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We may lose the battle, but need to stay focused on the war


So, how to judge the deal the Obama seems on the verge of reaching with the GOP? Both Democrats and Republicans seem upset about the pending deal, and in the short term, there is good reason for this.

But looking at the deal over the longer term, one possible interpretation is that Democrats have lost this battle, but may yet win the war.

Given how this battle was set up by the Tea Party and the GOP, which was able to take the economy hostage to get their way, the deal that seems to be taking shape is not all that bad of a result.

(explained in detail on the flip)

First off, from a variety of sources, here are the key outlines of the terms (I’m not trying at all to be detailed here) as I understand them:

*A debt ceiling increase to take us beyond January 2013.

*Immediate spending cuts of $1 trillion or more – basically, the cuts agreed upon in the Biden talks.

*The 12-member commission that will find additional cuts, with the following trigger: if cuts are not enacted, there will be an across the board expenditure cut, include Medicare and Medicaid (to motivate Democrats to reach an agreement) and Defense (to motivate Republicans to reach an agreement).

*The commission can consider revenue increases, meaning the decision for Republicans would be, essentially, whether they would prefer revenue increases or defense cuts. That’s not a great trigger, but it is not a complete loss.

Now, why are Democrats unhappy? Well, Obama seems to have given in on every point, most significantly the fact that there are plenty of expenditure cuts in this deal and no new revenues. This is too superficial of a deal analysis, in my view. The fact is that new revenues were never in the cards at this point in the deal cycle, and so their absence from the final deal is not a significant concession. Further, it is important to understand that Obama has been dealing with a hostage situation here, and so to the extent the final deal seems tiled to the GOP, the playing field was not a level playing field to begin with. Within limitation, Obama had no choice but to rescue the economy, if he could, at the cost of short-term concessions. That needs to be taken into consideration in evaluating the final agreement.

I submit, based on what I have seen from this deal so far, that Obama’s report card score here is “Incomplete.”

Here’s why:

Democratic electoral goals for 2012 should be, in order: (1) retaining the presidency; (2) holding on to the Senate; and (3) re-taking the House. This deal, as outlined above, advances that agenda more than the other possible alternative at this point, which is basically letting the debt ceiling deadline pass and taking extraordinary executive actions to mitigate the effects.

First, while Obama has lost some political support through this debacle, by far the Tea Party brand has suffered a more significant setback. Sure, while this mess may have increased the intensity of existing Tea Partiers, it has probably stopped dead in its tracks the movement’s ability to attract new followers or expand its influence beyond the extreme. Indeed, while we may see more Tea Party candidates emerging from GOP primaries in 2012, these candidates will be far too extreme to win general election contests that more moderate Republicans might have won, a la Nevada and Delaware in 2010.  So, to the extent this deal seals in these attitudes, it benefits Democrats.

Second, as split as Democrats seem about this deal, the fissure in the GOP is much deeper and much more difficult to repair. This, too, enhances Democratic chances in 2012.

Third, because Democrats were able to push the debt ceiling out beyond 2012, it means the 2012 election, at least insofar as deficits are concerned, can be fought out on the issue of whether to increase taxes on the rich and whether to close outrageous corporate loopholes, which is very friendly terrain for the Democrats. Republican intransigence on these issues will hurt them in 2012, badly, and I suspect we will see a split among GOP candidates, presenting a difficult problem for the presidential nominee.

Fourth, the GOP will now share what looks to be a lousy economy in 2012. Republicans belittle the argument that our lousy economy is the fault of George W. Bush (even though that is true), and have argued that the economy belongs to Obama because he is president. Thanks to this deal, forced on the country by the GOP’s hostage-taking tactics, in 2012 both parties will be seen as directly responsible for our economic situation. Never mind that this is total crap – as I said, the fault here lies with Bush — it neutralizes what would have been the GOP’s best issue in the upcoming election.

Fifth, according to ABC News, the cuts in Medicare that the trigger in the deal contemplates would be in the form of payments to providers (a generally Republican constituency), as opposed to benefit cuts for recipients. While this may give Republicans some political cover, in would still allow Democrats to run against the benefits cuts of the Ryan Plan and, in the short term, at least, minimize actual harm to people. So, while the deal minimizes GOP issues for 2012, it leaves Democratic issues substantially intact. (One caveat – to the extent the debt ceiling deal will inexorably lock in benefit cuts to Medicare, Medicaid or Social Security, then it should be rejected immediately. Default is a preferable option to cutting those benefit, which would be lousy policy and lousy politics from a Democratic perspective.)

