JONATHAN COHN JULY 22, 2011
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What did the president offer and when did he offer it? That’s the question everybody was asking yesterday, following reports in multiple media outlets that Obama and House Speaker John Boehner were close to negotiating another large deficit reduction package.
According to the reports, including this thorough dispatch from TPM's Brian Beutler, the package would have looked a lot like the one Obama and Boehner had nearly constructed two weeks ago: More than $3 trillion in total spending cuts, including changes to all of the major entitlement programs and significant defense reductions, coupled with about $800 billion in new revenue. But this plan reportedly had a few new wrinkles, too – none of them too appealing. Instead of specifying the form of the $800 billion in revenue, the plan would call for Congress to find the money by a certain date. If Congress failed, then the Bush tax cuts affecting high incomes would expire as planned in 2012 – or, perhaps, the Affordable Care Act’s controversial requirement that everybody get health insurance would be rescinded.
If that last part surprised you, don’t feel bad. It surprised everybody, as it has nothing to do with the budget debate and seems like a completely unnecessary capitulation to Republicans. And it’s really difficult to know whether this is something the administration so much as winked at, let alone condoned, in any serious way. Then again, the Obama Administration has surprised a lot of people by its willingness to offer concessions on Medicare, Medicaid, and Social Security – in exchange for what look like awfully tiny concessions on tax revenue. And while the White House pushed back hard against the deal stories yesterday, publicly and privately, the nature of the pushback was interesting: Officials kept saying the reports mischaracterized the state of play, that a deal really wasn’t imminent. They were not going out of their way to dispute details.
Again, you should view all of these reports (including mine!) with at least some skepticism. Among other things, I wouldn’t assume that the sources for these stories always know as much as they think or that the reporters like me always understand what we are being told. Still, it seems increasingly clear that Obama wants a large deficit reduction deal, even if it means giving more ground than the Republicans are giving and even if it means infuriating much of his own party. Just look at the graph that Ezra Klein posted yesterday, copied below: At this point, Obama is offering a deal that would demand less revenue than either his own deficit commission or the Gang of Six put on the table. And I’m among those who thought neither proposal had enough revenue anyway.
The cynical explanation for this posture is that Obama is obsessed with appealing to political independents, whom he views as the key to his reelection. That probably gives the president too little credit: I continue to believe the driving force here is Obama’s determination to the president who tackles the nation’s hardest, unsolvable problems in an adult, responsible way. But that is also why I find this approach so baffling. The deal, as taking shape, doesn’t seem particularly responsible.
Among other things, it would all but guarantee that the Bush tax cuts for middle-income Americans stay in place. If Obama were truly serious about taking politically difficult steps to stabilize the budget, he’d be trying to avoid that outcome – something that could be easily done, as my colleague Jonathan Chait has pointed out repeatedly, simply by waiting until 2012 to have the entire tax debate.*
Keep in mind that, by seeking to balance the budget while keeping in place the majority of the Bush tax cuts, Obama would be downsizing the government in more or less the way conservatives have always wanted. When Bush first promoted his tax cuts, at a time when the budget was actually in surplus, he promised that they would act like a “fiscal straightjacket” on the size of government -- in effect, "starving the beast" as Republicans since Reagan have been dreaming of doing.
It didn’t quite work out that way, at least during Bush's tenure. Taxes came down but spending went up, thanks to two wars and the creation of a new entitlement, the Medicare drug benefit, for which Bush and his allies couldn’t be bothered to pay. But instead of addressing that problem by allowing revenue to go back up to where it was, during the Clinton years, Obama seems to be proposing we settle at a new equilibrium, with lower overall revenue.
I say "seems" because so much remains uncertain and I'd very much like to be wrong about this. But nothing I've read or heard in the last 48 hours makes me think I am.
* To be clear, any tax hikes or spending cuts should wait until the economy has recovered. In fact, in an ideal world, a deal on the budget would focus on job creation as well as deficit reduction.
10 comments
I can't help thinking lately that we elected a spineless fool as our president. I keep waiting and hoping to be proven wrong. But this latest capitulation to the GOP jackals, assuming the news reports are correct, only strengthens that opinion.
