John Boehner is a Genius

Turn the clock back a year. It’s the middle of the 2012 election and I tell you that President Obama will win a second term commandingly, Republicans will hold the House and Democrats will keep the Senate. On December 31, the Bush tax cuts expire and sequestration takes effect. Soon after that, we’ll hit the debt ceiling. President Obama also campaigned on raising taxes for those with incomes over $250,000, refuses to negotiate on the debt ceiling and everyone hates sequestration. Oh, and the Republican party will swing even further to the right in the aftermath of the election with Senate Minority Leader Mitch McConnell facing a primary challenge and Senators Ted Cruz (R-TX) and Rand Paul (R-KY) becoming leaders of the party. Over the next 12 months, what do you think the course of economic and tax policy will be?

Here would’ve been my guess:

  • Taxes raised for all those with incomes over $250,000
  • Capital gains and dividends taxed at a much higher rate, if not as ordinary income
  • Estate tax rises back to 40%
  • Payroll tax cut extension
  • Sequestration is rolled back with limited if any replacement cuts
  • Debt ceiling raised without a fight

Here’s where we may be at in just a couple of days:

  • Taxes raised for individuals with incomes over $400,000 and families over $450,000
  • Capital gains and dividends taxed at 20% (rising from 15%)
  • Estate tax rises back to 40%
  • No payroll tax cut extension
  • Sequestration is on the brink of becoming permanent
  • Debt ceiling is shaping up to be a major fight

That’s a lot of victories for Republicans and it’s in large part due to John Boehner. He has repeatedly out negotiated President Obama because he and his caucus seem more willing to break through the fiscal cliff, shutdown the government and default on our debt. In fact, Boehner is not willing to do any of those things more than Democrats are. He brokered a last second fiscal cliff deal that was a pretty big victory for Republicans under the circumstances (only raised taxes on individual income over $400,000). Over the current continuing resolution battle, Boehner is now hoping his caucus will give up their desperate demand to defund Obamacare and pass a clean CR. It’s looking like we could be heading for a government shutdown – the least damaging of all the potential fiscal crises, but damaging nonetheless. In the end though, this will likely be a huge victory for Republicans, even if they don’t treat it as such! Sequestration will stay in effect and while many Republicans don’t like the defense cuts, they are more than happy with the other cuts to discretionary spending. By changing the conversation to focus on defunding Obamacare, Boehner and his colleagues have made sequestration permanent. The upcoming debt ceiling battle is a place where Republicans have leverage. They know the President doesn’t want to breach it – even if he said he won’t negotiate – and Americans want there to be a negotiation. How this shapes up is anyone’s guess, but Boehner has put his caucus in an excellent shape.

Of course, not all of this is Boehner’s doing. A lot of times, he’s gone with the flow and benefited thanks to the credible threats of his right flank to do crazy things. He’s had trouble passing a farm bill and immigration reform doesn’t have a chance in the House. But nothing was going to happen no matter who was speaker. In addition, despite repeatedly promising Tea Party Republicans that they would take on Obamacare and find a way to stop it, he has convinced them to back off and move to the next battle. Most importantly, he’s done so without losing his speakership. I expect he’ll do the same with the debt ceiling since Boehner knows we can’t breach it. But it’s going to be very hard for the President not to negotiate it all. If Boehner extracts any concessions from him, it will be a monumental victory.

So while everyone is saying that John Boehner is irresponsible and has lost control, I think he’s a genius. A lot of the time, he’s going with the flow of his caucus. But he’s also used their craziness as leverage to extract meaningful concession from President Obama and Senate Democrats. At the same time, he’s avoided any fiscal disaster while keeping his speakership. I still hold out hope that he’s going to find a way around a government shutdown. He may not have an exact plan, but he has a strategy:

  1. Lie to his caucus, allow them to “take control” and make it seem as if disaster will strike
  2. Use that desperation to subtly change the conversation to the upcoming disaster and extract concessions from Democrats
  3. Go back to his caucus, say he got everything he could and convince them to vote to avoid the crisis at the last minute
  4. Keep his speakership by allowing himself to seem weak and extract some concessions
  5. Lather, rinse, repeat

It’s worked over and over again and allowed Republicans to swing policy to the right in situations where they have zero leverage. Boehner has stopped the base from causing a fiscal crisis and still kept his speakership. Call him irresponsible. Call him crazy. Call him reckless. Call him whatever you want, but John Boehner has been a brilliant speaker for the Republican Party and Democrats have underestimated him for far too long.

Will the GOP let the Tea Party Break Away?

As promised, I stayed off WordPress and Twitter yesterday and enjoyed watching the election without frantically typing up blog posts. But, now that it’s been a bit, I’m back.

There are a huge number of story lines from yesterday’s results. One main one has been about the state of the Republican party. This has come up with a couple of my conservative friends. The party right now is a mix of center-right moderates and extreme Tea Party members. They are held together by a dislike for President Obama, but the ties are tenuous.

Now comes this from the Tea Party Patriots:

The Tea Party Patriots declared war on the Republican establishment after moderate establishment Republican Mitt Romney’s loss to President Barack Obama on Tuesday.Jenny Beth Martin, National Coordinator of Tea Party Patriots, criticized the Republican Party for hand-picking a Beltway elite candidate who did not campaign forcefully on America’s founding principles and said the “presidential loss is unequivocally on them.”

“For those of us who believe that America, as founded, is the greatest country in the history of the world – a ‘Shining city upon a hill’ – we wanted someone who would fight for us,” Martin said. “We wanted a fighter like Ronald Reagan who boldly championed America’s founding principles, who inspired millions of independents and ‘Reagan Democrats’ to join us, and who fought his leftist opponents on the idea that America, as founded, was a ‘Shining city upon a hill.

Instead, Martin lamented, “what we got was a weak moderate candidate, hand-picked by the Beltway elites and country-club establishment wing of the Republican Party.”

Many of the commenters on the article want to form their own “Tea Party” or “Constitutional Party” to break off from the Republican establishment.

I’m wondering how Republican leaders will treat this. I hesitantly think they may jump for joy. Here’s a perfect way to move towards the center, to become more open to Hispanics and more liberal on social issues. The Tea Party is extreme on all those issues. Just by having them jump ship, the Republican party becomes a lot more appealing to minorities and women.

Of course, that leaves a hole in the GOP base. But if the Tea Party runs a candidate in the next election (or in a Senate race, House race, etc.), he won’t have a chance. The Tea Party does not have bipartisan support and America cannot sustain a third party.

In such a situation though, whoever the Republican candidate is will have a chance and the Tea Party members may switch their votes from their own guy to the Republican at the last second to prevent a Democrat victory. In addition, if the Republicans can pick up a decent percentage of minorities and women, the party won’t be as stuck to its base.

It’s certainly a risky strategy, but it’s also a great opportunity. In the end, Republicans may just say, “Bring on the war.”