Maybe Obama Knows What He Is Doing

Progressives have exclaimed their disappointment, outrage, and disgust with the way the President negotiated the budget deal with Republicans last year and the debt limit increase this week. He agreed to extend all of the Bush tax cuts, not just those for people making less than $250,000 a year; he did not get a “clean” debt limit increase; and the bill he signed Tuesday is hardly the “balanced” approach he argued for.

So, did President Obama get rolled? Is he a lousy negotiator who compromises too easily? Perhaps that judgment is too severe. Let’s look at this a bit differently.

To paraphrase Barney Frank, the liberal congressman from Massachusetts, if you are negotiating with people who are perfectly willing to cut the baby in half, you are immediately at a disadvantage. The most radical Republicans appeared to be ready to bring about an economic catastrophe. Even “mainstream” Republicans (rapidly becoming an oxymoron), are blocking any initiative that might help the economy. They are fighting reauthorization of the Federal Aviation Administration (putting 4,000 Americans out of work and costing the government $200 million per week in lost tax revenue), won’t allow trade agreements to be passed, have blocked a continuation of the payroll tax holiday or extension of unemployment insurance, and will not let legislation on an infrastructure bank be considered. The President can’t even get a new Commerce secretary confirmed. Both the Administration and the Republicans know that if the economy does not improve, the President’s chances of reelection are diminished. So, he had little choice but to make huge concessions to mitigate the damage to the economy.

More importantly, look at what we are facing in the next few months. In September, there is going to be another battle over the budget. It is likely that another government shutdown will be at stake. In November, the “super committee” from the debt limit legislation is required to report and Congress has to act on their recommendations (assuming the committee can agree) right before Christmas. Republican leaders have vowed to appoint members who will say “no” to any revenue increases. Therefore, a stalemate is the most probable outcome, triggering the automatic budget cuts. Then, the Bush tax cuts will expire at the end of the year unless Congress reauthorizes them. The President has pledged to fight the extension for the most wealthy Americans.

Each of these battles will highlight the fact that Republicans are resisting tax increases for the wealthy and protecting taxpayer subsidies for big corporations. Democrats will protect entitlements and Republicans will propose Ryan-like plans that the public hates. In the current debt limit debate, polls showed that the public blamed Republicans more than the President for the stalemate and they back tax increases on the wealthy. Imagine what this going to look like in the Fall and Winter as these issues come up one after the other. Furthermore, the military hawks in the Republican Party (e.g., Lindsey Graham and John McCain) are going to fight with Tea Party Republicans about the mandated military cuts (if the triggers in the debt limit bill go off). That will be a spectacle.

The election is over a year away and the debt limit debacle will be dwarfed by the upcoming fights. I think the President is counting on the Republicans to look more and more radical and firmly on the side of the wealthy and big corporations. With the public paying greater attention the closer we get to the election, that will work to his advantage. If unemployment is still around 9% by November, 2012, he has to hope that works.   We have to hope he’s right.