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Sam Stein put a bit more substance on what he calls the “hybrid deal” between Mitch McConnell and Harry Reid, which includes all of the political pitfalls of the McConnell deal with the cuts-only approach sought by House Republicans. It’s basically everything that was discussed before: $1.5 trillion in cuts, no net revenues, a convoluted voting process that forces all votes sustaining an increase in the debt limit to come from Democrats, and a Catfood Commission II to deal with taxes and entitlements at a later date. Chuck Schumer went on the record blessing this deal today:

“We would like to see, even if we can’t get a grand deal, that some real cuts be added to Senator McConnell’s proposal and perhaps Senator McConnell’s proposal be modified,” Schumer said. “That is another possibility, not as good as a larger deal, but certainly better than just avoiding default.”

I don’t think it’s plausible that Reid is going through this for any other reason than because the White House is heavily invested in a deficit reduction deal. And this doesn’t even really satisfy them, they’d still prefer a bigger deal. If you want to get the best sense of what the White House is thinking, you could do a lot worse than going to Ezra Klein. Here are the Administration’s arguments, in summary form.

1. Finishing off deficit reduction, which is crowding out all other issues in Washington, will allow for job creation measures to come back onto the table.
2. Only the big deal would include stimulus measures, like extending the payroll tax cut or unemployment insurance. A smaller deal won’t.
3. Republicans will demand and get immediate spending cuts if there’s no deal, by slashing 2012 appropriations. If you get a phased-in 10-year deal, you can control the timing of when the cuts hit.
4. Obama has to be re-elected to protect other policy gains and prevent more crippling austerity, and a big deal will help Obama in 2012.
5. They truly believe that deficit reduction would help the short-run economy. Obama himself put it best in his July 2 address: “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”

OK, we’ll take these in kind. First, there’s no way you can “finish” deficit reduction. The fever swamps on the far right think $4 trillion in deficit reduction is a capitulation. What’s more, if you try to spend on new programs after explaining the importance of reducing the size of government, there will be loud claims about welching on the deal.

The fact that your stimulus measures run out in 2011 just in time for a re-election campaign in 2012 is YOUR FAULT. You designed the arbitrary cutoff date for the payroll tax cut and unemployment insurance. And if they get included, in order to hit the large number for deficit reduction you’d just have to include more cuts, which defeats the purpose of stimulus.

The “control the timing” argument is a tiny bit compelling. But just because Republicans “demand” immediate spending cuts on the 2012 budget doesn’t mean you have to give them what they want. There’s an aversion to having a government shutdown, but it’s a hell of a lot safer than a debt default, and recent experience shows it’s a fight Democrats can win.

The idea of an expansionary contraction has been completely discredited, as has the confidence fairy. Businesses need more customers, and cutting spending massively will have the opposite effect. Ask Ben Bernanke. The economy cannot support major spending cuts at this time.

Which brings us to the re-election argument, and I’m sure this is the big one in the eyes of the Administration. Mitt Romney or Michele Bachmann will be worse and won’t all of our critics be sorry. Except that the Administration is signing its own death warrant here. The idea that independents will vote for Obama because he signed a bipartisan deal, rather than vote against him if the economy still sucks in late 2012, is pretty fanciful. Political scientist John Sides ran the numbers on this. If you want to get re-elected, the thing to do is to fix the economy. Despite the legislative constraints there are ways to do that. Mitch McConnell threw you an anchor a lifeline in that regard, allowing a clean vote to raise the debt limit, defusing one of the bombs Republicans want to use to wreck the economy. You have Lindsey Graham feeling sorry for himself, saying that the GOP made a bad bet and now has to snap out of it. And the White House is throwing them a lifeline, and objectively harming their own re-election prospects in the process.