Seize the Momentum

In 1998, the congressional Republicans’ midterm election strategy backfired. Tired of fighting President Clinton on issues, Republicans instead tried to make the midterm election a referendum on impeachment. Republicans lost seats – almost losing control of the House of Representatives – and Newt Gingrich resigned. Conventional wisdom held that impeachment was over. What happened next is a part of history, but also very instructive for President Bush and the new congressional majority. Less than two months after the disaster of the 1998 midterm elections, the House of Representatives voted to impeach Bill Clinton. Through a series of self-inflicted wounds Bill Clinton managed to squander the political momentum of the elections, unite his opposition and face a humiliating political and legal defeat. The lesson is that the political momentum from midterm elections, if not handled carefully, can be very short-lived.

President Bush is not Bill Clinton and neither he nor his congressional allies face anything like the historical scandal Bill Clinton dragged the country through. But, President Bush did win a big victory last Tuesday. He and his supporters on Capitol Hill must quickly, but carefully, seize the momentum or it will be lost. Today, the Democrats are depressed and divided. History has shown that could change overnight.

Three issues stand out as critical. Now that it looks as if President Bush has won on Homeland Security, the issues that quickly move to the top of the agenda are:

  • Holding the line on federal Spending

  • Moving forward on tax reform – including sustained, incremental steps such as permanently eliminating the Death Tax

  • Beginning a real movement towards Social Security reform

    President Bush and his Budget Director Mitch Daniels have fought a lonely battle all this year to hold down the growth of federal spending. Their allies have been outside groups like CSE and the Fiscal Responsibility Coalition along with an extremely thin majority of Republicans in the House of Representatives. The opponents have been Congressional appropriators in both parties, led by Democratic Senator Robert Byrd of West Virginia. Byrd has insisted all year on over $12 billion more in pork barrel spending then the President will accept. Taken over ten years, Byrd wants baseline federal spending to grow more than $140 billion more than the Administration. Before the elections, the two sides fought to a stalemate. Senate Democrats couldn’t even pass a budget resolution and Congress could not complete its work on their annual appropriation’s bills.

    The new congressional majority needs to pass the 2003 appropriations bills quickly – and at the President’s requested levels. Bush held the line. He campaigned on the issue. He won. Congressional Republicans need to step-up and stand-up to the Appropriators and pass the President’s spending request. In recent years federal spending has been spiraling out of control. If the new majority does not seize this narrow window of opportunity, politicians will quickly go back to their old habits and spend away resources needed for tax cuts, Social Security reform and the War on Terrorism.

    Next, the Administration should make clear that it has a multi-year, multi-faceted strategy to fundamentally reform the tax code. President Bush’s economic team should begin a serious conversation, including congressional hearings, on what fundamental tax reform looks like. While that educational effort is under way, we should simultaneously be moving to enact pro-growth tax legislation that is consistent with the goals of fundamental tax reform. For example, permanently eliminating the Death Tax will remove one of the least productive, most complicated and anti-investments portions of the tax code. A serious effort to eliminate the Death Tax has an excellent chance of success.

    The Administration has also indicated that it believes the economy needs additional pro-growth tax cuts that focus on investment. These are important in the short-run, but President Bush should make it clear that these smaller pieces are just part of a bold, comprehensive multi-year plan to give the American people a simple, fair, low and honest tax code.

    Finally, the advocates of Social Security reform won an historic victory last Tuesday. The Democrats made opposition to personal retirement accounts the centerpiece of their mid-term election strategy. And they lost. Liberal groups spent more money trying to make Social Security reform unpopular with voters than in any election in history – and it did not work. Republicans would be making a huge mistake if after surviving that onslaught they decided to put the issue on the back burner.

    We do not need legislation to enact personal retirement accounts on the floor of the House the week in February. But we do need a serious effort by the Administration and the congressional majority to lay the groundwork for reform legislation. The Administration should hold town hall meetings and Congress should hold a sustained series of meetings. The American people are ready for a serious educational effort about the need for personal retirement accounts. The results of the elections provided the pro-reform movement with momentum. If it is not seized, it will quickly go away.

    Everyone in Washington who did not want President Bush to succeed last week is now cautioning him not to overstep his mandate. He does not risk overstepping his mandate by continuing to push exactly what he advocated before and during the election season. The real risk is that he and the new majority will get distracted and do not push hard enough for a conservative economic agenda that includes less government, lower taxes and more freedom.

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