http://www.tnr.com/blog/jonathan-chait/92991/did-obama-get-rolledDid Obama Get Rolled?
Jonathan Chait
August 1, 2011 | 12:02 am
The debt ceiling agreement is a horrible piece of legislation. It ratchets down already too-low domestic discretionary spending caps and imposes painful sacrifice on the middle class with little asked of the rich. Obviously, though, you can’t assess any deal without asking “compared to what?” Did President Obama get a worse deal than he had to, given the circumstances? And the answer to that question, in turn, depends on when you start the clock, and more importantly, when you stop it. Let me explain.
-snip-
Chait points to the "massive blunder" made when Obama didn't push for a debt ceiling increase last December, with "blunder number two" being Obama's mistake last spring, when he should have made it clear to the Republicans that he would refuse to negotiate with them when they wanted concessions in order to raise the debt ceiling. Chait says the third blunder was the administration's assumption that Republicans would agree to raise tax revenue, a naive assumption he heard from a number of administration officials.
This left the administration basically negotiating a ransom payment, with no good options remaining. (This is similar to what Robert Reich has been saying -- that whatever argument can be made that this deal is better than default, we should never have reached a point where this bad deal became necessary.)
Chait continues:
Obama has one golden ticket out of the revenue dilemma. As I’ve written multiple times, the expiration of the Bush tax cuts gives him enormous leverage over the GOP. Republicans signaled last year they’d rather kill off the entire Bush tax cuts than sacrifice the portion that only benefits the rich. Holding firm on the Bush tax cuts would let Obama maneuver Republicans into the position of killing off all the Bush tax cuts. That would provide all the revenue he needs – some $4 trillion over a decade, as opposed to the $800 billion he’d raise merely by ending tax cuts for the rich.
What’s more, going to the mat over the Bush tax cuts would provide Obama with a strong political message for 2012. He can’t run on the economy. He needs a contrast election. Republicans will try to pass some version of the Paul Ryan budget, cutting taxes for the most affluent and laying waste to Medicare and Medicaid. Obama can run as the candidate insisting on shared sacrifice – and having already agreed to $3 trillion in spending cuts would give him credible to draw that line.
The problem, though, is that we can’t be sure Obama really intends to draw that line. There’s a limit to how much faith one can place in a man who has so badly misjudged his political opponents time and time again. The debt ceiling ransom may be a shrewd strategic retreat, or it may be the largest in a series of historic capitulations. We won’t know until the fight over the Bush tax cuts has been settled.
Emphasis added.
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