Obama is Capitulating on the Debt Crisis

June 29th, 2011 at 5:43 pm David Frum | 82 Comments |

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“Call me naive,” President Obama invited viewers of today’s press conference.

Mr. President, invitation accepted: Unless that performance today conceals some unimagined occult plan, yes, you are naive.

Congressional Republicans have refused to raise the debt limit unless the Obama Administration agrees to large and immediate spending cuts. They have their finger on the nuclear button and are threatening to detonate unless they get their way. It seems crazy that they would actually do it, but congressional Republicans have done a pretty good job of convincing the Administration (if not yet the financial markets) that they just might do it.

Obama has responded by entering into negotiations with the congressional Republicans. These negotiations have not gone well, largely because Republicans are united upon an all-spending-cuts, no-tax-increases approach to deficit reduction.

So what does Obama have to say to that? At his press conference:

Mr. Obama repeatedly mocked tax breaks that he said were for “millionaires and billionaires, oil companies and corporate jet owners,” saying that voters would not look kindly on Republican lawmakers who defended such breaks at the cost of cuts in popular programs like health care, education and food safety.

But he did not explicitly say that he would reject a deal that did not eliminate such breaks, saying that he believed his adversaries would eventually agree to what Democrats have called a “balanced approach” that included trillions of dollars in spending cuts along with tax increases.

“If you are a wealthy C.E.O. or hedge fund manager in America right now, your taxes are lower than they have ever been. They are lower than they have been since the 1950s. And they can afford it,” Mr. Obama said. “You can still ride on your corporate jet. You’re just going to have to pay a little more.”

How lame is this answer?

Let’s count the ways.

1) The stuff about corporate jets is just … crapola really. It’s the Democratic equivalent of Republicans pretending that the deficit can be closed by cutting PBS and the National Endowment for the Arts. If Obama, the supposed grownup in the room, wants to make the case for revenue measures, let him make the case for relevant revenue measures.

2) 30 or so days before a forced default on the financial obligations of the United States seems a poor choice of a time for negotiations over budget measures. Why is Obama allowing himself to be engaged in this way?

3) Why for that matter is Obama surrendering to the demand to change the subject from jobs to deficits? Surely Obama believes that rapid budget-cutting will be deflationary? And therefore irresponsible in the context of  10% unemployment, near-zero inflation, and 1% interest rates on federal debt? Why has he allowed himself to be pushed into measures he regards as irresponsible?

4) Beyond that why isn’t he yelling his head off about the Republican default threat? Why isn’t he being specific about what it could mean? And why isn’t he doing what Lyndon Johnson would do – making it clear that if H-Hour does arrive, he’ll use disbursement power just as politically as Republicans are using the power of the debt ceiling: eg, paying Medicaid bills from Blue states first, Red states later? Paying farmers and other Republican constituencies with IOUs, while hoarding cash for Democratic voters?

5) For that matter, why isn’t he hammering home the point that Bruce Bartlett makes in this column.

The Constitution itself emphatically states that the public debt of the United States “shall not be questioned.” Yet these so-called conservative constitutionalists are doing precisely that , calling that public debt into question by refusing to vote the federal government the instrumentalities to pay its obligations.

On this issue, Obama has passed the point where he looks reasonable. He looks too weak to do the job of the presidency. And we are all left to wonder if he looks weak because he is weak.

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82 Comments so far ↓

  • balconesfault

    Both Reid and Obama evidently declined to even try to get the debt ceiling attached to the tax deal.

    Does anyone have any doubt that the GOP would have gladly cut off the extended unemployment checks had Obama tried to work this kind of deal?

    There are people out there who are really hurting thanks to the jobs situation. The Dems wanted to make sure that the hurt didn’t get worse, and we didn’t suddenly have a new wave of foreclosures triggered by unemployment checks stopping. They’re dealing with a party that either doesn’t care – or who thinks such things are desirable outcomes. And you expected Obama to add more items to the plate?

  • ottovbvs

    I am gobsmacked.

