Congressionally Created Crises: The Fiscal Cliff and Other Legislative Follies

By Erin Ingraham

One definition of insanity is doing the same thing over and over but expecting different results. Some might say the outcome of the November 6 elections matches this definition. When the Dow Jones opened the morning after election night, it dropped 300 points. By Friday, the market was down well over three percent. While a second-term Obama presidency likely means tax increases and codification of the Dodd-Frank Wall Street Reform Act, these were not the fears the market was reflecting. The market was acknowledging the impending fiscal cliff – and the fact that voters essentially elected the same presidential administration, House of Representatives, and Senate to tackle a crisis they themselves created. The authors of the cliff are now in charge of pulling us back from the ledge.

In recent years, congressionally created crises have become the rule rather than the exception. At first, the only government “crisis” in recent memory was the 1995 budget battle between Speaker Gingrich and President Clinton, which resulted in an unprecedented government shutdown. Since then, however, Congress nearly sent the financial markets into total meltdown by first refusing to pass the Targeted Asset Relief Program (TARP) in October 2008. This was followed by the August 2011 debt ceiling showdown which nearly caused the United States to default on its debt payments for the first time in history.

That brings us to our current situation.  The fiscal cliff is the culmination of many legislative sessions of kicking the proverbial can down the road. At the end of this year, the 2001 and 2003 Bush tax cuts expire along with the payroll tax cut, the “doc fix,” the Alternative Minimum Tax patch, and a slew of other tax expenditures. In addition, an across-the-board budget cut of over $100 billion (called “sequestration”) goes into effect on January 2, 2013.  If nothing is done to address this combination of revenue hikes and spending cuts, the nonpartisan Congressional Budget Office has predicted our economy will tip back into recession. The insanity of the situation is that this economic precipice was self-created. Many recent articles have sought to predict the outcome of the fiscal cliff, but this post will instead consider the question: why does Congress self-impose crises instead of solving problems at the outset?

The most obvious answer is members of Congress and the Obama Administration traditionally avoid taking action on anything that might upset their chances of reelection. Thus big-ticket items get postponed to the lame duck session for a mad law-passing dash before the holidays. Voters have short memories and are less likely to penalize their hometown member for a vote that happened nearly two years prior to reelection. In off-election years, the August recess often becomes the “holiday” deadline for must-pass bills (see the Budget Control Act of 2011).

In addition to avoiding votes that could be election fodder for opponents, the increased polarization of Congress adds to more standoff situations. As voter identification and polling technology improved, the ability to gerrymander districts and create safe seats increased dramatically. These polarized districts in turn elect polarized members, meaning fewer in Congress feel comfortable defining themselves as moderates. Of the 435-member House, National Journal’s 2011 voting ratings found just six House Republicans with slightly more liberal voting records than the most conservative Democrat. Flashback to 1982, when 344 House members had voting records that fell between the most left-leaning Republican and the most conservative Democrat.

While members are more ideologically pure, leadership has fewer tools to sway them to the center on close votes. The relatively recent abolition of earmarks prevents party leadership from whipping votes in line by adding small-dollar local projects to sweeten controversial legislation. Thus, a member cannot go home to his constituents and say, “Yes this was not a perfect bill, but it allowed for the rebuilding of our pothole-ridden main highway.”  Instead, they just have leadership-scripted talking points on why this bill was good for the nation.  And while Speaker Boehner pushed for the earmark ban, there are sources who have said he would support a committee to study earmarks and an implementation of reforms that would replace a strict ban.  Senior legislator Rep. Steven LaTourette (R-OH), explained that, “You can’t get [a simple majority of] 218 votes and part of that has to be if you can’t give people anything, you can’t take anything away from them.”

The loss of the carrot option with the rank-and-file has forced leadership to find alternative stick-like strategies to bring members in line on important votes.  Most recently, leadership took the unprecedented step of removing four GOP members from their prize committee seats for bucking the party line on votes.  Removal from plum committees means these members no longer have their hands in major legislation, and their fundraising ability should be subsequently curtailed.  All four opposed the budget deal negotiated by Boehner and Obama to prevent a default on government debt in August 2011, and their rebuke sends a timely message to any Republicans considering opposing a cliff deal.

Declining leadership leverage has also been coupled with the increasing role of money in politics. As campaigns get more expensive with each cycle, members face even more pressure to fly home every weekend to fundraise and make their presence in the district known. This prevents them from socializing with their Congressional colleagues and building relationships inside the Beltway that in the past were vital to finding compromise. In prior decades it was not uncommon for members to move their families to D.C., with weeknights spattered with bipartisan dinners at members’ homes. Now the families stay in their home districts to avoid any appearance of losing touch with the region the members represent. Of course, certain lawmakers are trying to buck this trend, such as the “Gang of Eight” budget negotiators, but the inordinate amount of attention this Senate Gang receives speaks to how novel bipartisanship has become.

In sum, Congress is increasingly creating its own crises, because taking tough votes has a higher cost than benefit. The price for the vote could be the member’s seat with little to show for it in return. The President’s Affordable Care Act (ACA) required Democrats to take an unpopular vote in the name of dramatically increasing health care access, which voters rewarded in 2010 with the largest GOP wave election since 1938. Members of Congress will be thinking of the ACA when they approach the fiscal cliff vote, because that package will likely include tax hikes and entitlement cuts that constituents on both sides of the aisle will oppose. A strong fiscal cliff package might prevent our nation from following in the footsteps of Greece, but voters will simply look at how it affects their pocketbooks and retirement benefits in the short-term. Once a deal forms, both sides will seek to point fingers at whoever is to blame for the more onerous provisions, and member trust and bipartisanship will continue to erode until faced with the next self-imposed crisis. When and if a deal will come together, however, remains to be seen.  There is still opportunity to kick the can further down the road through various extensions and short-term offsets, thus maintaining recent tradition by handing the crisis over to members of the incoming Congress.