In the aftermath of whatever becomes of the debt limit deal, you’re going to see a lot of apologies for the dim result that Democrats will see. Jonathan Bernstein takes a stab at it today. This is the general theme: the surrender on deficits was prefigured by the result of the 2010 elections, and Democrats were always going to have to give up.
However, it was never at all plausible after November 2, 2010 that Obama and the Democrats could get through this year and next without losing on several fronts compared to what they had in the very liberal 111th Congress. And yet liberals seemed to believe that if only Obama negotiated properly he could avoid those losses. It just wasn’t going to happen.
So the proper way to see the current negotiations are in the context of watching both sides surrender. Republicans, as I’ve argued, are having to do most of the surrendering; what they’re going to get will be nothing remotely close to what they bid, and most of the drama of the past weeks has been trying to find a way to convince the House Crazy Caucus of that. But Democrats will have to surrender too. In that context, the question becomes what, exactly, they want to give up. Of course Democrats are upset about coming cuts to programs they believe are vital to the nation, and of course they’re upset about what they see as nonsense economic policy, and of course they’re upset, for that matter, about the possibility that they may make their best deal only to find that House Republicans who persist in believing things that are not true will still spike the whole deal and send the economy into a tailspin anyway. And of course liberals should be pushing for the best deal they can get, and fighting for their priorities. But the bottom line is that whether it’s associated with the debt limit or with FY 2012 spending bills, Republicans are going to get some of what they want, there’s no magic way — not the 14th amendment, not the McConnell plan, not brilliant negotiating or brilliant speeches by the man in the White House — to make that go away. What we’re seeing now, therefore, is Democrats coming to grips with that reality, and battling over what specific losses they should absorb.
I’m not sure what Republicans are giving up: they have options for future fights in two upcoming budget agreements, for FY 2012 and 2013, and they will get anywhere from $1.5-$3 trillion in spending cuts, a dissolution of the social safety net in large measure, while not having to give an inch on revenue. What’s more, they don’t allow the Bush tax cuts to be decoupled, so the high-end tax cuts that the Obama Administration wants to expire and the tax cuts on the first $250,000 of income that the Administration doesn’t are still attached, setting up something much like last December’s conundrum.
But there’s far more missing from this analysis, probably too much to get to in one post. The main thing is the reason for the loss of the 2012 elections. It was in December 2009 – when Obama still had 60 votes in the Senate! – that the President made the conscious decision to turn away from stimulus and jobs and to foreground deficit reduction. In fact, this was something he wanted to do in January of that year, something that is publicly documented, but the extreme job loss forced a slight diversion. But by December 2009, Obama was back to his main plan. He hasn’t been failing to enact this agenda since, he’s been succeeding – at great cost to his party’s success in the midterms, to say nothing of the 14 million out of work. Simply put, a better economy, with more intelligent decisions about how to manage it in a time when the Democrats had total control of government, would have mitigated those losses that squishy liberals now blame for everything that’s going wrong. Instead, we got a stimulus fading out when it was still required, a freeze on nonsecurity discretionary spending, a freeze on government salaries, and a basic pullback on any kind of job creation and demand-producing programs, at odds with basic economic theory.
Indeed, what we’ve now learned is that this monomania on the deficit roused credit rating agencies who otherwise would have had no problem with the current debt load. Despite historically low interest rates, the main judge of the market’s comfort with a nation’s debt, Standard and Poor’s is now saying that the US government must cut $4 trillion within 90 days or risk a debt downgrade. The focus on the deficit drove this, entirely. You cannot come up with one empirical reason for this.
Yes, we have a bad Congress. Perhaps one of the worst ever. Yes, getting them to somehow agree on a liberal economic platform is not in the cards. But you have Democratic Senators like Mark Warner enthusiastically seeking grassroots support for the entitlement-slashing Gang of Six proposal. You have the leader of one of the more liberal think tanks in Washington going along with it in a form of pre-emptive surrender. Indeed, rank and file liberals do not believe that anyone in Washington is articulating their perspective. And they are taking out that anger on their leaders.
There’s a serious credibility gap in the Democratic Party, and arguments like Jonathan Bernstein’s perpetuate it.