One of the great puzzles about the Obama administration that historians will have to suss out is just what their actual position was going into and during the negotiations over the Grand Bargain. This isn’t a simple question to define, let alone attempt to answer in a definitive way.
The biggest problem is that the Obama administration has never, in my opinion, been very honest about what transpired, and why. In their telling, they were completely sincere in making these offers to Boehner and were shocked to learn that he would not and (even more importantly) could not accept them. That’s the line Dan Pfeiffer is still pushing, and it’s at least partially true. There is no doubt, for example, that the White House was slow to learn that Boehner could not deliver on his promises and that the administration wasn’t really having a genuine negotiation with him.
However, I do not believe that the White House ever expected the House Republicans to accept their terms. Their strategy was to dangle forbidden fruit but hold back enough that they’d never actually have to deliver on their offers. So, what surprised them wasn’t that Boehner didn’t accept their plan but that he did. And, once he did, they were shocked to discover that he didn’t have the power to bring his caucus along with him.
There was definitely some bad thinking going on on the White House side. They wavered on whether a bad deal was better than no deal at all. They were clear that the primary objective was to appear reasonable in order to assure that they didn’t get the blame for a failure of negotiations, and a failure was the default assumption. This meant that there was little cost to appearing to give away the store. But, at some point, Boehner attempted to call them on their bluff, and that’s the point where everything gets very contentious. Did the president back out of the deal, as I believe he did? Or did it turn out that Boehner couldn’t deliver either way, which I also believe to be true?
Why this matters is because it was at this time that the White House finally learned that they’d do better not even trying to negotiate with the GOP. But this lesson was a results-driven lesson that only could be fully applied once Obama won reelection. Until a second term was assured, the optics and the politics mattered at least as much as the policy, and for this reason they felt compelled to pursue Obama’s campaign promise to take the poison out of partisan politics and change the tone in Washington. If they failed, it had to be the Republicans who took the blame.
There’s no question that parts of the White House operated during the first term as if it were their responsibility to cut deals, even lousy deals, in the interest of getting things done. Some probably saw the Republicans as having enough legitimate political power after the 2010 midterms that they had a right to expect unsavory concessions. Others saw what was happening more clearly.
In the end, those concessions were not made. Some progressives will argue until the end of time that it was only Republican radicalism that saved the day and that the White House was desperate for a Grand Bargain. The truth is much more complicated. The White House was divided. They were primarily concerned with getting the president reelected. The most important thing was that Obama be perceived as the only adult in the room, and he couldn’t do that if he was seen as just as intransigent as the Republicans.
But they wavered. They might have cut a deal that we would all regret if their terms had been unexpectedly accepted.
What’s clearer is that, freed from the need to worry about getting reelected, the president was able to show his true preferences. And that should guide us when we look back to his first term and try to figure out what was happening at the time.
Any way you look at the issue, the administration did more damage to itself than to the republicans. Obama came through it looking like a weak negotiator willing to give away the farm. This impression continues on all sides of the aisle and haunts the negotiations with Iran, even for democrats if they will admit it.
to you, perhaps, but not to everyone. I believe this is what this thread is about.
I don’t think that’s true, maybe internet progressives think that but generally he’s been seen as the only adult in the room and it probably helped him win re-election.
Old habit of DC Democrats …as if it were their responsibility to cut deals, even lousy deals, in the interest of getting things done.
Better not to get things done when the deals are lousy. Stretching back to 1981 — S&L deregulation (that was a winner), Social Security Reform Act of 1983 (aka, increase payroll taxes on the have nots and give the haves a tax cut). (The Boland Amendment was good — DC
Democrats just neglected to notice that Reagan violated it.) And on and on.
Sucks when a leftie has to look to GOP regressives to stop really lousy deals because for them they aren’t lousy enough.
WRT — Obama’s intention on the Grand Bargain. It was real. Evidence for that conclusion is his repeated claims that SS is going bankrupt and has to be fixed. It’s not true and either his knowledge of SS is zippo or he and his team calculated that scaring the public with misinformation is how to get them to approve what will hurt a significant majority that isn’t and never will be wealthy.
WRT — Obama’s intention on the Grand Bargain. It was real. Evidence for that conclusion is his repeated claims that SS is going bankrupt and has to be fixed. It’s not true and either his knowledge of SS is zippo or he and his team calculated that scaring the public with misinformation is how to get them to approve what will hurt a significant majority that isn’t and never will be wealthy.
Does everyone forget he was national elected to show up at the opening of the Hamilton Project back in 2006? Here:
http://www.youtube.com/watch?v=P-5Y74FrDCc
Slap the Brookings Institution logo on anything and Democrats/liberals assume it must be okay.
Fewer people today have even heard of The Hamilton Project than were aware of PNAC in 2002.
Lots of good mumbo-jumbo making The Hamilton Project sound like a 21st century of the New Deal/Great Society instead of what it really is — destroy the spirit, intent, and legislation that raised the financial well-being of everyone. Before it fulfilled its guiding promise of maximizing equity and fairness, but all lives of US citizens were improved by it. Neat trick to pull the wool over the eyes of almost all Americans that they would be better off without some or all of it.
Summers and Rubin were at a Hamilton function this February calling pretty loudly for pro-equality redistributive policies. I think they might mean it. Things are changing.
Seriously, Lucy is never going to change her football handling habit.
We hippies aren’t important enough to be Charlie Brown. John Boehner thinks he’s Charlie Brown, and I’ve been thinking for a while that he might be right.
Nous sommes hippies.
