May 11, 2011 11:45 pm

America: Elephantine problem

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Republicans struggle to find a credible presidential candidate
Republican headquarters

Dais straits: the Republican headquarters in Washington. The party lacks a strong field as primary season approaches, even though it has been in the ascendant for most of the past 18 months

Most Americans have never heard of the Bureau of the Public Debt. But the body, which is part of the Treasury department, is at the heart of how the country is kept afloat in the 21st century. In a near-daily ritual, it conducts auctions of Treasury securities to raise tens of billions of dollars to fund the federal government and service the swelling public debt.

“It’s frightening,” says James Risch, a Republican senator from Idaho, after witnessing one of the auctions on a lawmakers’ visit to the bureau. “People don’t really comprehend what’s going on because the human mind cannot comprehend the magnitude of the sums that are being talked about.”

Mr Risch is no Tea Party ingénue. He served as a governor and in a series of other senior posts in his state before being elected to the US Senate in 2008. His views about the debt, however, are firmly in the mainstream of American politics, which is increasingly obsessive in its focus on how to cut the size of government and bring the budget deficit under control.

The Republicans have pushed these goals ceaselessly, demanding spending cuts to pass each budget measure in Congress. To lift the debt ceiling in coming months in order to allow the Treasury to borrow money the government has already spent, the Republicans say they want “trillions” more in cuts.

For a president who came to office with the Herculean task of cleaning up the economy after its near collapse in the 2008 financial crisis, Barack Obama remains relatively popular. His national security credentials have been burnished by this month’s raid that killed al-Qaeda leader Osama bin Laden. But for most of the past 18 months, the Republicans have been in the ascendant, fuelled by popular disquiet with the ambitious agenda of the early Obama years, anxiety about the economy and mounting concern about government spending and budget deficits.

Last November, the party scooped the midterm elections, robbing the Democrats of their majority in the House of Representatives and constraining Mr Obama’s ability to advance any new programmes. Arriving in Washington, the newly elected Republicans promised to tear up the president’s legislative achievements, especially healthcare reforms.

In recent weeks, however, the party’s no-holds-barred approach to the deficit has left them looking like the dog that caught the car, tossed around by their own agenda.

Republicans in the House have begun squabbling openly over radical changes to health spending that only weeks ago they voted overwhelmingly through the chamber.

Most embarrassing, however, has been the carnival-like search for a candidate to run against Mr Obama. Donald Trump, the property developer and television star not seen as a serious candidate by anyone in the party, was briefly rated the most popular potential Republican candidate in polling late last month.

His bubble has now burst, and more serious candidates such as Newt Gingrich, who joined the race formally on Wednesday, are preparing runs. But the party is struggling to find a winning standard-bearer to articulate and enact its programme.

Only a few months ago, the party was being fuelled by an explosion of energy in conservative politics, from the surge in Republicans in Congress to the proliferation of grassroots activists under the banner of the Tea Party and the relentless advocacy of Fox News, by far the most popular cable news outlet.

“In the last four years, [the foundation has] gone from 280,000 to 710,000 members,” says Edwin Feulner, president of the Heritage Foundation, a leading conservative think-tank. In the days of Ronald Reagan, he says, they would congratulate themselves if they had 100,000 members.

Most of the additional members have joined during Mr Obama’s presidency but the conservative revolt started during the administration of his Republican predecessor, George W. Bush, with anger at his lax fiscal policies

Conservative activists have money as well. Some of the most cashed-up operate in newly created funding groups outside the party with the power to spend on the candidates and races of their choice.

The conservatives are aggressively selling their vision of smaller government, with cuts in welfare and health of the kind not contemplated in more than a generation, and will not countenance tax rises of any kind.

Mr Obama, in turn, has proposed a kind of fiscal straitjacket to kick in by 2015 if deficit reduction does not meet specified targets, forcing automatic across-the-board spending cuts but also a reduction in tax breaks and higher marginal rates for the wealthy.

Hanging over the debate is the threat of another US financial crisis with global fallout. If investors such as China balk at taking part in the Bureau of the Public Debt auctions, interest rates would have to rise sharply, with a catastrophic impact on economies around the world.