Sixth, we will be able to address the issue of deficits in the 2012 election, without the GOP holding the economy hostage. This will put the onus for deciding how the country should proceed on these issues squarely where it belongs – on the shoulders of voters – who will be able to evaluate the options without a sword handing above their heads.

Seventh, no matter how heavily tilted toward expenditure reductions this deal seems, remember Obama still has a great deal of leverage in his pocket heading into 2012 because the Bush tax cuts will automatically expire, and they cannot be renewed unless he agrees. If Obama wins re-election, this leverage increases exponentially because not only will Obama be there for the next four years, he will not be facing another election, leaving him free to hold firm of vetoing any extension of the tax cuts without exacting something valuable in exchange.

And that is why I give him an “Incomplete.” The ultimate judgment on this deal will need the election of 2012 to play out to determine whether what must be seen as a tactical retreat will bear fruit in terms of electoral success — and, if so, whether Obama would be willing to use the leverage that will provide.

So, while a battle royal right now with the Tea Party might make us feel better, from a more dispassionate, analytical perspective, Obama has done exactly the correct thing here. To what ultimate end, however, remains to be seen, and that will be the test of whether this deal was brilliant strategy, or simply a poor job of negotiating to a poor result.

So, I for one am willing to withhold judgment on Obama’s deal at this point (as long as Social Security, Medicare and Medicaid are protected), but if I could, once it all plays out, I would remind Obama of the wise words of the Do-Dah man:

Sometimes your cards ain’t worth a dime, if you won’t lay ’em down.

  • I can’t find any flaws in it at all. Nice job!

  • Elaine in Roanoke

    I am so glad to have someone make these points. Far too many Democrats have been simply negative, instead of looking beyond what appears to be weakness in the Democratic response to what well may win the day. The ace in the hole for the President is the Bush tax cuts, which will be on the table after the November election.

  • Bumble Bee

    This is a very hopeful perspective. It would be very good if this is the angle being planned for the future.  If so, Obama has positioned himself well and the Bush tax cuts, which are a large part of the economic problem, can go whistle Dixie along with most of the Republican Party.

  • aznew

    From Talking Points Memo


    $900 billion of immediate cuts and debt ceiling raise.

    Subsequent $1.5 trillion raise subject to Congressional disapproval.

    Super Congress will try to reach an additional $1.2 trillion of deficit reduction through revenue increase or expenditure cuts.

    If they can’t, automatic across the board expense cuts will ensue, 50% from domestic spending, 50% from defense. Domestic cuts would include Medicare providers, but would exempt Social Security and Medicaid, as well as other programs serving the poor and veterans.

    If the Super Congress find cuts between $1.2 trillion and $1.5 trillion, the shortfall to $1.5 trillion would be made up by the automatic cuts on a pro rata basis.

    Further, from TPM:

    [T]he White House assures [Democrats] that if the committee [Super Congress] fails to produce “tax reform” he will veto any attempt to extend the Bush tax cuts, which expire at the end of next year.

    Is that a great deal? But given we are freeing a hostage and saving the country, and will be positioned to fight another day, it is not a bad deal, and certainly not worth the harsh treatment being accorded the President by Progressives.

    Obama played the hand he had. He didn;t go all in on this hand, and he is still in the game, with enough chips to yet come out on top. Whether or not he does in the end will determine whether, in retrospect, this hand was well played or not.

  • kindler

    …how a Roosevelt or Lincoln or Washington or the Congress-savvy Lyndon Johnson would’ve handled this political hostage crisis.  When you’re dealing with people willing to crash the global economy if they don’t get their way, it certainly limits your options.

    That said, I don’t know if we win the war or not.  The problem is that the Teapublicans have taken our focus so far off the ball — away from focusing on jobs and the economy to instead helping them slash the budget — that I’m concerned that the result will be a renewed recession as it was when FDR did the same in 1936.  You could say that Repubs will now “own” this economy with the Dems, but that will be cold comfort in either the soup lines or the ballot boxes.

    The fact is that the Tea Party is writing the narrative right now.  Sure that’s hurting their popularity, but that’s because they decided to spend their political capital — just as Obama did on health care.

    If, from now until the next election, all we get to talk about is debt, I don’t see how we win.  Dems need to figure out how to craft the narrative and stick to it. We can’t keep letting Repubs create the terms of debate and then thinking we’ll somehow win the argument.  

  • pontoon

    give me a clean bill or I’ll veto it.  Period.  I’m so tired of giving in to the whims of the crazies who want nothing but to protect the rich.  When is somebody going to stand up for the people?

  • that he’s circulating to his caucus of Teapublican’ts is available here.  Enjoy! (or, more likely, not)

  • Does anyone know how this and other college affordability programs were affected by the final deal?