In the aftermath of the Senate vote on the stop gap fiscal deal, many worried democrats are wringing their hands worried that too much was given up. Progressive economists and pundits, like Paul Krugman and Robert Reich (writing for Huffington Post)
are chiming in with their view that Obama keeps drawing new lines as fall back positions. What resulted last night was a good news/bad news bill. The good news: no spending cuts. The bad news: retreat on revenue demands from wealthy Americans including a new definition of America's middle class that includes those making $400,000 a year. So the typical law firm partner driving a brand new Lexus is now in the same working niche that I inhabit. (I'm an elementary school teacher living in a working class neighborhood with my family in New Jersey).
But, as Paul Krugman writes, it's not the plan itself as much as how the White House got to it. The negotiating positions--hard line positions that were an integral part of the Obama election campaign--changed seemingly overnight. Just one week ago, Obama supporters were emboldened by the President's steadfastness. Today, we are justifiably worried about what happens in late February/early March.
The White House says that there will be no negotiation on the debt limit. They're willing to let default take place rather than fight with Republicans on cutting essential programs. America can't afford another fight because it will be the fight that derails the most promising second term in modern history. And yet, there is more proof that negotiation will take place and that republicans could set a precedent for every future fight thereafter. Granted, democrats will have to agree to balanced spending adjustments, and republicans run the risk of making themselves even more unpopular if they demand cuts to programs that are both essential and widely supported.
But the White House can't let themselves get pulled into a drawn out battle. Sticking to a non-negotiatiable position on taxes would have caused the fiscal drop to happen. But the vast majority of economists didn't see that as disaster. On the other side of January 1, the greater leverage would have been in Obama's hands. And a short term fix would not have been as necessary as a long term fix. The pressure could have--I think would have--built from the business community, especially Wall Street and big multi-nationals.
But all of that is now water under the bridge. Obama must stake out a new hard-line position and he must stick to it. Whoever is advising him otherwise is unwittingly working to dissolve whatever political leverage Obama has to tackle other, bigger problems and issues like gun control and immigration reform.
Sat Jan 05, 2013 at 9:25 AM PT: Update. Saturday, 1/5/13: Based on comments from a number of republicans--including conservatives--the message appears to be sinking in. The republicans risk everything, and the blame will deservedly be completely on them, if they choose to hold the debt limit hostage in order to get deep cuts to entitlements. On both counts, they'll lose the message war because they'll be threatening the U.S. and world economy at the same time they're proposing deep cuts in very popular programs. The republican response to Obama's very direct and unmistakably clear Saturday radio address shows a measured response rather than the overwhelmingly histrionic republican responses earlier in the week. Obama must continue to convey this message during the coming weeks; prominent democrats must remain cool, level-headed by not taking bait from right wing commentators and politicians; and the stage needs to be set by both sides with proposals that can be modified. Both sides now agree that BOTH spending and tax reform MUST be on the table. All of this bodes well for a reasonable approach rather than an extremist approach to solving these problems.