The political terrain has rarely been more fertile for budget-cutters. The deficit this fiscal year is forecast by the White House to be $1,650bn. For every dollar it spends, the US must borrow 42 cents.

So far, outrage over the debt has proved a vote-winner. The 2010 congressional elections, which the Republicans won overwhelmingly, represented a watershed for the conservative movement. “It was the first election that I can recall when people actually voted on their concerns about the deficit and spending,” says Vin Weber, a former Republican congressman and consultant. “Republicans always talked about it, but it was never a voting issue, except for perhaps in a small way when Ross Perot ran in the 1992 presidential poll.”

Mr Weber says the party has been transformed over decades with the influx of small business, farmers, conservative Christians and the working class. “It is the replacement of big business by big government as the ultimate object of populist scorn and resentment,” he says. “Obama is the symbol of big government to these folks.”

The issues that form the holy trinity for social conservatives – described by one political consultant as “abortion, guns and gays” – are still pushed by some Republicans. But they take a back seat to fights over the size of the government. Each budget measure this year in Congress has provided an opportunity for the party to demand ever deeper cuts.

“I expect the debt ceiling will probably pass,” said Mr Risch in an interview before negotiations opened last week between the administration and Congress. “The issue is: what do people get for it? It is a unique opportunity for those of us who want to see some sanity restored to this process.”

Even as they push drastic spending cuts, few Republicans in Congress have dared challenge a countervailing conservative edict outlawing raising extra revenues through higher taxes. Jim Jordan, an Ohio Republican, heads the most powerful caucus in the party in Congress. The Republican Study Committee has 177 members, or about three-quarters of the party’s House members, and Mr Jordan is adamant that taxes cannot rise in any form.

“We truly believe that you don’t get growth when you are taxing small business and the like – it is a fundamental core belief that we have,” he says. “Some say that you must raise the debt ceiling otherwise you might have a crisis in the bond market, but if you keep spending at the pace we are then you will have a crisis.”

But the deficit-cutting ardour is starting to catch up with the party. The Republican House almost unanimously voted last month to pass the budget proposal crafted by Paul Ryan, the Wisconsin Republican who heads the House budget committee.

The vote was largely symbolic as the Democratic Senate would never pass the bill but its radical provisions limiting government support for the healthcare of the elderly and the poor are already unnerving the party.

Many Republicans returned to Washington last week with the anger of elderly constituents ringing in their ears and their enthusiasm for the Ryan plan diminished. In the short term, it has been dropped as a bargaining chip with the Democrats on a deal to raise the debt-ceiling.

Open warfare has also broken out between Republican senators trying to craft a compromise with fellow Democrats on the deficit and Grover Norquist, the powerful head of Americans for Tax Reform.

Republican Senator Tom Coburn backed a plan to end a $5bn annual tax break for companies that blend ethanol with petrol but Mr Norquist and other anti-tax activists have declared the policy unacceptable. Measures such as ending ethanol subsidies or other such loopholes that increase revenues, they say, amount to de facto tax rises, and must be matched by comparable cuts.

An infuriated Mr Coburn responded by labelling Mr Norquist “the chief cleric of sharia tax law”. The riposte contains a nasty edge, as Mr Norquist’s wife is a Palestinian Muslim and he has been attacked by Republican party members for his views on the Middle East.

It will take months to find a candidate, during which time the president’s stock could slide along with a weakening economy. But the field of potential candidates is not strong. Some Republicans privately concede they are unlikely to win the White House and will have to settle on winning the Senate.

Even with the entry of Mr Gingrich into the race, most of the party establishment is focused on persuading alternative candidates to run, most notably Mitch Daniels, the Indiana governor. Mr Daniels jokes that he is famously dull – but he is a serious politician, with a fiscal CV the grassroots love.

Mr Feulner at Heritage remains optimistic, pointing to the fact that Social Security reform was finally attempted (albeit unsuccessfully) by the second President Bush decades after he and his colleagues raised it.

“It was 30 years from when we started talking about it,” he says, “to the politicians catching up.”

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