(cross-posted at gnomanomics)
President Obama is offering to make cuts to medicare and social security as part of a broader deal to raise tax revenue, cut spending, and decrease the deficit by $4tn over the next decade (before this push, negotiations had brought that number to $2tn).
Putting aside the personal gut reactions to this deal, a lot more interesting question is the "why" of it. What does this do in the political battlefield? What is the price, what is the gain, and how could this possibly be better than the walk-away position for president Obama?
Surveying the reactions, Ezra Klein writes that this deal could be a break from the kabuki theater we are used to seeing on the deficit, but that he's not sold yet. Nobel Laureate Paul Krugman calls Republicans the Armageddon Caucus, drawing ties to the Great Depression. Meanwhile, KOS bloggers are proclaiming that Obama is committing political suicide and predicting that this deal could rip the party itself apart. Erick Erickson of redstate fame surprisingly picks up the "Republicans as hostage takers" analogy in his blog "Republicans Must Show They Will Shoot the Hostage," in which he argues that Republicans who end up making a deal and voting on the debt ceiling are "betraying" their own side, and for that reason the hard line against the debt ceiling rise that some Republicans are taking is untenable.
So now we get to the meat of it. Both parties' constituents see this as betrayals from their own leaders. In order to understand president Obama's decision, let's look at the ZOPA.
Speaker Boehner's walkaway position is not clear, because even after this negotiation with Obama he must still negotiate with his party. He can side with the Erick Ericksons and refuse to raise the debt ceiling. Or he can side with the David Brookses of his party who know recent history that says that government shut down under Gingrich handed Clinton the reelection, and therefore are cautioning their own party not to turn the country's economy into a hostage, and especially not to shoot the hostage. Given this large divide in his own party, no matter which way Speaker Boehner chooses, he is going to infuriate a substantial portion of his base and--even better for president Obama--this is not a maneuver that can be pinned on the Democrats: whatever decision Speaker Boehner and his caucus make, it will plainly be their own choice without coersion from the other side, as they have had to walk away from the negotiation table with the Democrats altogether to even get to this point.
So the Speaker Boehner walkaway position can be shorthanded as "openly taking Economy hostage, and deciding whether to shoot him."
President Obama's walkaway position is more straight-forward. The debt ceiling raise is not in his or his party's hands, ultimately, because the decision lies mainly in the Republican-controlled House. So if the debt ceiling lapses and the Federal government is largely shut down to pay off debts, history shows that this would work very much in president Obama's favor, especially given that this subject is out in the open, and Republicans have begun shooting at themselves already. This side comes with a risk, of course, because moderates tend to like to see a functional government and may blame whoever is in charge even if the other party is stalling. Or if the David Brookses win, then Obama gets a clean debt ceiling rise through Congress without having to give up anything.
So those are the outer boundaries of the ZOPA. But what is inside? By making this and similar overtures, President Obama gives up support from his own base, while accomplishing some very important things:
1. He shows publicly that he was willing to take on his own sacred cows, which makes it more significant if Republicans refuse to do so. Especially if they refuse to do so in the sole interest of millionaire and billionaire tax loopholes on things like corporate jets, which has been maneuvered lately.
2. If the negotiations fail and the government shutdown does happen due to failure to raise the debt ceiling, president Obama now has a full ledger to point to regarding his willingness to compromise. This absolves him to the greatest extent possible of any blame for the resulting problems, and pins it squarely on the Republicans.
3. President Obama loses support from his own base, however not by a significant margin because--remember--this same base is being absolutely horrified by what the Republicans are proposing and fighting for. And as discouraged as the base may become due to this, remember that it is July of 2011, and elections are in November of 2012. That is a long time in political terms, and the memory hole kicks in in about 2 weeks anyway.
What do Republicans get?
1. This pressures the David Brookses in Congress to choose to treat with Democrats over their own Erick Ericksons, or else choose to re-enact the Gingrichian government shutdown. This is a significant and painful fork for them to negotiate.
2. This plainly pits the financial Republicans against the values Republicans, a chance that it would be political malpractice for president Obama to ignore. Financial Republicans will openly revolt if the debt ceiling limit is not raised, because that would represent a significant and long-lasting hit to their bottom line. And bear in mind, Republicans are especially beholden to this portion of their constituency given Citizens' United and unlimited campaign financing.
On the other hand, the values Republicans who just want federal government to be annihilated represent a significant portion of their voter base, including their volunteer and word-of-mouth election efforts. And given that Republicans are less popular than Democrats nowadays in the American public at large, they need to rely on their supporters to be extra enthusiastic to make up for the difference.
3. Even if Republicans evade the obvious political bullet of shutting down the government by treating with Democrats, this ends up not being great for them in the long term anyway because, if the economy continues to recover, credit will primarily go to the party in charge, which is presently the Democrats. They would additionally be able to say that they had to give up significantly in order to get there, so the Republicans would look like the ones who kept trying to put the turd in the punch bowl. It would be a hit to the Republican political and economic policies, and a feather in Democrats' cap.
So, in a sense, this is a Queen sacrifice on the part of the Democrats. Both sides get injured, but by examining the ZOPA we can see that this move puts the advantage squarely in Democratic hands.
The democrats who are discouraged by this, and indeed I can see arguments that SS and Medicare cuts are long term, might be encouraged if they imagine that what's at stake here isn't just four years of a presidential reelection, but possibly the crucial Kennedy seat in the Supreme court. If they want more, and I'm certainly among them, we're going to have to see the long arc of politics and not just the latest play.
(cross-posted at gnomanomics)