No, Obama Was Not Too Demanding With Boehner

by Jonathan Chait | August 2, 2011

I'm still shocked and dismayed that President Obama tried so hard to cut a budget deal with Republicans that, in return for enormous concessions, would have raised no more revenue than we'd get if the Bush tax cuts for income over $250,000 expire on schedule. William Galston, by contrast, argues that Obama blundered by asking for too much revenue, thereby blowing up the negotiations:

If news accounts are accurate, the Obama/Boehner talks broke down when the president proposed increasing the revenue component of the grand bargain from $800 billion to $1.2 trillion. Given what he ultimately accepted, $800 billion looks pretty good. (How likely is it that the new congressional committee will be able to agree on anything approaching that figure?) To be sure, we’d have to know more than we do about the other components of the proposed deal, especially the changes in entitlement programs, to reach a solid all-things-considered judgment. And it’s not at all clear that Boehner’s fellow Republicans in the House would have gone along with him on such a bargain, either. But it has been widely reported that the White House shifted its stance only after the Gang of Six made its framework public. If the bipartisan G6 was proposing $1.2 trillion in revenue increases, how could the White House accept less? At the time, that must have seemed like a slam-dunk argument. But it was too clever by half, and the White House ended up throwing away a chance to promote the president’s “balanced” approach to deficit reduction … and, by the way, to drive a wedge into the massed ranks of the opposition.

I have a few disagreements here. First, Obama's request for more revenue did not blow up the negotiations. Here's the Wall Street Journal tick-tock:

The White House asked for an additional $400 billion in tax revenue, saying it was needed to get enough Democratic votes. White House officials say they got no signals the request would be a deal-breaker. But by week's end, the deal was dead.
On a Friday night, July 22, the president and Mr. Boehner held dueling news conferences, each blaming the other for the breakdown. The next day, the president called Mr. Boehner and offered to return to the $800 billion target, trying to save the deal. Mr. Boehner declined.

A Republican aide has also confirmed that Obama quickly abandoned his request for more revenue when Boehner balked. I think this is totally clear. The request for more revenue did not blow up the negotiations. The negotiations foundered on Boehner's inability to sell his party on any increase in revenue.

Second, the Gang of Six did not agree on $1.2 trillion, as Galston says. It agreed on $1.8 trillion. The numbers are confusing because there are several different baselines for comparison. The Gang of Six used what the Congressional Budget Office calls a "plausible baseline," which assumes that after 2012 the Bush tax cuts on income under $250,000 continue but the tax cuts on income over that threshold expire, as Obama has insisted. The Gang of Six agreed to increase revenue by $1 trillion over that baseline, in part because anybody who studies the federal budget understands that even major cuts to federal spending require significantly more revenue than the plausible baseline for the government to operate.

Obama was asking for zero revenue over the plausible baseline. And that was far too much for Republicans to accept, because it would have forced them to acquiesce in the partial expiration of the sacred Bush tax cuts. Even so, it was a giveaway for Obama that would have resulted in the government spending years choosing between large deficits and crippling basic functions of the state. Obama was nuts to make that offer, but thank goodness Republicans refused to accept it.

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