- DAVIDDREIER@EARTHLINK.NET-old
July 22, 2011 at 12:09pm
Someone floats a rumor and already the liberals are driving new nails into his crucifix. How about we wait to see the actual details of the final deal, if any, before we start crucifying him? Oh yeah, too late.
- GSpinks
July 22, 2011 at 12:32pm
I think Cohn and Klein, and maybe Chait, have influence with the administration, so I encourage all the steering they wish to provide. It's not out of fondness alone that PK refers to them so often on his blog.
- rayward
July 22, 2011 at 1:00pm
I do seem to recall Obama mention TNR during the '08 campaign, although that could have been a hallucination on my part. But Cohn has published several bits directly from people within the administration, so I have to agree rayward.
- GSpinks
July 22, 2011 at 1:50pm
Spinks, I don't think we should stay passive and wait; if this is a trial balloon, then it has to be popped. We can't wait until it's too late to do anything about it.
- Curran1
July 22, 2011 at 3:18pm
As Cohn points out, "And it’s really difficult to know whether this is something the administration so much as winked at, let alone condoned, in any serious way." So no. I agree, it's preposterous, but I'm not about to start jumping on anyone's case because there's a rumor that Boehner wants to force Obama to throw grandma and grandpa under the bus for him, and thereby leave the Republicans blameless for their shameful policy objectives. Cohn argues for jumping the gun because Obama has surprised us before with previous negotiations, but let's get real for a second. Obama conceded the extension to the Bush tax cuts in exchange for much needed (if far too small) extension to unemployment and a little money for infrastructure (iirc). Obama conceded to $100 billion (?) in spending cuts, about 2/3rds of which were actually already mandated in one form or another by the glorious PPACA (and the other 1/3rd of which I've not seen one specific piece of evidence to suggest that we'll miss even 1 dollar of it). In exchange, grandma and grandpa continue to receive their social security checks, the government continues to operate normally without defaulting on its debts. I'm actually surprised, given that Republicans appear hell bent on destroying America for one reason or another, Obama's been able to hold the line as well as he has. Lord only knows the spineless wussies in the Senate can't do their own job to save their hides. But they sure can whine when Obama starts upstaging them.
So I'm not about to start jumping the gun now, especially not about a rumor regarding a new facet of the ransom demands of the Republican terrorists.
- GSpinks
July 22, 2011 at 4:30pm
GSpinks, if Obama publicly announces a proposed deal and it is along the same lines as rumored, will you modify your opinion of him? Would it make a difference to you if the proposal was enacted or if Republicans rejected it? What if Senate Democrats rejected it?
- AaronW
July 22, 2011 at 7:31pm
This is the way the world ends. Not with a bang. Not with a whimper. With a once rich and powerful nation petulantly refusing to pay its bills. Bankruptcy sale next week, as China, India, and Brazil pick over the bones followed by Germany, Singapore, and Nigeria.
- skahn
July 22, 2011 at 9:59pm
Brilliant post Jonathan and exactly the right question to ask. If the final deal is approaching that bottom chart bar then Obama has to be the worst negotiator the Oval Office has ever seen. Makes you wonder if he could have pushed harder on single payer or getting out of Afghanistan.
- IggyPop
July 23, 2011 at 9:58am
"Again, you should view all of these reports (including mine!) with at least some skepticism." Yes, everyone here should. I'm with GSpinks. What's the rush to judgement based on rumors and supposed reading of body language? The last time the president's negotiating skill was condemned was for the supposed $100billion budget cut, a deal negotiated to avoid a govt shutdown. When the "facts" came out, I recall how we knocked the poor man from pillar to post without mercy. Well, it turned out on closer examination, as GSpinks pointed out above, that the cut was about $20billion, if even that. I'm unhappy with the president for not being partisan enough, for constantly taking fire from the wingnuts without firing back, and for playing above-the-fray way too much. But it's also true, as some other poster on another thread reminded us, Obama has achieved more for liberal ideals than the last two Democratic presidents combined. That couldn't have been all luck. So, the man deserves not to be judged on rumors and uncredited leaks. We'll find out soon enough.
- scrubby
July 24, 2011 at 4:09pm