The Grand Bargain, Revisited

Before describing himself as “agonizing” over whether to support it or not, Paul Krugman tries to distill the pro/con of the latest potential Grand Bargain:

So is what Obama gets out of this — basically unemployment benefits and infrastructure — worth it? The hardship of the unemployed is important; on the other hand, the numbers here are only about half a percent of GDP. As I said, right now I’m not feeling positive.

I understand that Obama prefers not to go over the cliff and face the political and economic uncertainty that this opens up; maybe my assumption that he can still get the middle-class tax cuts is wrong. On the other hand, cutting Social Security, even modestly, is a very big concession, especially because, as I said, it’s cruel and stupid viewed purely as policy.

One thing is for sure: any further concession on Obama’s part would make this a total non-starter. And I’m waiting for clarification on capital gains and dividends. But even as it stands, it’s not a deal to be happy about.

Krugman isn’t usually being fed behind-the-scenes information as he is here, which, to me, is a sign that someone at the White House (Gene Sterling?) hopes to neutralize or co-opt the Nobel Prize winner in advance. It’s flattering, after all, to be an insider; and if Paul Krugman isn’t apoplectic over the deal, that’ll mean a healthy portion of the left will either temper their criticism, fall in line, or recede into ambivalence. It’s the kind of move the White House would make only if they’re very serious about getting this deal through with as much left-of-center support as possible.

Beyond angst, Krugman also has some further (sketchy) details on the deal which weren’t included in Ezra Klein’s original report and which potentially go some way to making the deal more bearable for Democrats. Go ahead and read the Krugman piece if you want to get more in the weeds than I will here; the short version is that the White House believes it’ll get a bunch of less-high-profile tax hikes on the wealthy and will also be able to shield the most vulnerable from the Social Security cuts. My first instinct is to be skeptical of the Social Security promise. It sounds too good to be true.

But as I was thinking s’more about the deal last night, trying to game-out the likely future if the deal is made as well as if it isn’t made, I realized where the point of divergence between Obama and his left resides. It’s the same as it ever was. Obama doesn’t want a fight.

I’m not a big fan of the whole uncertainty worldview, but I do think it’s worth acknowledging just how ugly and momentous a post-cliff fight will be. Democrats by and large feel that they won in 2012 and are thus in a good position to bend the GOP, through public opinion if necessary, to their will. Maybe that’s true. But keep in mind what we’re looking at if over the cliff is the route we go: not only would Republicans have to be forced into delaying the sequester cuts as well as reestablishing tax cuts for the “bottom” 98 percent, but they’d also have to be forced to surrender on the debt limit, too.

With GOP congressional power located in the House, where nearly every representative is guaranteed reelection as long as they don’t lose to an insurgent in the primary, it’s highly debatable whether Republicans can be made to give a shit about the consequences of letting the sequester cuts happen in total and not raising the debt ceiling. The sentiment that both issues are Obama’s problem — not theirs — will no doubt hold sway for many representatives; and if Obama unilaterally raises the debt-ceiling himself that’s all the better for those interested in impeachment.

All of this is to say, things will get really messy really quickly. And any prospect of other significant initiatives from DC — be it on immigration reform, tax reform, climate change, what-have-you — will be utterly annihilated. A total non-starter.

Is avoiding a slugfest, as well as gaining the revenue in a deal they’d otherwise never wring from House Republicans, worth it? Is it worth making a real cut to Social Security? Worth endorsing Boehner’s “rule” that every bit of stimulus must be off-set by an equal amount of cuts? (The deal is supposedly 1:1 in terms of spending-to-cuts.) Is it worth implicitly granting that the administration will negotiate over the debt-limit… just not yet?

I’m still leaning towards No. But it’s not as easy a call as it was yesterday.

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21 thoughts on “The Grand Bargain, Revisited

  1. It’s okay. Boehner rejected it and moved the goalposts again.

    Going over the ‘cliff’ (more of a mild downhill slope) is gonna be a slow, awkward, hilariously sad ride.

