The standoff between President Obama and congressional Republicans over the fiscal cliff could provide the bookend to an era in the GOP that began with another budget negotiation 22 years ago. Many of the defining aspects of the modern Republican Party were set during the 1990 budget collision between President George H.W. Bush and Democratic congressional leaders.
To reach agreement with Democrats who controlled both the House and the Senate, Bush accepted a deficit-reduction plan that raised income-tax rates—breaking his “read my lips” tax pledge from the 1988 presidential campaign. In protest, Newt Gingrich, then the House minority whip, quit the talks and led a rebellion that ultimately persuaded nearly half of Republicans in the chamber to abandon Bush and oppose the deal.
Bush’s budget package established the foundation for further deficit reduction under President Clinton in 1993 and 1997. Those agreements fueled the 1990s economic boom and produced three consecutive balanced budgets in Clinton’s second term. But it was Gingrich’s revolt in the name of inviolate principle, not the elder Bush’s flexibility in the face of divided government, that left a lasting imprint on the GOP.
Gingrich’s mutiny marked a tipping point in two distinct respects. First, it symbolized the ascent of younger conservatives who rejected the deal-making ethos represented by Bush and Rep. Bob Michel, the courtly House GOP leader at the time. Each man had been shaped by what I’ve called the post-World War II “age of bargaining,” in which the two parties, both representing ideologically diverse coalitions, regularly reached agreements that blurred the differences between them.
Gingrich, viewing that approach as a slow-motion surrender to big government, believed that Republicans should instead focus on polarizing the electorate behind an unflinching conservative agenda that maximized the contrast with Democrats. As Gingrich later explained, “The No. 1 thing we had to prove in the fall of ’90 was that, if you explicitly decided to govern from the center, we could make it so unbelievably expensive you couldn’t sustain it.” Bush won the battle but lost the war: Although the budget agreement became law, Gingrich’s confrontational strategic view has dominated the GOP ever since.
Second, the 1990 budget deal marked a pivot in the party’s attitude toward taxes. Even into the 1980s, many top GOP leaders placed greater priority on controlling deficits than cutting taxes. But the backlash against the 1990 budget deal elevated GOP resistance to taxes from an inclination to an obligation (especially after Bush lost his reelection bid). Since then, Republicans in Congress voted unanimously against the 1993 Clinton budget and President Obama’s 2010 health care plan, each of which increased taxes. Almost all congressional Republicans voted for President George W. Bush’s 2001 and 2003 tax cuts.
Now, though, the fiscal-cliff showdown is straining both pillars of the post-1990 GOP consensus. While party leaders are sending mixed signals, a steady flow of congressional Republicans are voicing the previously heretical thought that to reach agreement with Obama, the party may need to accept not only greater tax revenue (through loophole-closing) but also higher marginal rates on top earners.
That’s largely a tactical retreat necessitated by a recognition that the year-end expiration of the Bush tax cuts gives Obama the clear advantage in the struggle. But an increasingly audible chorus of Republican voices is also arguing that the party has erred by selling tax cuts (and the allied principle of shrinking government) as its silver-bullet solution to every economic challenge. Conservative strategist Peter Wehner voiced that perspective this week when he wrote that amid “wage stagnation, lack of social mobility, globalization, income inequality, fracturing families, and an entitlement crisis … arguments about tax rates and the size of government” may be less politically relevant than in the Reagan era.
Wehner’s comment hints at the second way this budget showdown may lead the party away from the first. For the GOP, the unmistakable lesson of 2012 is that mobilizing the base is no longer enough to win the White House. The concentration of Democratic voters into big urban areas means that Republicans can hold the House almost entirely on the votes of conservative whites, who are more widely dispersed. But the GOP isn’t likely to recapture the White House anytime soon unless it can appeal beyond that base to voters (especially nonwhite ones) who don’t believe that the solution to all problems is to cut taxes and spending.
The defining moment in this year’s GOP presidential primaries came when every contender said he or she would reject a budget deal that slashed $10 of federal spending for every $1 it raised taxes. That stampede prized contrast over compromise and purity over governing—and thus marked the enduring triumph inside the GOP of the martial perspective Gingrich championed in 1990.
But since Republicans chose that course, they have lost the popular vote in five of six presidential elections. Mitt Romney’s defeat even in such a grinding economy shows the need for his party to find a more inclusive path. And the high-stakes budget maneuvering now nearing its climax offers the GOP a chance to start forging one.
This article appears in the Dec. 15, 2012, edition of National Journal as Then and Now.