The Challenge Facing Republicans

 Vincent J. Truglia

May 27, 2013

Many of you already know the US federal deficit is falling fast.  Earlier this month the CBO, the Washington numbers-cruncher I trust most, lowered its 2013 deficit forecast by $200 billion, to a revised $642 billion.  This represents a deficit/GDP ratio of about 4%, a dramatic improvement over 2009, when that same ratio stood at 10.1% of GDP.

Modest Deficit By 2015

The CBO also now projects that the deficit will continue to decline to 2.1% by fiscal year 2015.  In that year, the deficit will be well below the 40-year average of 3.1%.  By any calculation, the US is not facing a fiscal crisis anytime soon.  The CBO projects that without new fiscal measures, the deficit will slowly start to rise after 2015, but only reaching 3.5% of GDP by 2023, a full ten years from now.

Given this rapidly improving fiscal outlook, what are the political implications?  Republicans took control of the House in the 2010-midyear elections.  At the same time, the Tea Party took the House Republican caucus hostage. When the federal government was running double-digit deficits, Tea Party themes had great resonance. Now that the deficits are shrinking, it will be hard to find electoral success with a shrink-the-government platform.

Democratic Gains

The shrinking deficit will make it easier for Democrats to boast that they have been fiscally responsible, while at the same time resisting the more extreme proposals advocated by the far-right.  For that reason, it is increasingly likely that the Democrats will win additional House seats in the 2014 mid-term election, and remain competitive in the Senate.

Additionally, centrists within the Republican Party will likely gain strength. House Speaker Boehner should have an easier time keeping his caucus in line.

Obama

For Obama, this means he can afford to take the high road to entitlement reform.  He can and should leave reform proposals to blue-ribbon committees, rather than be drawn into closed-door bargaining over vital programs.

ACA

Since all this must be obvious to Republican leaders, what will they do as they lose the deficit as their weapon-of-choice against Democrats? I believe they will take full aim at the Affordable Care Act, or Obamacare.  There is little else they can campaign on.  However, this will prove to be a losing proposition.  Once people begin to enroll in state or federally–run exchanges beginning this October, there will be no stopping it.  People will likely complain about certain measures in the new law, but all in all, they will quickly become used to it.  It is technically impossible for Republicans to repeal the ACA as long as Obama is in the White House.  If the program is in place for several years, even if the Republicans win control of both houses of Congress and the Presidency — unlikely from today’s vantage point — they won’t have enough votes to kill the law since it is extremely unlikely they would win 60 seats in the Senate.

As the uninsured begin to take advantage of Obamacare, many of whom are probably less affluent than the population at large, and historically less likely to vote, this newly insured group might become more energized to vote in future elections to protect their new healthcare plan. We should remember that seniors didn’t become a genuine voting block until Social Security and Medicare were threatened in the 1980s under Reagan.

Student Loans

Besides healthcare, the next biggest political issue is the student loan crisis. Young people are living under a mountain of debt. The latest estimate is that student loans outstanding already exceed $1.1 trillion.  That figure is probably too low an estimate, because it excludes capitalized interest.  Student debt surpassed credit card debt more than a year ago.

Over 15 million Americans under the age of 30 have student loans.  College graduates of the class of 2013 have a whopping average student debt burden of $35,000.  They are starting their adult lives in hock up to their eyeballs.

If the far-right has its way, the federal government will provide less relief to these students and former students, not more. The last election highlighted the fact that young voters, who in the past had been moving steadily to the right, have now, for three election cycles, been moving steadily to the center.  Student loan relief will increasingly become an election-winning issue for Democrats.

Multifaceted Crisis

The Republican Party is in crisis. It has lost its major campaign issue, fighting the federal deficit.  It will wage a losing campaign trying to overturn Obamacare.  In addition, its natural proclivity to austerity will not find support among the 15 million young Americans weighed down by a mountain of debt.  Add to these issues, the unstoppable demographic transition the country is undergoing, and it becomes clear the Republican Party needs a major makeover if it is to survive as a national party.  Without a major change in direction, it will become a regionally based, Southern party.  There, too, with changing demographics in two of the South’s largest states, Texas and Florida, in 10-15 years, the crisis will only grow worse.

As always, Clear and Candid.