On the heels of the demise of omnibus spending bill in the Senate, where it was blocked by the very same Republicans who helped write the bill in the first place, David Dayen and Adam Serwer raise a key question: will the looming spending battle of 2011 end with steep cuts that erase the stimulative impact of President Obama's tax cut deal? David:
There were two major things to move in the lame duck, according to Republicans: the tax cuts, and funding the government. They now got what they wanted out of both. For some insane reason, Democrats didn’t insist on those two measures moving together, so Republicans couldn’t pull back their support of the omnibus like they did last night. One could have been a condition of the other.
Instead, Republicans will have a chance in February of next year to set spending levels. The Democrats could have pushed this off until October, and could have written it into the tax cut deal as well. They failed to do that. And if anyone thinks that the result will not be a slashing of vital social safety net spending, take a look at how Reid folded last night, trading other priorities. The “stimulus” from the tax cut deal is GONE. It’ll be gone by February, at least. Republicans are fulfilling the Norquistian promise of lowering taxes massively, and then using that lack of revenue as a pretext to cut social spending. That’s what’ll happen in February. And the debt limit vote provides just another opportunity.
As David argues, beating back the GOP's austerity plan will require presidential leadership -- including a threat to veto any legislation that cuts spending, thereby lowering demand and risking a return to job losses. Such a threat would set the stage for a massive battle next spring, especially with the debt limit vote looming.
Based on what we've seen in the tax cut debate, it's tempting to say that there's zero chance President Obama will take a hard line against Republican demands to cut, cut, cut, but as Adam argues, agreeing to spending cuts wouldn't just harm the economy, it would harm President Obama's re-election prospects. As long as President Obama believes that when it comes to job creation the demand-side of the equation matters (and it's pretty clear that at least intellectually, he believes it does), then he's got two good reasons to fight: the desire to do what's best for the country and the desire to win reelection.
Of course, as we all know, President Obama also believes in bipartisanship. The conflict here is that come next spring, the only way to achieve bipartisanship without having a fight will be to accept a deal that harms the country and his political fortunes. Put another way, if you think this tax cut debate tested his mettle, you ain't seen nothing yet.