I think at this point, we can say with a fair degree of certainty that Republicans have clear goals for the set of post-election measures that must be dealt with in the lame duck session. Generally speaking, they don’t care about the deficit, and that manifests itself by wanting to extend the Bush tax cuts as long as possible and canceling the automatic cuts to defense spending. If they can replace those cuts with other discretionary spending cuts, great, but really the plan is low taxes for the rich and more defense spending. In this sense, their bumper-sticker values are driving their policy choices.
It’s often said that Democrats have no bumper sticker argument, nothing that can be said in an elevator pitch to boil down the principles of the party. That can be seen in the utter confusion with which the party is approaching the lame duck session and the fiscal cliff. I follow this stuff fairly closely, and I can say without reservation that I have no idea what the overarching plan for the lame duck is coming out of Democrats in Congress or the White House.
Take the Bush tax cuts, for example. In the 2008 primaries, the universally acknowledged plan was to repeal the Bush tax cuts to pay for other priorities. By the time we got to the general election, that had narrowed to letting the Bush tax cuts expire for the top two brackets, above $250,000 a year. That has held in all Presidential budgets since that time, though in 2010 all the tax cuts got extended for two years. And now there’s not even a clear direction. Nancy Pelosi’s shift, asking for the Bush tax cuts to be extended except for incomes over $1 million, came as a surprise to allies. I have been able to confirm that Americans for Tax Fairness, the organization launched to argue for repeal of the Bush tax cuts over $250,000 a year, as it is in the President’s budget, was totally blindsided by the Pelosi letter to John Boehner, setting the dividing line at $1 million. They hastily rushed out their coalition, which includes some of the biggest progressive and labor groups in the country. They weren’t even able to complete their Web presence. They felt the need to answer Pelosi’s shift.
While the White House still nominally supports the $250,000 demarcation, they haven’t really said much about it. And the Democrats in the Senate have been muddled on the issue as well.
Then there are the automatic cuts to defense. The White House finds these so distasteful that they didn’t even include them in their budget plan, expecting them to be reversed. However, Harry Reid last week vowed to carry out deficit reduction already scheduled, and that includes the defense cuts. He might want to have a word with Defense Secretary Leon Panetta, who continued to demand a reversal of the cuts:
During the interview, Panetta also raised an alarm about looming cuts to the defense budget, saying that they would be “disastrous” for national security and urging Republicans and Democrats to work together to avoid a budget showdown.
“Well– my view is that when you’re facing the size deficits and debt that we’re facing, that obviously defense has to play a role in trying to be able to achieve fiscal responsibility,”
The Defense Department, he said, “provided a budget that, we think, meets not only the goal of savings but also, more importantly, protects a strong national defense for this country. The thing that does concern me is the sequester which involves another $500 billion in defense cuts.” [...]
“I think what both Republicans and Democrats need to do, and the leaders on both sides is to recognize that if sequester takes place, it would be disastrous for our national defense and very frankly for a lot of very important domestic programs,” Panetta said. “They have a responsibility to come together, find the money necessary to de-trigger sequester. That’s what they ought to be working on now.”
So what is the official position? Is it what Harry Reid said, that the defense trigger will have to be pulled, or what Panetta said, that they’ll have to be replaced – without being specific – or what was in the House Democratic budget, a replacement of the trigger with the closure of tax loopholes? There’s just no unity on the Democratic side on these issues.
Then there’s the overall question of deficit reduction itself. We know that the CBO predicts a recession for the first half of 2013 if nothing is done on the fiscal cliff measures. But we also know that they predict 4.4% growth on the year if everything gets extended. I don’t know if I totally believe that figure. But you would think that a country desperate for growth, with a high unemployment rate, would want to chase that 4.4% brass ring. That would entail extending unemployment benefits and the payroll tax cut for another year. Yet that’s not on the table at all. Nobody’s said a word about the payroll tax, which is sure to expire. And we’re already seeing extended unemployment benefits wind down, despite their high-multiplier stimulative effect, and the continued elevated presence of the long-term unemployed.
What is the goal here? Growth or deficit reduction? We know that the Obama Administration has gone out of their way to promote themselves as spendthrifts, who would rather deal with long-term fiscal issues than a near-term lesser depression. But if that’s the goal, it isn’t totally manifesting itself in policy. They want to replace the defense trigger. They want to extend 98% of the Bush tax cuts or more. Similarly, it’s not like growth is the sole agenda either. We know that Democrats, in broad terms, want a “balanced” deficit solution to come out of the lame duck session. The numbers on past spending they continue to promote are in fact evidence of a failed recovery policy, but they continue to promote them.
There’s a lot of gimmickry going on about true intentions and public intentions, particularly before the election. And there are months left on the calendar before any of this has to become clear. But Republicans are operationalizing their values. They know what they want. I see no reason to believe that Democrats have the same strategy. I don’t know what their values even are here. They want growth but not the policies – and higher near-term deficits – that will produce growth. They want deficit reduction but not the kind of deficit reduction that comes from higher taxes or defense cuts. If one side has staked out definitive ground, and the other side hasn’t, you can bet that the side with more certitude will have the advantage. Despite the fact that the leverage is on the Democrats’ side in most of the fiscal cliff measures, because something has to affirmatively pass to change the trajectory, their lack of a clear plan is inviting a bad outcome.