Oh gawd… Bobo has extruded a thing called “Strangers in the Night” in which he posits that if the two parties just knew a little more about each other we might have a deal on the “fiscal cliff” already. He reads Boehner’s and the President’s minds, and also assures us that even though the Republicans “can do big things” next year. Desperation isn’t a pretty thing to watch… Prof. Krugman, in “Playing Taxes Hold ‘Em,” says for a change, progressives can give thanks to the G.O.P. crazies this year. Here’s Bobo:
It’s always amazing how little Democrats and Republicans know about each other. Democrats, for example, are mystified that we haven’t already gotten a deal on the “fiscal cliff.” On Monday, the two sides seemed close. Both made serious counteroffers, and a deal seemed a day away.
Then Speaker John Boehner pulled back. He did this because senior Republicans were afraid that he was giving away the concessions they would need in a future tax-reform negotiation — like closing tax loopholes.
But Democrats don’t know this. They have no clue what Republicans are thinking at any moment. Republicans are equally in the dark. The White House is a black box to them. They have no clue what President Obama wants in his second term or how the fiscal-cliff negotiations fit in.
Well, I’d like to help the Republicans understand what’s going on in the other camp. First, Republicans should understand the mood in the White House. A month ago, the president and his team were gearing up for a fight. They were belligerent and tough-talking. Now, their mood is one of deep confidence. They’ve had a good month. The business community is on their side. Public opinion is breaking their way. Republicans are disorganized. The Obama folks project the self-assurance of a Duke basketball team warming up against a Division III school.
Second, Republicans should understand Obama’s incentive structure. He’s trying to map out his whole second term and write an Inaugural Address that will prefigure it. He wants to accomplish some big things: his middle-class economic agenda, immigration reform, a global warming agenda and government reform.
He cannot have a satisfying second term if the next four years look like the last two, with a string of debt-ceiling-type budget showdowns. If Obama’s going to govern the way he wants, he absolutely has to crush the Republicans on the debt-ceiling threat and on tax rates.
He’s going to be willing to fight tooth and nail to put the budget-showdown-era behind us. He simply has to win this. He’s going to be willing to go over the fiscal cliff and blame it on Republicans.
Given the weak Republican position, he’s going to conclude that his current offer is roughly the best he has to do. He’s just going to sit there, through hell and high water, and wait for Republicans to come to him. And since he’s sensitive to the liberal criticism that he’s a soft negotiator, he’ll love the chance to be implacable.
So over the whole span of his presidency, this is the moment when Obama is going to feel the least need to give ground.
But down the road, Obama does have a problem and, for Republicans, a vulnerability. Even if the cliff talks go his way, Obama will still face a money shortage. Entitlement costs are rising. Revenues can’t keep up. This squeezes the share of federal revenue that can be devoted to domestic discretionary programs — stuff like education, welfare, infrastructure, etc. As Eduardo Porter noted in an Economic Scene column in The Times, discretionary spending, which usually hovers around 3 percent or 4 percent of G.D.P., is scheduled to shrink to a paltry 1.7 percent in 10 years. That’s roughly the level envisioned in Representative Paul Ryan’s budget.
In other words, even if Obama gets a fiscal-cliff deal, he still needs to shake loose some money — either from the entitlement programs or from a new revenue stream — to pay for his programs. He is still caught in the remorseless vice that Christopher DeMuth describes in, “The Real Cliff,” a brilliant piece in The Weekly Standard. A generation of debt politics has left our leaders with no room to maneuver.
That means that in 2013, he will need to do comprehensive tax reform, find fresh revenue or take a broader whack at entitlements to shift some of that money to domestic programs.
As invulnerable as Obama is right now, he will be equally vulnerable next year to get these big projects done. The Republican strategy should be obvious. Swallow hard and accept a deal. End the showdown era. Achieve short-term fiscal stability. Don’t give away G.O.P. leverage on tax reform. Then focus on the bigger fight in 2013.
Don’t get hung up on some incremental tax increase for the rich. Instead, make sure America doesn’t have another credit downgrade. Make sure the economy doesn’t fall into another debt-exploding recession. Prepare a comprehensive tax and entitlement reform strategy for 2013. Call Obama’s bluff on health care reform. In case Obamacare doesn’t bend the cost curve, get Obama to agree to some automatic triggers — plans that will kick in and bring down health care spending.
