, had Jumonville’s letter been fully translated before Tanaghrisson acted, and been able to restrain the Indians. Tanaghrisson, who seems to have understood French, probably realized this.
Washington, duped, blamed his translator, Jacob Van Braam, and never spoke to him again. Neither side ended up honoring the remaining terms of an agreement negotiated in bad faith under duress. The succeeding controversy touched off the global war known in the U.S. as the French and Indian War, with dire results for all sides. For Washington, it meant being sent back to confront the French along with a British expeditionary force led by General Braddock. Braddock sought decisive battle and got it, with his expedition ending in a rout that killed its commander and required Washington to shepherd the remaining forces home safely. For the French, the war itself resulted in the loss of all their North American possessions. For the British, Braddock’s defeat convinced the colonials that they could handle battle as well as the British regulars, a discovery that would help trigger the American Revolution 21 years after the surrender at Fort Necessity (a revolution that itself would help contribute to the fiscal crisis that collapsed the French monarchy).
Today’s Field of Battle
The Legislative Terrain
The “fiscal cliff” negotiations, which by design were set for right after the presidential election, have been built around the legislative Doomsday Device constructed by the two parties in 2011 and having its roots all the way back to George W. Bush passing tax cuts in 2001 and 2003 that would expire in 2010 unless extended. The “cliff” refers to a bunch of things that will happen automatically without legislative action – signed by the President – to prevent them:
1. The [temporary] payroll tax reduction passed in 2010 will end.
2. The temporary tax rates passed under President Bush will lapse.
3. Obamacare’s taxes will come due.
4. The Alternative Minimum Tax will expand to many more taxpayers.
5. Extended unemployment benefits will expire.
6. Some $78 billion in federal spending will be sequestered.
7. Medicare “doc fix” will expire.
By choosing to fight right after the election, Republicans took the risk that Obama would win and negotiate from what is likely to be the high point of his second term popularity. Each side holds hostages: Obama holds the extension of the tax cuts, especially the cuts for the top tax rates, which Republicans want; Republicans hold the extension of the debt limit. On the tax side, Democrats (in a sharp reversal from their position during the Bush years) profess to want to make the Bush tax cuts permanent below a certain income threshold, and have previously passed a bill in the Senate to do so. Obama’s hostages among the top rates include the capital gains rate, which is of particular importance to the economy:
The Senate-passed bill to extend Bush tax cuts for income under $250,000 ($200,000 for a single filer) applies to both the 2001 and 2003 Bush tax cuts, and thus also allows tax rates on capital gains and dividends over $250,000 to return to 20 percent. It would also reinstate separate tax provisions cutting the amount by which high earners can benefit from the personal exemption and itemized deductions.
On the spending side, the sequester cuts include dangerous cuts to defense spending, which Republicans want to avoid and which Obama professed to not want during the election campaign, and a variety of social-program spending the Democrats want to preserve. Items that could potentially be included in a deal range from entitlement cuts to eliminating deductions in the tax code. Different economists project various sorts of doom from “going over the cliff” or for pretty much any other possible solution; your mileage may vary as to how seriously to take these.
The Political Terrain
Republicans and Obama both have immediate political stumbling blocks and goals aside from their long-term policy interests. For Republicans, the top of that list is the Americans for Tax Reform no-tax-hikes pledge, which most have taken. Grover Norquist, the head of ATR, doesn’t wield all that much power by himself, but House and Senate Republicans who have taken the pledge can be in a very bad place with their own constituents (think: “read my lips, no new taxes”) if they break it without a really compelling reason to do so. No GOP-controlled House since the institution of the income tax has ever raised rates. But they also have one possible escape hatch: it’s not a real violation of the pledge for tax hikes to happen automatically without a vote, especially if Republicans have gone repeatedly on record trying to extend them.
Obama’s goal is twofold and related. First, he wants to break Republicans, and divide the party to it’s less able to resist him in his second term. And second, he wants to get the core of his economic agenda – the top-rate tax hikes and “Buffett Rule” tax hikes on investments – passed with GOP support so that he can spread the blame for the consequences. Obama may be slow to learn this lesson, but he understands that the game theory calculus from the 2009 stimulus – that the only safe place for Republicans is to wash their hands of his agenda – requires him to find a way to keep Republicans out of that place. Bipartisan cover is particularly important to Senate Democrats up for re-election in 2014 in Louisiana, Arkansas, West Virginia, South Dakota, and Montana (all states Obama lost twice), as well as states like North Carolina, Virginia, and New Hampshire. Like Villiers at Fort Necessity, Obama wants Republican signatures on a deal that can be used against them.
