Obama May Have Won This
As you all know, I'm not a fan of this president. But I want to take a contrarian position on the debt deal that the White House struck late today: Namely, if Obama manages to avoid his legacy-building impulses between now and the end of his first term, he just got $4 trillion in revenue for at most $2.8 trillion in cuts, and snookered the GOP and Tea Party today.
The deal is really built around two stages:
Obama agreed to $1 trillion in discretionary spending cuts already hammered out with the GOP by Joe Biden, but these cuts would be spread over ten years. Obama also agreed to let the Tea Party have meaningless up-or-down votes in each house on balanced budget constitutional amendments.
In exchange for this, he got an immediate increase in the debt ceiling, and another when Stage Two kicks in later this year. Both increases met his demand that the debt ceiling be increased enough to take us to 2013.
Obama agreed to the creation of a supercommittee of members of Congress that would identify another $1.8 trillion in debt reduction by this November, which can be both revenue increases and spending cuts. If this committee comes up with recommendations, they will be submitted to each house for adoption. If the supercommittee cannot reach agreement or if Congress fails to adopt the recommendations, automatic across-the-board cuts kick in targeting all programs including defense for 3% cuts. However, note that these cuts do not kick in until 2013. And the key part in these negotiations is that the White House kept the Bush tax cuts out of the discussion.
After witnessing the last six months, Obama and the Democrats already know the Tea Party and GOP will not agree to any revenue increases especially weeks before the start of the 2012 election cycle. And the Tea Party is already signalling that they will fight any defense cuts. So the White House and congressional Democratic leadership can start planning now for the Stage Two supercommittee process to fail, and begin the narrative that the GOP would rather cut Medicare and Main Street programs instead of cutting defense and making the wealthy and Corporate America pay their share. Strategically therefore, the White House and congressional Democratic leadership should aim for the across-the-board triggered 3% cuts at the outset without saying so publicly, knowing that they don't kick in until the next Congress anyway, and can be refashioned within that context, if kept at that level at all.
So what exactly did Obama give away tonight? The only cuts he actually agreed to were the cuts they already accepted, over ten years. The Stage Two cuts will not take place until a new Congress is seated, after a campaign when Obama and the Democrats can pillory the GOP relentlessly for refusing a balanced approach that led to cuts that a new Democratic congress can repeal, while they let the Bush tax cuts expire, thereby getting a $4 trillion hole filled immediately.
Obama frees himself from any additional GOP hostage-taking over the debt ceiling. He is getting leverage over the GOP on taxes, because if he does nothing, he gets $4 trillion in revenue and ends up giving up only $1 trillion in actual cuts now, and at worst another $1.8 trillion in cuts later, and even those custs don't kick in until the next Congress takes office, where a future Democratically-controlled Congress can remake them.
Sure, the optics right now may be bad, but Obama wants the House Progressive Caucus and the Congressional Black Caucus to raise the roof tomorrow so the Tea Party doesn't catch on that they've been had.
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