    Either you’re a concern troll or very naive about political reality. I’m willing to concede it may be the latter since you apparently believe the Dems had an effective majority in congress. They never did because the Republicans used cloture as an effective minority veto. That was problem with the tax deal. Without a deal which the Republicans had the power to block (or don’t you actually understand that?) the tax cuts for all would have expired and unemployment benefits not been renewed with disastrous results for the economy. Your criticisms rather fall into the same pattern as Krugman’s on the stimulus. He’s right it should have been bigger but his airy dismissals of the political arithmetic of getting a larger sum through are absurd.

  • jonnybutter

    you apparently believe the Dems had an effective majority in congress. They never did because the Republicans used cloture as an effective minority veto. That was problem with the tax deal. Without a deal which the Republicans had the power to block (or don’t you actually understand that?) the tax cuts for all would have expired and unemployment benefits not been renewed with disastrous results for the economy.

    Last comment. The Dems did have a majority in congress. That doesn’t mean they could do anything they wanted, but they had more leverage than they have now. My point is simply that they didn’t try to make the debt ceiling – which had heretofore been uncontroversial – part of the deal. Why is that? You are asserting that the GOP wouldn’t have allowed it to be part of the deal, but you have zero evidence for it, particularly since the Dems evidently didn’t even try. The GOP didn’t want the Bush tax cuts to expire, which is why they made a deal.

    The Krugman criticism is similar. He is aware that it was a tough political environment during the stimulus fight. His criticism, and mine, is that, in a competent negotiation, you start high and negotiate down. You don’t compromise pre-emptively, and you don’t start with the number you want to end up at.

    I’m willing to admit that I’m wrong – in fact, I would LOVE to be wrong, since I don’t see an alternative to Obama. But calling me names and cleaving to what you already think isn’t an *argument*.

    good luck

  • ottovbvs

    Last comment. The Dems did have a majority in congress.

    I said they didn’t have an effective majority. Since you don’t seem to know the difference between an effective majority and one on paper can you tell me one good reason why I should pay any attention to your assertions which are entirely speculative. The claim they had more leverage is entirely specious. And since you and Krugman are such experts on negotiating tactics (and Obama and Reid are totally incompetent at the game) perhaps Obama should hand the Israeli/Palestinian problem over to you and Krug.

  • jonnybutter

    I said they didn’t have an effective majority.

    Sixty votes in the Senate is not an effective majority? Didn’t they pass a little something about HRC? I’d call that pretty effective (even though it was essentially a Republican alternative plan). They didn’t have invulnerable fillibuster-proof effectiveness, but……oh never mind.

    Yeah ottovbvs, things are going great. The GOP, which controls only the House, is forcing on a Democratic party, which controls the Senate and presidency, policies that a huge majority of Americans are against, unemployment is still over 9%, the economy is barely back on its feet (and Israel/Palestine is also going great, BTW!). We Democrats must be doing something right!

  • jonnybutter

    Oh, and lest we forget! The Democrats had the chance to revise the rules of the Senate at the beginning of the term to at last curb, if not end, the abuses of cloture/filibuster. It was actually brought up in the Senate and supposedly ‘studied’. Did they do it? Of course not! Wouldn’t be cricket, don’t you know. Wouldn’t be nice!

    They didn’t do it, among a thousand other things like it, because they are spineless and foolish, and also because they have become more like the Republicans – they love that finance and big corporate money. They aren’t as corrupt as the GOP and they get fewer of those $, but it’s enough. If they could pass bills with a mere majority, they’d have to take responsibility for it.

    I hate what the modern GOP stands for and hate what they do. They have damaged and degraded this country over the last 30 years in such profound and myriad ways that it’s hard to keep it all in your head at once. But I will say this for them: they are not spineless. Crazy, destructive, sometimes even evil (e.g. torture), yes – but they’re not political cowards. If you care about saving/preserving liberal democracy in the US, you have to be willing to diagnose the problems and failures of the party that’s more or less on your side. The Democratic party needs an enema, and badly. The blame for the wretched state of affairs we find ourselves in falls more on the Republicans, but Dems crucially are responsible too. Time to own up to it and DO something about it.