I feel like US fiscal policy is trapped on some kind of treadmill. Democrats offer some level of budget cuts for the current fiscal year, Republicans reject anything less than what they’ve proposed, and then they put together a short-term stopgap with all of the Democrats’ cuts. The Democrats wind up agreeing, and the whole negotiation starts over again, with Democrats moving closer to the Republican position by offering yet more cuts.
Now we have the third offer from the Democrats, with $10 billion in cuts already enacted. They plan to offer $20 billion more.
The White House and Democratic lawmakers, with less than two weeks left to avoid a government shutdown, are assembling a proposal for roughly $20 billion in additional spending cuts that could soon be offered to Republicans, according to people close to the budget talks.
That would come on top of $10 billion in cuts that Congress has already enacted and would represent a deeper reduction than the Obama administration and Senate Democrats had offered previously in negotiations. But it isn’t clear that would be enough to satisfy Republicans, who initially sought $61 billion in spending cuts and face pressure from tea-party activists not to compromise.
You could make a case that the first $10 billion didn’t have a huge impact, as they went to programs already scheduled to be cut (I don’t totally subscribe to that). But the low-hanging fruit is gone. This $20 billion will hurt.
Michael Ettlinger and Michael Linden take note of what this means. Democrats are now ready to cut $30 billion below 2010 levels for the 2011 budget. That was the Republican leadership’s initial offer, basically a pro-rated version of their $100 billion in cuts from the Obama 2011 budget request. They went further to the right after losing the tea party conservatives and then sought $100 billion overall from that budget request, or in real dollars a $61 billion reduction. So here come the Democrats, offering the $30 billion in cuts that the Republican leadership wanted in the first place.
There’s no question that Republicans played the “Bad Cop, Insane Cop” game very expertly. But it was apparent from the moment that Democrats allowed the 2011 budget to be decided on the watch of the new Republican House that there would be a massive reduction like this. They failed to finish a 2011 budget resolution as part of the deal for extending the Bush tax cuts for two years. They failed to incorporate an increase in the debt limit into that as well. As a result, they forced themselves to negotiate with a bad hand. And they’re not the best negotiators in the first place.
The result is a series of immediate cuts when the recovery remains fragile. Furthermore all of those cuts will hit the relatively shallow non-discretionary non-security slice of the budget, magnifying the impact on Americans who receive services from that.
Nobody should be feigning surprise that the baseline, best-case scenario is the level of cuts the Republican leadership asked for in the first place. It was baked into the cake when the budget was left out of the tax cut deal. Indeed I always called the 2011 budget negotiations the second half of the tax cut deal. And now that deal, trading tax cuts for millionaires for tax-driven stimulus that is getting cancelled out by budget reductions, looks pretty pathetic indeed.