JONATHAN CHAIT APRIL 9, 2011
The policy merits of the budget deal struck between President Obama and the Tea Party – no other group seems to have exerted serious influence – aren’t terribly interesting. If you subscribe to the mainstream tenets of macroeconomic thought, it will have a small, negative effect on unemployment, partially offsetting the benefits of the tax cut deal agreed to last December. If you instead subscribe to the small but politically influential subset of right-wing dissidents who believe that the government should respond to a liquidity trap by decreasing its deficit, then you think it will exert a small positive influence.
What’s more interesting is the politics. I’m not sure I can think of an example of a party that leverage control of one House of Congress into significant policy movement in its direction on a high profile issue. When Democrats took control of the Senate in 2001, there was the sense that they could limit the ambition of President Bush’s domestic agenda, but nobody considered the possibility that they could force Bush to move policy in their direction as a condition for keeping the government open. Even when the Democrats won both Houses of Congress in 2006, they used their leverage merely to veto additional policy changes in Bush’s direction, not to adopt their own policy goals opposed by Bush.
So why didn’t President Obama at least fight the Republicans to a draw? Why, if he had to move in their direction, did he wind up adopting deeper cuts than even John Boehner originally proposed?
A few factors leap out. First, the Democratic coalition is dominated by people who favor a conciliatory political style. Substantive beliefs about policy aside, most Democratic voters want their elected officials to take what seem to be reasoned, compromising positions. The Republican coalition, by contrast, is dominated by voters who want their leaders to take strong, uncompromising stances.
Second, arguing about government spending in the abstract favors Republicans. People do not believe in (or, I would put it, understand) Keynesian economics. So arguing that spending cuts inherently jeopardize the recovery is a losing proposition. When the category is domestic discretionary spending, a catch-all category, it’s difficult to turn the debate into one of specifics, since so many actual programs are affected.
It is worth noting that when the time comes to debate the overall Republican budget, particularly the one crafted by Paul Ryan, the advantage will return to the Democrats. In that case, we’ll no longer be confining the discussion to domestic discretionary spending but debating specific programs, including Medicare and Medicaid. But the terms of this debate inherently favored the GOP. Liberals who implored the White House to take a hard line and demand Keynesian fiscal stimulus seriously overestimate the power of the presidency to influence public opinion.
Third, Republicans were able to credibly threaten a shutdown of the government. That willingness to impose harm on the entire country if they didn’t get a sufficiently friendly outcome proved to be powerful bargaining leverage, moving the goalposts progressively closer to them.
Here is where it really does seem where the House Republicans simply out-maneuvered the Obama administration. The response to that tactic is to expose the willingness to shut down the government. Polls showed that the public would apportion blame equally between the two parties in the case of a shutdown. But they also showed that the vast majority of the public considered a shutdown highly unlikely. If Republicans did shut down the government, public opinion would likely have turned sharply against them, as long as Obama publicly established a willingness to compromise, which he had.
Indeed, conservative pundits have spent the last few weeks desperately warning against a shutdown over the relatively small stakes of the domestic discretionary portion of the federal budget. Indeed, Boehner himsefl was obviously terrified of this outcome, even if he appeared at times helpless to prevent it. The Republicans, like the sheriff in Blazing Saddles, were holding a gun to their own head:
How they managed to use the threat of suicide to extract concessions from Obama, I don’t understand.