Back in 2008, my understanding of the thinking around health reform was that health insurers would so fear the prospect of liberals imposing a public option that they would induce Republicans to come to the table and strike a bargain to remove it. Instead, Republicans made it clear that they weren’t voting for the bill no matter what it said, so insurers and other interest groups leaned on pivotal congressional Democrats and got what they wanted. More recently, the thinking around the debt ceiling was that business groups would so fear national default that they would induce Republicans to come to the table and strike a bargain that raised taxes. Instead, the Chamber of Commerce threw its time and energy into lobbying for a trade agreement with Panama and eventually default-averse Democrats caved.
But imagine Democrats insist on higher revenue, and they decide, sensibly enough, that failure to cut a bipartisan deal is better than $1.8 trillion in cuts. (Which is probably is.) Then what? Well, then the entire defense lobby plus the entire medical and insurance lobbies turn fiercely against the very people with whom they had marched shoulder-to-shoulder under Bush. If the Democrats hold the line and insist on more revenue, the committee has the potential to split the GOP coalition wide open.
Or how about this scenario. First, Republicans refuse to agree to more revenue. Second, Democrats refuse to agree to a no-revenue deal. Third, lobbyists for the defense and health care industries get nervous. Fourth, lobbyists for the defense and health care industries remember that they are high-income people who don’t want to pay taxes. Fifth, executives at defense and health care industries remember that they are high-income people who don’t want to pay taxes. Sixth, executives at defense and health care industries start lobbying Democrats in swing districts, red states, or in which key weapons manufacturing or certain hospitals are major industries. Seventh, Democrats fold.
Labor unions, environmental groups, anti-poverty advocates, etc. all have some clout in the Democratic coalition. But rich businessmen also have clout in the Democratic coalition. And all that needs to happen for the Democrats to fold is for rich businessmen to persuade a relatively small group of congressional Democrats to start taking their side. Then a unified anti-tax GOP will roll the Democrats. What’s more, recall that it’s not as if non-business groups will be united in lockstep against surrender. Defense contractors and health care providers are firms with rich executives, but they’re also firms with working class employees who can be mobilized to beg Democrats to save them by surrendering on revenue and agreeing to modify the trigger to reduce defense and health care cuts and increase cuts to anti-poverty programs.