The current debt ceiling battle is sputtering its last coughs. While Republican leaders are tinkling their victory triangles, a more nuanced view reveals that Obama and Dems are the ones who outplayed the GOP.
Yes, on the surface, Dems didn’t get Republicans to open their tight fists and offer any revenue. But the devil’s in the details – and here they are (from the White House fact sheet):
• GOP achieved a debt limit increase that requires almost dollar-for-dollar spending cuts ($2.4 trillion).
• Revenues aren’t part of the first step in the two-step process.
• Republicans get to keep up the appearance that they are fighting for a balanced budget amendment (but it won’t ultimately pass – the enforcement clause of the deal sees to that).
White House/Democrat Wins:
• Spending cuts ($2.4 trillion over 10 years) are a little more than half of what was originally on the table.
• Nearly 40% ($350 billion) of the initial $900 billion in cuts comes from the defense budget. The remaining $550 billion over 10 years results from caps on discretionary spending (not itemized cuts), so expect the President and Dems to fight to spread those losses out to places where they’ll have the least impact.
• Of primary importance to Obama’s base, all entitlement benefits and many programs for the poor are exempt from current cuts and the trigger cuts.
• The “triggers,” or fail-safe plans, heavily favor Democrats. If the bi-partisan commission fails to agree to a balanced plan – or Congress fails to pass a balanced plan – the Defense budget alone will take half the spending cuts ($600-750 billion). This trigger gives Democrats significant leverage.
• The process is gimmicky and allows Congress symbolic votes of disapproval, but essentially the agreement will raise the debt ceiling through 2012, one of Obama’s biggest sticking points – meant to settle financial markets and to avoid repeating this charade before the election.
• Did you notice that repealing the health insurance individual mandate – Boehner’s big last-minute sticking point – is no longer part of the deal? Don’t think that wasn’t a hard-won battle.
The reason this agreement is being touted as similar to Boehner’s plan is because Boehner put together a weak plan that was quite light on cuts (hovering around $1 trillion) that he couldn’t even get his own caucus to sign off on last week – until he added some fluff about a balanced budget amendment.
Again, the difference between this agreement and Boehner’s plan – and it’s significant – is that almost 40% of the initial cut is from Defense.
Balancing the budget on the back of defense is like telling Republicans they’ll be dragged by the hair into rehab as a consequence for not breaking their tax-cut addiction.
All this Republican trumpeting about how they won this battle is their way of coddling bruised egos and pretending to conservative and swing voters that the GOP is strong and principled. As was the case in the April budget deal, Obama was willing to let Republicans save some face if it meant that the real meat and grizzle of the deal – the long-range view – was the best possible outcome he could have bargained for in this Republican Congress climate.
That means Obama has the smaller ego … and the better intentions – and he’s banking that his base has the smarts to see the hard-fought victories in this whole debt limit debacle.
Of course, Obama and Dems can’t claim a total victory of guaranteed revenue right away and programs we value will see cuts through trimming in discretionary (non-entitlement) spending. That’s because the Left has to face the reality of an off-the-rails, sociopathic House of Representatives and filibuster-happy majority in the Senate.
Still, here are more need-to-know details on the three successful layups the White House executed on the debt and deficit deal:
1. Triggers Put Defense on Chopping Block
If Republicans refuse to compromise on revenue, they’ll face an axe that will be too much for them to bear – massive cuts to their “pet” defense budget. Thus, they have great incentive to compromise on a deal capable of passing the two chambers and the Oval Office.
Meanwhile, Social Security, Medicare benefits, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement funds are exempt from any trigger on the Democratic side. The only entitlement touched by the enforcement would be capped cuts to Medicare providers (hospitals and doctors) – not seniors’ benefits.
An anonymous Republican lawmaker had this to say to Fox News:
Obama’s health care law was protected while “the military got screwed,” [and] … Medicare left Medicaid off the table.
The inclusion of a balanced budget amendment in the debt deal is a mirage that would only hazily materialize should Congress fails to cut at least $1.2 trillion in second-round spending. However, we already have a trigger for an automatic $1.2 trillion in cuts (half of which comes from defense), making the BBA virtually moot.
Bottom line: The President agreed to $550 billion in non-defense cuts over 10 years (1.6% of federal operating budget of $3.5 trillion/year). He also agreed to form a bi-partisan commission tasked with coming to a balanced approach on cutting the remaining $1.5 trillion, with a trigger that takes half the cuts from defense if no agreement is reached.
Thus, of the total of $2.4 trillion in cuts agreed to in the near- and long-term, $1 trillion could potentially come straight out of defense budget. How is that for the “balanced” approach the White House has been rooting for all along?
Essentially, Dems have substituted defense spending for the tax cut revenue Republicans have refused to move on.
Remember that the Constitution (Art. 1, Sec. 7) requires that all tax legislation originate in the House of Representatives – that’s why Republicans are holding the tax cut/tax increase cards. The ONLY way to get Republicans to agree to new tax revenue is if something near and dear to them is held hostage (i.e., defense spending).
2. Medicare Benefits, Social Security, Medicaid, Pell Grants Preserved
To the liberal base that has been frenzied by the gossip of proposed entitlement cuts, please do a fact check. This is what Obama fought to protect in this deficit deal:
• In last minute back-and-forths, Obama won exemption for the Medicaid program from automatic spending reductions and worked to make certain that the Medicare cuts hit health care providers, not beneficiaries.
• He protected Social Security from any annual cost-of-living adjustments, effectively taking that program off the chopping block.