A minority party has to learn how to pick its battles. The White House has a dominant position on the fiscal cliff and knows it. But next year Republicans can do big things.
Right. Sure they can, Bobo. Name one. Here’s Prof. Krugman:
A few years back, there was a boom in poker television — shows in which you got to watch the betting and bluffing of expert card players. Since then, however, viewers seem to have lost interest. But I have a suggestion: Instead of featuring poker experts, why not have a show featuring poker incompetents — people who fold when they have a strong hand or don’t know how to quit while they’re ahead?
On second thought, that show already exists. It’s called budget negotiations, and it’s now in its second episode.
The first episode ran in 2011, as President Obama made his first attempt to cut a long-run fiscal deal — a so-called Grand Bargain — with John Boehner, the speaker of the House. Mr. Obama was holding a fairly weak hand, after a midterm election in which Democrats took a beating. Nonetheless, the concessions he offered were breathtaking: He was willing to accept huge spending cuts, not to mention a rise in the Medicare eligibility age, in return for a vague promise of higher revenue without any increase in tax rates.
This deal, if implemented, would have been a huge victory for Republicans, deeply damaging both programs dear to Democrats and the Democratic political brand. But it never happened. Why? Because Mr. Boehner and members of his party couldn’t bring themselves to accept even a modest rise in taxes. And their intransigence saved Mr. Obama from himself.
Now the game is on again — but with Mr. Obama holding a far stronger hand. He and his party won a solid victory in this year’s election. And the legislative clock is very much in their favor, too. All the Bush tax cuts are scheduled to expire at the end of the month.
A brief digression: I’ve become aware of a new effort by the G.O.P. to bully reporters into referring only to the “Bush-era” tax cuts, probably in the hope of dissociating those cuts, which they want to preserve, from a president voters now regard with disdain. But George W. Bush and his administration devised those cuts and rammed them through Congress, and it’s deceptive to suggest otherwise.
Back to the poker game: The president doesn’t hold all the cards — there are some things he and fellow Democrats want, like extended unemployment benefits and infrastructure spending, that they can’t get without some Republican cooperation. But he is in a very strong position.
Yet earlier this week progressives suddenly had the sinking feeling that it was 2011 all over again, as the Obama administration made a budget offer that, while far better than the disastrous deal it was willing to make the last time around, still involved giving way on issues where it had promised to hold the line — perpetuating a substantial portion of the high-income Bush tax cuts, effectively cutting Social Security benefits by changing the inflation adjustment.
And this was an offer, not a deal. Are we about to see another round of the president negotiating with himself, snatching policy and political defeat from the jaws of victory?
Well, probably not. Once again, the Republican crazies — the people who can’t accept the idea of ever voting to raise taxes on the wealthy, never mind either fiscal or economic reality — have saved the day.
We don’t know exactly why Mr. Boehner didn’t respond to the president’s offer with a real counteroffer and instead offered something ludicrous — a “Plan B” that, according to the nonpartisan Tax Policy Center, would actually raise taxes for a number of lower- and middle-income families, while cutting taxes for almost half of those in the top 1 percent. The effect, however, has to have been to disabuse the Obama team of any illusions that they were engaged in good-faith negotiations.
Mr. Boehner had evident problems getting his caucus to support Plan B, and he took the plan off the table Thursday night; it would have modestly raised taxes on the really wealthy, the top 0.1 percent, and even that was too much for many Republicans. This means that any real deal with Mr. Obama would be met with mass G.O.P. defections; so any such deal would require overwhelming Democratic support, a fact that empowers progressives ready to bolt if they think the president is giving away too much.
As in 2011, then, the Republican crazies are doing Mr. Obama a favor, heading off any temptation he may have felt to give away the store in pursuit of bipartisan dreams.
And there’s a broader lesson here. This is no time for a Grand Bargain, because the Republican Party, as now constituted, is just not an entity with which the president can make a serious deal. If we’re going to get a grip on our nation’s problems — of which the budget deficit is a minor part — the power of the G.O.P.’s extremists, and their willingness to hold the economy hostage if they don’t get their way, needs to be broken. And somehow I don’t think that’s going to happen in the next few days.
Paul, please try to hammer some sense into Bobo’s head…