    The upcoming debt limit debate — which is what I’m pretty sure the House backbenchers have decided to wait on before agreeing to anything — is going to be the fun time.

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    • The upcoming debt limit debate — which is what I’m pretty sure the House backbenchers have decided to wait on before agreeing to anything…

      I think you’re right on this. From what I’ve read they by-and-large seem to believe that went well last summer and they can do it again, this time with even more success. Sadly, it’s starting to feel like we need to have this debt-limit clusterfuck before anything else will happen.

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      • I anticipate a large non-event, except for the screaming of the extreme Republicans. Geithner will be gone and the new Secretary will do what they are told to do. I can already hear Obama’s address to the nation, explaining that Congress has saddled him with conflicting laws and no freedom to adjust spending or taxes, so in the interest of doing the least damage, we’ll just continue selling Treasuries and paying our bills. Played properly, it’s the adult(s) versus the noisy children, doing the adult thing.

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        • I wouldn’t ever describe a constitutional crisis (which is what O unilaterally raising the ceiling would be) as a non-event. I wouldn’t expect the courts or public opinion to be against Obama on this, but I think it’ll be pretty turbulent. And impeachment proceedings would begin immediately, of course.

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          • I agree — it’s turbelent, distressing, a true Constitutional Crisis and deeply disturbing to anyone who cares about good government, conservative or liberal, Democrat, Republican, or neither.

            On the other hand, I think it’s going to be a major non-event. Obama’s been very cagey with what he was advised on the Constitutional issues, and he’s got a number of ways around it ranging from the stupid-but-true (platinum coin) to the common-sensical (“Faced with two conflicting Congressional mandates, I go with the most recently passed — ie, the latest budget) to the Constitutional (14th Amendment, right?), so I suspect he’ll let the GOP run the government right up to the bring to show they’re seriously gonna do it…

            And then push one of the various solutions and dare anyone to sue him. And he can cloak himself, quite believably, in the mantle of “I did not wish to provoke a Constitutional Crisis, so I waited until the last moment before acting as I had to, hoping that Congress would come to it’s senses”.

            I swear, though, the whole Debt Ceiling thing just irritates me. I get mad at everyone, from the morons on facebook to the morons on TV. Obama shouldn’t even be involved — it’s the power of the purse, where Congress’ power is at it’s peak.

            The executive branch — Treasury, basically — is just a middle-man, doing Congress’ will. Congress says what to spend and where, Treasury does so. If Congress spends more than it gets, Treasury borrows. Neither Obama nor the Treasury department have ANY control over amounts!

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            • Obama shouldn’t even be involved — it’s the power of the purse, where Congress’ power is at it’s peak.

              In my ideal U.S., I so agree with you. But that ship sailed long before either of us was born, with the Budget and Accounting Act of 1921, one of the great steps forward in shifting the presidency to the center of the American political system, displacing Congress as the source of legislative energy.

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              • Doesn’t matter. Congress controls the purse.

                And these stupid yahoos voted for spending that WOULD, no ifs ands or buts, require an increase in borrowing. And when that happens, they want to act shocked, appalled, and point fingers? Yeah, if they jsut wanted to use it for the usual kabuki “Let us take this time to express how much it sucks that, strangely, we keep voting for deficits year after year” theater, that’s one thing.

                But these idjits? They want to default and they act like the budget somehow sprung forth from the President’s brow, into law, rather than something they themselves VOTED FOR.

                Screw them. Screw them hard. They don’t belong in government. They don’t belong NEAR government. They shouldn’t be allowed access to anything resembling authority anywhere.

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            • Is there any doubt as to which way the crisis would be decided? I asked before but none of the lawyers commented on it. Budgeting is defined constitutionally, this debt limit ceiling is a legislative artifact. Shouldn’t the budgeting trump it easily?

