Political zugzwang and the OMB passback
A few weeks back, the Administration made a puzzling move whose deftness is becoming clearer the more I reflect on it. By tabling a proposal to overhaul the tax code, the Administration has placed many other political players into political zugzwang: whatever they do, the Administration gains.
In chess, the German word zugzwang (”compulsion to move”) describes a situation where a position is tenable but any move fatally weakens it.
Mutual zugzwang: the player to move loses.
To understand who’s in zugzwang, and why, we must take a stroll through budget arcana.
“I hold the passback and can hold it infinitely.”
The OMB passback. Even before calendar 2006 begins, the Federal fiscal year 2007 (FY 07) budget cycle will start, with a Washington-insider event known as the OMB passback.
Before Congress can enact spending legislation, you see, it adopts a budget resolution — an agreement among the members of Congress as to how much they intend to spend in total for the upcoming fiscal year. The budget is then allocated into spending caps for the respective committees, and under Congressional procedural rules, appropriations bills may move forward only if they are under the caps. (In this Congressional spending is akin to Supermarket Sweepstakes.)
“I’m terribly sorry, Madam Chair, your appropriations earmarks are over the spending caps …
so you don’t get any money, but let’s give her a big round of applause.”
Before the budget can be adopted, it must be proposed by the President, roughly around the State of the Union Address. So the Administration, like white in chess, always has the first move advantage.
And before the budget can be proposed, it must clear review by the Office of Management and Budget (OMB), which demands that each cabinet department or agency submit its budget request for OMB clearance. OMB, after consulting with its economist wizard’s cabal, issues the passback, in which it reviews each agency request, line item by line item, and advises the agency what it (and therefore the Administration) will support, and what OMB will not support.
Judge Roy Bean (tearing a page from a law book): “That’s a bad law. I just repealed it.”
Agencies or departments receiving the passback have two choices:
- Go along, grin sickly, be good soldiers, and support the passback. OR
- Fight the passback, in which case OMB will implacably oppose virtually everything the agency or department wants to do.
Since OMB must sign off on just about everything a department does (Anti-Deficiency Act notwithstanding), including the issuance of regulations, in practice wise department secretaries learn to fall in line.
“Thank you sir, may I have another?”
The passback and the budget cycle. In the pre-Cambrian era (before email), the passback was a hush-hush document (passed from hand to hand via bad photocopies and worse faxes), but in recent years the speed of e-leakery has so accelerated that all parties now tacitly treat the passback as effectively a public document.
Thus the passback becomes a series of editorials: “Department, you asked for this, you have obviously erred, we are supporting that.“
Unlike CBO’s baseline, which must assume continuation of present law, the passback can loftily assume whatever it wants, including legislative change not even introduced. If the President wills it, then it will be so (for passback purposes).
The passback enhances political vaporware. It can raise the stakes both by assuming a legislative change and then budgeting costs consistent with the change.
Additionally, the passback comes out in late November, and the budget is not offered until early February. That’s two and a half months during which the political vaporware sucks up lobbying oxygen, and where the political terrain, like Birnam Wood coming to Duninsane, moves in the Administration’s favor.
The passback and the tax proposal. Will the passback include the tax-reform proposals? I think it will, because, as I’ve previously posted, repeal of the Alternative Minimum Tax is too big to ignore, and too popular not to propose.
So, if I’m right [We'll check you later! -- Ed.], the passback will propose tax reform (including AMT repeal) — maybe not the full-blown commission report, but several of its more substantial elements.
The tax proposal and the FY 07 budget. In January, legislators return to
A second session of Congress typically produces more legislation
That’s so the legislators can all go home with freshly-minted laws for which to claim credit with the voters, the better to be re-elected.
They hear the President say, “I propose repealing the Alternative Minimum Tax.” [Applause.] “My tax reform proposal is fair, simple, and will grow our nation’s economy.” [Applause.]
(See the benefits of political vaporware? It can whiten breath even as it freshens teeth!)
AMT repeal and elected officials. Now comes the extremely deft part. To pay for the AMT repeal, the tax-reform proposal will do the following:
- Cap mortgage deductibility for millionaires. (You wanna be against that?)
- Eliminate mortgage deductibility for second homes. (Weeping for the fat cats yet?)
- Eliminate all tax incentives, or as it will be described, “close tax loopholes.” (Find anything to oppose yet?)
“Oh, I am struck down by the moral force of your arguments.”
So it’s the morning after the State of the
There will be wonderful graphics showing that in ten years, thirty million households will be in the AMT.
(Horrors! Economic pandemic! An eco-demic!)
Someone will shove a microphone in front of Mrs. Elma Suggs, eighty-three years old, from Wet Blanket, Ohio, who has had to send additional tax to Washington because her charitable donations have thrown her — flung her — into the AMT.
“It’s not fair!” cries Widow Suggs. ”People who own big beach houses aren’t paying their fair share of tax.” [Cut to picture of big beach house.]
You just let me know what part of that your elected official wants to oppose, okay?
Stakeholders and political zugzwang. Now, you’re a current tax-code beneficiary (hereinafter a “special interest group” — ack!). You’re well aware that many tax deductions are indeed loopholes (that is, your members don’t benefit from them) but your tax expenditure is a critical economic stimulus (that is, your members benefit from it). So what do you do?
“What do you do?”
“Shoot the hostage.”
Remember, you cannot do nothing — you’re a lobbyist, for heaven’s sake! You must lobby!
Welcome to political zugzwang.
So you do the following:
- Defend your program, and only your program, because that’s what you’re being paid to defend.
- Stop talking about anyone else’s tax expenditure — that’s for them to worry about.
- Rally your members to go see their members of Congress, and bring along the mother’s milk of politics, those campaign-contribution checkbooks. (Because you don’t want to be left in the cold during the political endgame.)
In other words, high-grade political vaporware seizes the initiative, scatters opponents and puts them on the defensive, energizes the base, and fills the campaign coffers. All this from purest vaporware.
Because it is vaporware, the Administration retains the further initiative to decide whether to invest further political capital in its pursuit.
Quality political vaporware creates political capital. It is the Philosopher’s Stone of politics.
If, in the end, the reform proposal goes away … the Administration can bring it back again next year.
The most famous zugzwang ever: Samisch-Nimzovich 1923, White to move and lose
“If you can’t drink a lobbyist’s whiskey, take his money, sleep with his women and still vote against him in the morning, you don’t belong in politics.”
– Jesse Unruh, 1974
