Spending cut showdown threatens Obama's second-term agenda
By Jeff Mason and Matt Spetalnick. WASHINGTON | Sat Mar 2, 2013 9:51pm EST. WASHINGTON (Reuters) – Just hours after across-the-board spending cuts officially took effect, President Barack Obama pressed Congress on Saturday to work with him on a …
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As Obama starts his second term, the game has changed: with no need to compromise, he can make defaulting the GOP’s fault
Since this piece was written, President Obama’s “Pat Geary strategy” of offering nothing has … well, succeeded. Friday, Republicans announced that they will take default on the national debt off the table and will push to pass a three-month extension of the debt limit.
Faced with the choice, described below, of default or humiliating walkback, Republicans have chosen the latter. And President Obama’s strategy of holding firm on the debt limit appears, at least for now, to have worked.
Original article starts here:
When it comes to legislative negotiations, Barack Obama doesn’t exactly have the best reputation. Indeed, the dominant view of the president, particularly among his liberal supporters, is that he is a chronic caver, who offers pre-emptive concessions to his opponents, and strikes bad deals with Republicans.
But if the past few weeks are any indication, there appears to be a new sheriff in town. First, there was the fiscal cliff deal, which received more than its share of grudging support from liberals. But the caveat for many was that the agreement only worked if Obama didn’t waver in the subsequent debt limit debate.
If Obama’s press conference earlier this week is any indication, then they might get their wish. On Monday, Obama unveiled his new, uncompromising approach for getting the debt ceiling raised. It’s what I like to call the “Pat Geary strategy”.
For those who have not obsessively memorized every moment of the Godfather Part II, Pat Geary was a fictional Nevada Senator, who tried to put the squeeze on Michael Corleone (played by Al Pacino) and the gangster’s plans for Las Vegas gaming operations. Corleone’s response is one of the great moments in American cinema. He tells Geary:
Eventually, Corleone gets his way, by having a prostitute killed and using the death to blackmail Geary – a strategy that Obama would be wise not to imitate. Otherwise, though, the “you get nothing” approach holds great promise.
Obama’s all-or-nothing strategy goes beyond his oft-stated assertion that he won’t negotiate with Republicans over the debt limit (as he did 18 months ago). This time, he has rejected any shortcuts or gimmicks. No invoking of the 14th amendment, no minting of a platinum coin, no IOUs.
This has put the Republicans in a virtually impossible position. With the knowledge that Obama will not bail them out at the last minute, they have two unpalatable choices: default or a humiliating walkback. Increasingly, it appears that Republicans are leaning toward the latter.
In fact, while liberals, mostly, have been pushing for Obama to mint a platinum coin, or invoke his executive powers to raise the debt limit, these scenarios would be dreams come true for Republicans: they wouldn’t have to vote on the debt limit, and they could launch a political attack on Obama for making a power grab and bypassing Congress.
Republicans have been intent on forcing the president’s hand on the debt limit, to make him acquiesce to spending cuts. But they appear never to have considered that he might call their bluff. Now that he’s told them he won’t play ball, they have no back-up plan.
Still, many suspect that Obama will, all the same, eventually give in. But don’t count on it. As soon as Obama gets involved in a debate over the debt limit, he has already lost. Not only will he yield to GOP hostage-taking, but there is no way he can come out of the negotiations with a win.
This isn’t like the fiscal cliff talks. During those, he accepted a higher tax rate for revenue increases, which won him concessions on unemployment insurance, and tax breaks for low-income and middle-class Americans. Over the debt limit, any negotiation with the GOP will have Obama losing more than he can possibly receive in return.
Then, there is the more important issue: taking a stand on the debt limit is simply good policy. Raising the debt limit has been traditionally a pro forma exercise by Congress (albeit accompanied by pious declarations about the need to cut government spending). But in the hands of House Republicans, it has become a way to blackmail the executive branch into accepting ultimatums.
This weapon, debt default, is far worse than anything else Congress has as its disposal. As Henry J Aaron, a senior fellow at the Brookings Institution said to me:
Moreover, Aaron notes that if such debt ceiling increases are consistently tied to government spending – and not revenue increases – then liberalism’s larger policy goals will be in serious trouble.
Of course, some might suggest that Republicans might actually kill the hostage this time. They could default on the debt – with catastrophic consequences. But if you are Obama, that is the risk you must take.
And as Greg Sargent pointed out earlier this week, the GOP is increasingly isolated on the issue, with little support for their uncompromising position, even among rank-and-file Republicans. Public opinion is also going against them, the less extreme members of the GOP caucus are running for cover, and increasingly, the Republicans’ biggest financial benefactors on Wall Street are sounding a note of growing alarm over possible default.
Besides, if there is one truism of these semi-regular, manufactured periods of brinkmanship, the GOP always backs down. In 2010, when they wrung a two-year extension of the Bush tax cuts out of the White House, they gave up far more in return: a payroll tax cut, unemployment insurance, and votes to repeal Don’t Ask, Don’t Tell and to pass the Start treaty. In the budget battle of 2011, they won some spending concessions from Obama, but far less then they demanded.
In the debt limit debacle, they got big spending cuts, but these included painful reductions to the Pentagon budget, and none of the entitlement slashes they desperately claimed to want. Early last year, they surrendered an extension of the payroll tax cut with barely a fight. On the fiscal cliff, they were able to roll back some tax increases on rich people – without any major concession on spending.
By adopting a maximalist position in every one of these showdowns, the Republicans have minimized their negotiating advantage. As a result, they’ve won far less from the bargaining table than they would have with a modicum of flexibility. This debt limit fight is yet another example.
So one could ask: why hasn’t Obama taken such uncompromising positions in the past?
The difference is that on the eve of his second inauguration – with two more years of experience dealing with the GOP – he has political leverage. While he had little option but to engage Republicans before, now he can smoke them out. But if he does emerge victorious from this fight, that does not mean he will win the rest.
With battles on the horizon – sequestration cuts go into effect on 1 March, and the continuing resolution (CR) that funds the government expires on 27 March – Obama will be forced to negotiate. Neither of those battles will go as well as this one should, but at least Obama will approach them with the potential to score something from Republicans. Moreover, budget fights over fiscal priorities are completely appropriate: the necessary give and take of divided government.
In the short term, however, if Obama holds firm on the debt limit, he will win a crucial symbolic victory. It will put an end to the ever-escalating legislative hostage-taking, and it will sow havoc among Republicans, further dividing the caucus between its radical wing and its even more radical wing.
That would be a pretty good outcome, even for a lousy negotiator.