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It was only last week that President Obama made clear he would veto any measure debt-ceiling measure that had under $2 trillion in deficit reduction and that did not extend the government's borrowing authority beyond the 2012 election. I said at the time that this was a bluff, and a weak one at that.
Joan McCarter informed us on Friday that the White House began getting behind the McConnell/Reid by negotiating an extensive number of budget cuts to be a part of the deal and no tax increases. While McConnell offered a clean debt ceiling increase so long as Democrats take the heat for it (a perfectly good deal with total Democratic victory in my view), the President is opposed. He is insisting on budget cuts of some sort.
So, as Jed Lewison noted, the McConnell/Reid plan is gathering momentum as a way to merge the cuts outlined in the aborted Biden negotiations with a clean debt bill. Boehner threw his support behind the McConnell plan, so it appears that it will emerge as the consensus favorite.
Jed believes this plan constitutes a win for Republicans. On policy, I agree. But on policy, the Republicans won a long time ago. There is bipartisan consensus that there must be cuts, the only question is where and how much. Since the White House already capitulated on this point, their policy victory is complete. We will, inexplicably, make exactly the same mistake we made in 1937, despite history and common sense. We are going to cut spending in the middle of a deep recession. If one defines Democratic victory as winning a spending increase on jobs, which is what I would define it as, victory has long since sank to the bottom of the sea.
If the McConnell/Reid negotiations come up with the plan that cuts $1.5 trillion with no changes to Social Security and Medicare, that is about as close a thing to a draw that Democrats are going to get, sadly. This cuts less than $2 trillion as of today, but they may get there. The president wants cuts. He wants cuts, and he wants his "big deal," but there is no way any of that is going to get through Congress. "Pain on all sides" isn't exactly an appealing plan, no matter how "adult in the room" it seems to people in the White House. It being his nature to value compromise, I have no doubt that he will approve whatever comes of bipartisan negotiations. That's his thing.
So if I were Nancy Pelosi and the House Dems, I'd go ahead and throw my leverage behind McConnell/Reid in order to keep Social Security and Medicare out of the negotiations in return for votes.
But I would also note that this would constitute a political victory for the President. First, this deal would be bipartisan. Case closed, he wins. If its bipartisan, it must be good. Ok, im kidding. Somewhat. The president wins because he can come out of these negotiations by being able to go into an election touting a) spending cuts to appease the Washington establishment, b) no tax increases to appease his donor base, and c) no cuts to Social Security and Medicare to keep Democratic hopes alive in 2012.
I didn't include a debt ceiling increase because as I've said often, that was going to happen no matter what. They could have all gone on recess for the last three months and they'd come back and raise it. We know who owns the place.