Afterthoughts

It is Tuesday early afternoon, August 2, and the deal is done. Nobody seems to like it very much. The Dow is off 150 plus points. Obama just spoke in the Rose Garden saying the entire, frustrating exercise was a manufactured crisis and it is high time to focus on investment and jobs. The Tea Party seems disgusted and angry. Hard left liberals are convinced Obama has sold out, that he is owned by Wall Street, and that he has been waiting for his chance to gut spending for the middle class. Moderate Progressives see this as a demonstrable failure of leadership. But John Boehner says he is happy and that he got "98% of what he wanted".

Where do I come out?

In retrospect, I am surprised I so misjudged the Tea Party/Republican intransigence. I sincerely thought they would agree to revenue increases, particularly when Boehner was working for the Grand Bargain. I was dead wrong. I hope I don't make this mistake again.

I also underestimated the President's reluctance to use the 14th Amendment. He simply did not want a constitutional crisis, and therefore he needed a negotiated deal, properly passed into legislation that he could sign, lifting the debt ceiling. The Tea Party was willing to have no agreement, to pass the August 2 deadline with no legislation, and to risk default. The President was not willing to do that, because if he got to August 3 without a deal, he knew he would have to invoke the 14th Amendment, and that was a very last choice scenario. It is tough to negotiate with someone who is completely indifferent to the outcome, when you, on the other hand, care.

So imaginatively, let's restart the clock on December 1. We are on the President's team and we have full knowledge of the Tea Party/Republican intransigence. We probably would urge the President to include the debt ceiling in his deal with Republicans on taxes, but here is how the President might respond:

"The Tea Party and the GOP are obsessed with deficits and debt levels. It doesn't make sense to focus here, when the problem is jobs; but we need to get this deficit/debt conversation aired thoroughly in the public arena or we'll never get to jobs. Given the make-up of the House, we may not get there anyway, but we have to try. We could try to make this a Jobs versus Debt discussion, but it probably won't work. The American people are worried about both. Getting a debt ceiling deal right now would delay our having this conversation. I think mid-summer, more than a year before the election in 2012, is the right time. And I think we should work toward a Grand Bargain type of deal - spending cuts, including  modifications to entitlements, and tax reform with revenue increases. Progressives will beat us up for including entitlements, but it is time for Democrats to wake up and realize that adjusting the safety net programs carefully can preserve them. The alternative is to end them. But I will not put entitlements on the table until I am in serious discussions with the other side negotiating a deal in good faith.""

So the President might punt in December, even with foreknowledge of the extortionist nature of the coming negotiations. He might decide that having a full blown conversation, even in a crisis atmosphere,would be the best thing to do. But how to respond to the Simpson-Bowles Deficit Commission, which included entitlement cuts? Warm comments, even praise, but no endorsement. What about the Budget? Put out a "strawman Budget", that you will later be hammered for. Wait the Republicans out.

When their Plan emerges, which the Ryan Budget did in March, then go to the people with a Big Speech and talk about the outlines of a Grand Bargain. Obama gave this speech in early April. It looked like a complete repudiation of his budget, which it was. Critics would later say it was never a Plan, and the President's answer would be/was:

"Plans are important, but what is more important is having a set of principles with specific objectives and then beginning a process of discussions with a willing negotiating partner from the other team. Negotiating through the media doesn't work."

And that would bring us to the debt ceiling discussions and negotiations. I am suggesting that, even with 20/20 hindsight the President might choose to follow the same trajectory: no deal in December, wait the Republicans out, broad invitation to a Grand Bargain, followed by negotiations running up to August 2.

Could the President (whom we have now given 20/20 hindsight) get revenues as part of the deal?

I say no. And this was my mistake before. This was not going to happen, given the ideological intensity of the Tea Party Freshmen in the House GOP caucus.

If Obama had known he would not get revenues in "normal" negotiations, would he still have proceeded?

Yes. Once he passed the December date, where a deal probably could have been done with Republicans, he had no choice. The GOP decided in January, when Boehner responded to Geithner's request for a debt ceiling increase with demands for big budget cuts, that they were going to argue their position strongly. And it was well forecasted that the big battle would come around the debt ceiling, which needed to be raised in June/July or early August.

If part of the body politic is aching for a fight, and there is a date specific coming up when you need them to vote on something the country needs, you can be sure the fight will happen, and more or less when it will happen. And given Tea Party intransigence, this fight meant a no revenue/spending cuts only deal, or default.

If Obama had told Republicans he would veto a spending cuts only deal, would that have made a difference?

No. We all saw the articles by Krauthammer and others that said "Call the President's bluff."

If Obama had told Republicans to give him a balanced (spending/revenues deal) or he would invoke the 14th Amendment, do you think the Tea Party would have obliged?

No. They would have called his bluff again. And the country would have a constitutional crisis on its hands, which Obama did not want.

So that brings us to now. I think the President got pretty much all he was likely to get. So what would the President say are the benefits of the deal for the Progressive/Democratic cause? Here's what he might say:

1. Republicans will claim that they won. An all spending cuts deal. From a limited perspective they are right. They keep forgetting about the Bush tax cuts which expire in late December of next year. Boehner had a chance in the Grand Bargain negotiations, before he walked, to remove this trigger, if he agreed to tax reform with revenue increases of $800 -$1,200 billion. He refused and bailed out of the negotiations. The trigger is still fully in place. Having these Bush cuts expire will raise $3-$4 trillion, and there is nothing Republicans can do to stop their expiration as long as I am President. Revenues will be part of this deal, either in the coming "Super Congress" discussions, or at the end of 2012.

2. We have a more than $2 trillion debt ceiling increase in return for about $25 billion in short term spending cuts. Entitlements are not touched at all in Phase 1, and only Medicare provider payments can be affected in Phase 2, if the automatic trigger goes into effect. Other programs for the poor are protected. And Defense takes a big part of the burden - $350 billion in Phase I and 50% of all cuts in Phase 2. We cannot be held hostage again, until after the elections in 2012, and the truly terrible Balanced Budget Amendment will be voted on in Congress, but not force fed out to the states.

3. Democrats can lay serious claim to caring about fiscal discipline and responsibility. I proposed a larger, "grander" deal than Republicans could stomach. They will argue that this fiscal discipline strain is only showing up because of GOP pressure, but that argument won't hold up very well. I have reasonably high hopes that the new Deficit Commission will make some true progress, and that in the roughly three months they will be working, the commitment of Democrats to fiscal responsibility will become clear. I have always felt that fiscal responsibility can be made an integral part of the progressive platform. It is not HOPE versus RESPONSIBILITY. It is both, together.  But we cannot just talk about it. We must walk our talk. And I believe our Party is ready to do that.

4. In addition to stealing some of the GOP's thunder, we have made progress in demonstrating the radical and dangerous nature of the GOP, now in thrall to the Tea Party. Never before has the country been held up by one of its political parties, at least not since the Civil War. I have every intention of highlighting this extremism during the campaign in 2012.