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This Is Not Leadership

Late Saturday night, media outlets first reported that President Obama would sign onto a debt ceiling deal with large spending cuts and no promise of revenue, signaling a final concession that seemed unthinkable just a few days ago. Out of exasperation as much as curiosity, I e-mailed a Washington insider who happens to be among President Obama’s most loyal supporters. How, I asked, could Obama agree to such a lopsided deal? This person answered with a different question: What would I have done instead? It took me a few minutes to realize that I didn’t have an answer.

The broad outlines of this agreement have been clear for a while. And they’ve been clear because, as the date for reaching the debt ceiling approached, the White House lost nearly all of its leverage. The Republicans were willing to risk an economic catastrophe and Obama was not. Given that, I'm not sure the president in the final days should have pushed Republicans harder, thereby risking the immediate, devastating effects of government reaching its debt limit. 

Meanwhile, the actual deal seems considerably better than reports early on Sunday suggested. It would reduce deficits in two stages – first, by enacting around $900 billion in cuts to discretionary spending; second, by calling for up to $1.5 trillion in additional deficit reduction. Congress would have the option of filling in the programmatic details of that $1.5 trillion, based on the recommendations from a new bipartisan commission. Absent that, or the approval of a balanced budget amendment to the constitution, automatic spending cuts would take effect.

Those automatic cuts would be divided equally between security and non-security spending--with Medicaid, Social Security, and programs serving the poor protected from reductions. Medicare benefits would be off-limits too, although Medicare providers and producers (doctors, device makers, etc.) would see their reimbursements fall. Those protections represent a key achievement by the administration: For much of Sunday, it appeared (to me, among other people) that Medicare was in line for sweeping, potentially severe cuts.  

But those are also the details. Take a step back and look at the big picture. It still looks ugly. 

That first round of cuts to discretionary spending might reduce some waste, but it would also undermine vital government services. At the same time, it would deplete the opportunities for easy spending reductions, making it more likely that second round of cuts had an equal, or harsher, impact. As Robert Greenstein, of the Center on Budget and Policy Priorities, pointed out in a recent statement about a different proposal, there’s just no way to enact spending reductions of this magnitude without imposing a lot of pain. And contrary to the common understanding in the Washington cocktail party circuit, “pain” does not simply mean offending certain political sensibilities. Pain means more people eating tainted food, more people breathing polluted air, more people pulling their kids out of college, and more people losing their homes -- in other words, the hardships people suffer when government can't do an adequate job of looking out for their interests.

More immediately, but equally troubling, this agreement would not address our most pressing economic problem: lack of jobs. On the contrary, by reducing deficits starting next year, this deal would do the very opposite of what virtually every mainstream economist now believes we should do: increase consumer demand by pumping more money into the economy. At one point, the debt ceiling agreement included promises to extend unemployment insurance and renew a break on the payroll tax. Those two would have provided a modest but very real boost to the economy (not to mention financial relief to people who need it). This deal would do neither.

Is Obama to blame? I’ve been among his staunchest defenders in situations like these. I know it's easier to second-guess these decisions from the cheap seats. I realize the country is more conservative than I am. I appreciate the difficulty of fighting Fox News, the Koch brothers, and the filibuster all at once. The failure to get a public option in health care reform and the inability to secure a second major stimulus have been frustrating, but they’ve also reflected broader political realities – including, frankly, a failure by progressives to apply enough political pressure on Congress. 

Obama was up against those same forces in the debt ceiling debate. But this time, I think, it's impossible not to second-guess his decisions. Why didn't he demand Republicans raise the debt limit, the way Congress has routinely for previous presidents, and stand by that when Republicans inevitably refused? Why didn't he spend more time criticizing Republicans for their values and priorities rather than trying to find accommodations with them? Why didn't he play up the possibility of the 14th Amendment, if only to increase his leverage? Imagine if the president had, from the very beginning, laid out a few key principles and stuck to them: No tying the debt ceiling to deficit reduction; no attacks on Medicare, Medicaid, and Social Security; no deficit reduction without higher taxes on the rich. 

No, I can't be sure he would have secured a better deal. And, yes, Obama said all of those things at one time or another. (His speech at George Washington University remains one of the best I've heard him, or any contemporary politician, give.) But politics is about using focus and repetition to reach the general public. And for the last few months the White House has subordinated these messages to its broader, overarching theme: That Obama is the grown-up in the room, the one who can rise above all the partisan bickering in Washington to do what must be done. However appealing that message may have been to the political independents that certain strategists covet, it suggested this was not a fight about priorities but about responsibility. It underplayed and ultimately undermined the power of congressional Democrats, both at the negotiating table and on the public stage. It was soothing when, I suspect, it needed to be polarizing. 

Unlike some of my friends, I don't believe Obama adopted this approach primarily because he thought it would improve his prospects for re-election. As I have written previously, I give the president a lot more credit than that, morally and intellectually. My guess is that he pursued this strategy because he didn't want to poison the atmosphere for negotiations and believed (genuinely, accurately) that moderate entitlement cuts should be part of a balanced deficit reduction agreement. But the atmosphere was poisoned from the start and Republicans were never going to support a balanced agreement. He was trying to do the right thing when it was not possible to do the right thing. It may not have made for bad politics, but it certainly made for bad policy.

This story isn't over, of course. The deal hasn't passed, the details are still a bit murky, and, beyond that, new issues beckon. Expiration of the Bush tax cuts would make this deal look a lot better in retrospect, by providing the revenue it so sorely lacks. Another effort to boost the economy, perhaps involving that extension of jobless benefits and payroll tax relief, would certainly make this whole drama more palatable. The one unambiguously good thing about this deal is that it would raise the debt ceiling enough to remove it as an issue until 2013. That would reduce the Republicans' leverage, particularly on issues (like expiration of the Bush tax cuts) when doing nothing is the best policy outcome.

According to Greg Sargent, the Obama Administration is now making this point explicitly in its defense. And that's encouraging. These issues could present Obama with what my colleague Jonathan Chait calls a "golden ticket" -- a chance to pursue good policy and good politics, in ways that would make this whole debt ceiling episode seem a lot less unpalatable. But achieving these goals would entail a series of high-profile battles. I'm not sure whether Obama really wants to fight them -- or whether he'd do what it takes to win.

Update: I revised language here and there, to improve my hastily written prose and to mention a few things I'd forgotten the first time, like the division of the automatic cuts between defense and non-defense.