But that’s if there’s an agreement. If there is none, the political reality is that the media is prepared to blame the GOP for any failure to reach an agreement, pretty much no matter the course of negotiations, and in the immediate honeymoon period following Obama’s re-election, this will probably work. Democrats have internalized this argument, saying the GOP is checkmated. This has emboldened Obama. Treasury Secretary Geithner declared that the Administration would go over the cliff unless a deal included hikes on taxpayers above $250,000. Press Secretary Jay Carney insisted, as Obama had said repeatedly during the campaign, that Social Security would not be on the table. Dick Durbin says the White House told him the Medicare eligibility age is not on the table. And on the debt limit:
President Obama is saying flatly that he will not negotiate under any circumstances over raising the national debt limit….the President says he won’t negotiate under any circumstances. And his top advisors say he’s adamant on the point – not just because of the current impasse but to take hostage taking over the national debt off the table for good.
This is all consistent with Obama’s traditional approach of offering nothing of value to Republicans to get bipartisan deals done. As usual, Obama is attempting – even without control of the House of Representatives – to proceed on what I’ve described before as the annihilation strategy of winning legislative victories.
Learning To Retreat
Nervous Hill Republicans have taken all this as a sign that they must accept a deal, any deal, and that Obama has them over a barrel, even if it means trading tax hikes for the illusion of spending cuts. But that is the wrong approach. The GOP can always retreat – but it must be to more defensible ground.
As I have written before at length, you win battles in politics by picking fights you are willing to lose. As streiff’s analogy to Keyser Soze makes clear, that includes showing a willingness to stand back and let Obama shoot his hostages. But it doesn’t mean the GOP is holding a strong position, either. Some hardliners think “no surrender” means we have the leverage to win all kinds of concessions, and Phil Klein explains why this is madness, and specifically why just walking away completely could leave Republicans in a much worse position come January:
[Consider] the effect on [the GOP's] low-tax brand from letting everyone’s taxes go up on Jan. 1. At that point, Obama can go on television and demand a $3.7 trillion tax cut for 98 percent of Americans. What happens to the brand if Republicans oppose a tax cut for the middle class because it doesn’t also lower rates on those with the highest incomes?
What happens when Harry Reid holds a vote on a bill that lowers rates on the middle class? Will Republican senators vote against it? If so, their challengers can run ads attacking them for voting against a massive middle-class tax cut. What does that do to the brand? And when, in all likelihood, such a bill passes with near-unanimous support in the Senate, what does it do to the House GOP’s low-tax brand if their members resist, bottle up or vote against the same tax cut?
The time for Republicans to win the tax debate was during the 2012 election. They lost. That doesn’t mean they need to give away the store, but it does mean that they’ll have to make some accommodation for reality.
I highly recommend reading both Klein’s and streiff’s essays in their entirety, as they frame the two possible approaches to walking away from a deal, along with Drew M’s “Let it Burn” argument. Klein says the GOP should just pass an extension of the Bush tax cuts for everyone below $250,000, dare Obama and Harry Reid to oppose them, and leave town; streiff argues that Republicans should just let the whole cliff go into effect, tax hikes and all, because the cliff includes cuts the GOP couldn’t get at the bargaining table; Drew argues that voters simply need to see the consequences of electing Obama. I think Klein has the better argument, the one that places Republicans in the position George Washington would have appreciated: having retreated to more defensible terrain where they can use their leverage over the remaining hostage (the debt limit) to ransom the defense cuts and perhaps get some additional modest concessions, while making clear that it was the Democrats alone who chose to raise taxes. It now appears that Boehner is pushing a “Plan B” that could do something like that – making the Bush tax cuts permanent for everyone below $1 million.
Of course, a retreat does not mean the end of the fight. And while Republicans do not have great leverage, they still have an advantage that gets undercovered by the media: the Democratic camp itself is divided on what it can and can’t swallow. For example, Obama may be willing to accept letting the payroll tax cut expire, a move that is deeply unpopular with base groups like MoveOn.Org. Senate Democrats are also divided over “Chained CPI,” a method of restraining the growth of Social Security benefits. But the George Washington approach – engage, retreat, maneuver, and make the Democrats show their cards – is a better way to tease out those divisions than either a suicidal last stand or an abject surrender.