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              • It’s kinda knotty, since Congress has passed two mutually contradictory laws and — if they don’t change one (the debt ceiling, historically) puts the President in the position of having to violate properly passed legislation one way or the other. Can’t split the baby.

                I think there’s a straight up “The Debt Ceiling is Unconstitutional because it is — in this case — making the validity of the US debt questionable, since we can no longer roll over debt which means we can’t pay it” argument.

                There’s also a “When Congress passes two laws that conflict, the most recent one is given precedence even if Congress didn’t intend to partially repeal the old one”.

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          • I wouldn’t ever describe a constitutional crisis (which is what O unilaterally raising the ceiling would be) as a non-event.

            Is it still possible for unilateral executive action to precipitate a true constitutional crisis? Or only a sort of constitutional crisis theater in which each side obligingly plays its dumbshow of critique and defense, while in reality we all accept that the Constitution places no practical limits on the unitary executive?

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            • I think “idiots” would be appropriate in this case. I don’t see any way that the Republicans score a political win with enough of the voters if they pursue impeachment. Seriously, guys — are you trying to lose the House in 2014? I’ve said before that I’m a lousy political strategist, but the Republicans appear to be presenting Obama with an opportunity to be patient and start 2015 with a small majority in the House, a filibuster-reformed Senate, and two years to establish whatever he wants his legacy to be.

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              • I think gerrymandering, and the general tendency for president’s party to lose House seats in midterm elections, make a Demo House majority in 2015 surpassingly unlikely, no matter what Republicans do (up to and including snuff orgies in the floor of the House).

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                • 55/45 districts are surprisingly easy to lose, if you piss off people ENOUGH. It happened in 2006, after all. (granted that was 6 years off gerrymander-standard, not four, but… I expect more population drift this decade, with the “recession”)

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        • … so in the interest of doing the least damage, we’ll just continue selling Treasuries and paying our bills. Played properly, it’s the adult(s) versus the noisy children, doing the adult thing.

          Except that selling treasuries requires someone to want to buy treasuries. If you are happy to ignore the fact that most of the buying is really just the Fed, then yeah, no problem. Politically, most people are happy with this, for the time being. I’m curious how long it can go for.

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  2. Yeah one thing that can’t be emphasized enough is how enormously Obama dislikes confrontation and uncertainty. He was pretty much the same way when he was first elected. 2012 demonstrated that once you force him into a corner he’ll fight like hell (and that he runs an excellent campaign team) but if you give him an out Obama will pay and pay even a steep price to avoid confrontation.

    Whether that’s prudence, bipartisanship or cowardice really depends on your mood and your perspective.

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    • A strange bit of idealism, probably due to his educational background. I have no doubt he sees government as a negotiation between parties, to move forward for the common good of the country.

      The reality of the modern GOP is, well, probably more historically normal than the 80s were (with bipartisanship being the norm, insofar as Southern Democrats Who Weren’t Yet Republicans voting with Republicans a lot for pretty obvious demographic reasons), it doesn’t fit with the ideal of the Constitution.

      Nor does it probably fit with the sort of President he wants to be. It’s a foolish idealism, but he seems pretty pragmatic in areas wherein he doesn’t share authority — so I suppose as flaws go, it could be far worse. Trusting your fellow Americans in Congress to be working toward the good of America isn’t the worst flaw in a President.

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  3. Strategically, the Republicans should give Obama whatever he wants with a minimal show of resistance for appearance sake. The election is over, none of the options are good options, so someone needs to take responsibility just to end the blame game.

    FWIW I doubt Obama and the Democrats can turn things around in four years, but they deserve their chance to try.

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  4. I don’t think a bargain is possible for one reason alone: it means GOP members of the House have to agree to a tax hike. They won’t go there. If they wait until Jan., the current tax cuts expire without their breaking a promise, and they can give new tax cuts, can campaign on those new tax cuts.

    Debt ceiling, sequester, all else? I just don’t think it matters as much as their promise to Grover. That promise to a group that limits their ability to actually govern free of outside restrictions is the real problem.

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