• He safeguarded his historic investments in Pell Grants, ensuring that the increase in maximum award to $5,500 (from $819) would remain.
The somewhat harsher reality is that the bi-partisan commission (equally split between Republicans and Democrats) can make cuts to some parts of entitlements. However, look for Dems to hold a hard line to restrict any entitlement cuts to trimming waste and capping payments to physicians. I don’t see the Dems on the commission – and then the Dems in Congress – agreeing to any significant changes to benefits, particularly since the triggers for inaction favor the Democrats.
3. Republicans Losing Grip on Bush Tax Cuts
Let’s hold our horses on our hot-button issue (forcing the Bush tax cuts expiration) to think about the Dems’ long-term strategy. Just because the Bush tax cuts aren’t part of this deficit deal doesn’t mean they won’t expire.
But now Dems get to hold Bush tax breaks for wealthiest Americans as a bargaining chip to force the Republicans to agree to tax reform.
The Washington Post’s Ezra Klein effectively rained on the Republican parade in last night’s column:
“Boehner is misleading his members to make them think taxes are impossible under this deal. The Joint Committee could close loopholes and cap tax expenditures. It could impose a value-added tax, or even a tax on carbon. All of this would reduce the deficit under a current-law baseline. [The Bush tax cuts going untouched] … is actually good news for people who want to raise taxes. The Bush tax cuts will still be set to expire in 2012, which means that if Democrats get some revenue as part of this deal, they’ll be able to get more revenue if Congress gridlocks over the Bush tax cuts in 2012.”
Klein is saying the Obama strategy – if it plays out right, of course – is actually quite brilliant. Dems now have a double trigger. Not only will their defense contractor donors go bonkers over at least $600 billion in trigger cuts, but Dems also get to hold the Bush tax cuts as the barrel in the back of Republicans – saying “compromise – or else your precious tax cuts go up in smoke.”
Looking at it from another angle, if Bush tax cut expiration was written into the deal, Republicans would have a great excuse to refuse to offer up any other (corporate tax) revenue. We also must remember that the Bush tax cuts aren’t protected by this deal. Independent of the $1.2-1.5 trillion deficit reduction fast-track vote scheduled for Dec. 2011, Obama and Senate Dems could still refuse to sign off on Bush tax cut renewal, allowing the tax cuts to expire Jan. 1, 2013.
The question is: How much tax reform will Republicans offer to again protect their precious Bush tax cuts? It will be fascinating to watch what happens when Dems turn the hostage-taking tables on Republicans. (Of course, this whole plan depends on keeping Obama in the White House and giving him some slack with Congressional seats – VOTE!)
The Bottom, Bottom Line
Pay attention! Obama protected entitlements and ensured via trigger cuts that favor Democrats that any final plan would have to be balanced – which means it would have to include revenue. IF somehow that goal is not reached, the Bush tax cuts would be set to expire.
Moreover, taking 40% of current cuts from defense – and potentially 50% of second-round cuts from defense – is unprecedented and it shows negotiation-room cajones (for lack of a more descriptive word).
So, what we’ve arrived at is a thinly veiled Grand Bargain (judging by the numbers, the triggers, and the political positioning) – and that adds up to a victory for the President and Democrats.
End Note: We Must Increasingly Tune Out Delusionary, Uninformed Ultra-Left
I hate to have to make this point, because I support the ultra-left in principle. But I bend to reason and facts, unlike the Tea Party or their left-wing offshoot, the Bath Water Party. I abhor fear-mongering, fact-rejecting, and truth-twisting, even when it comes from liberals.
This is what two Progressive spokespeople had to say about yesterday’s deficit agreement (from TPM):
“Seeing a Democratic president take taxing the rich off the table and instead push a deal that will lead to Social Security, Medicare, and Medicaid benefit cuts is like entering a bizarre parallel universe – one with horrific consequences for middle-class families." ~ Stephanie Talyor, a co-founder of the Progressive Change Campaign Committee.
“We urge the White House and all in Congress to keep negotiating for a deal that protects Medicare, Social Security and Medicaid and asks millionaires to pay their fair share, not a deal that creates a back-door way to gut these vital programs." ~ Justin Ruben, executive director of MoveOn
I want to ask these people and the rest of the far left who are so quick to criticize Obama: Are you listening? Have you examined the nuts and bolts of the agreement – the exacting protections for entitlements in both first round and trigger cuts?
Or do you just want to pretend that liberals can have their way on everything and that Republicans (who have a 240-193 majority in the House, and that filibuster-happy 51-47 minority in the Senate) don’t have a say in the landscape of final deals?
Which brings me to the ultimate point to make on Republicans: the undeniable importance of VOTING in your next – and every – election.
(Visit www.smartvoter.org for registration, ballot, and polling place info).
I thought I’d let Speaker Boehner have the last word today. After the April budget deal, Boehner had this to say on a conservative talk show:
I can assure you…I fought for every dime of spending cuts I could get out of Harry Reid and President Obama. If we had Mitch McConnell in charge of the Senate, if we had a Republican President, we’d have a lot more cuts.
Tomorrow is the next step and that’s Paul Ryan’s budget, where we’re going to be cutting trillions while we save Medicare and Medicaid. (This should read: cutting trillions FROM Medicare and Medicaid and throwing beneficiaries to wolves.)
Look at how the debate has changed dramatically in Washington, away from more stimulus spending to the fact that we actually have to cut spending and get our fiscal house in order. The debate has moved dramatically and it would not have happened had we had not won the majority last December.
Vote. Rinse. And Repeat.