Summers is right that more education is not going to do anything for inequality. What I see his recent statements to mean is analogous to Keynes who pushed his theories because he wanted capitalism to win over socialism.
Basically Summers is sating you need to throw more and different kinds bones to the masses to keep them pacified.
Also, how does Chait not ask Pfeiffer about Yertle the Turtle’s infamous proclamation about making Obama a one-term president?
Just what explains his love for these trade agreements that they have cooked up?
Money. Their BFFs have gotten richer and gotten richer faster than anytime since the Gilded Age. And those BFF are most generous to the pols that shoved this crap through once their out of office. From “dead broke” to extremely wealthy in a decade for the Clintons. Plus some deals for the Rodham brothers and sinecures for the daughter.
They scare me witless. The age of unaccountability.
The unaccountable will never stand for having their time named with a negative word. Naming rights belong to the elites as well as everything else, don’t you know? Thus, “Gilded Age” — wealth (recipients undefined). “Roaring Twenties” — fun, fun, fun (partygoers undefined).
Plenty of accountability for the rubes and do-gooders. “Poor people taking out mortgages they couldn’t afford crashed the economy. Melvin Goodman onthose held accountable and a few that it of those that it would be unkind to punish. (For pension purposes I would have busted Petraeus down to a private.)
Maybe we should hold a contest for the snappiest phrase for the 2001-2020 era.
Because Free Trade does generate more wealth, and that being a Desirable End in and of itself is part and parcel of elite education economics.
Let’s assume that Obama was playing some kind of complicated 11-dimensional Chess. What he suffered was:
What he got was:
* An alarmingly declining deficit that threatens to fuck over his administration or the next administration with a surplus-induced recession if it’s not taken care of promptly.
There’s no explanation for this behavior other than Obama, like most center-leftists that don’t have anywhere near as good of a grasp of Keynesian economics as they think they do, really and truly did see the debt ceiling hostage-taking as a chance for hardball (yet routine) budget negotiations that would cement his place in history as the post-partisan doofus that yadda yadda. And that embarrassing himself in news cycles and fucking over his party was a small price to pay for being known as the Bringer of the Grand Bargain.
On the whole, Obama was a much better President than I was expecting, but the debt ceiling debacle and its aftermath was one of the biggest unforced errors in American history. It’s Embargo Act or Roosevelt Recession-level bad. Hell, it’s not even clear that we won’t have an Obama Recession when all is said and done — and unlike most things conservatives say about liberals, the bad economy truly will be all his fucking fault.
He believed the Bob Rubin bullshit about deficits being bad, even in the middle of a big depression. Atrios has been pounding this theme for a long time. No one gives a flying f-ck about the deficit except the GOP and corporate media because they want to screw the 99%.
Yeah, alas, I’m afraid that part is true. Still boasting about reducing the deficit by two thirds as the administration’s major accomplishment.
Not in the “deficits don’t matter” nor “deficits are bad” camps. But we never talk about the issue except at a macro-macro-level and then fight about it at that same level. If running large deficits so that every American can maximize his/her purchases of soon to be obsolete gizmos manufactured in China, etc. that would be bad economics. Deficits to run our bloated and mostly unnecessary war machine isn’t much better. Huge deficits during economic prosperity is probably not good as well (although I can imagine scenarios where it would be an excellent move for the long-term health of an economy). Limiting federal economic policy discussions to “the deficit” would be like evaluating a business on the basis of a quarterly P&L statement. Ignoring the balance sheet, cash flow and all the other currently non-quantifiable elements that figure into future success or failure.
The rubes were probably better off when federal economic policy discussions focused on the National Debt. Also superficial and misleading to the uninformed, but a better measure credit debt and under-taxation than the deficit. Less than $1 trillion in 1980.
I would say evaluating a business solely on their bonded debt. I say tommayto, you say tomahto.
No. Businesses can operate with many forms of debt other than bond issuances. The USG is limited to internal account borrowings and bond issuances.
It’s bond debt, not “bonded” debt. “Bonded” refers to a person or business that has a financially strong third party standing behind them as a guarantee that they will perform as promised or contracted for. An example is a “bonded warehouse” for storage of commodities. The Great Salad Oil Swindle is a great read. Amex was the “bond” issuance on that one and took a huge hit. Ten of million of US employees are bonded and don’t even know it.
Should have said total debt, but usually bonds are the bulk.
Don’t think so. Generally bank loans and capital stock — preferred and common — make up the bulk of corporate debt.
Stock is only debt if the corporation is dissolved. Security analysts are always worried about a company’s bond levels and also bank loans if they are significant. No analyst ever faulted a company for having too much capital stock.
No analyst ever faulted a company for having too much capital stock.
Internal or external analysts? Such criticism is rare because few corporations are adequately capitalized much less over-capitalized. One does presently exist and is
engaged in significant stock buy-backs. Too much capital lowers ROE — and I assure that financial analysts do look at ROE. Interestingly enough, the company has issued bonds to raise some of the cash to fund the buy-backs. The alternative to accomplish the stock repurchases was to repatriate billions of surplus cash, but then they’d have to pay taxes on those earnings.
btw — capital stock is secured debt. That’s why it appears on the liability side of the balance sheet. The fact that its subordinate or inferior to all other debt obligations and gets the special consideration of entitlement to all NIAT, doesn’t change it’s essence as debt.
Is an overarching narrative which merely enables more and deeper looting of the former middle class.
It strikes me that both parties are cynical and more or less culpable in this respect. Tracing the trajectory of this wealth transfer from the Reagan years to present there seems to have been no substantial resistance by an organised legislative cohort of either party; Warren and Sanders notwithstanding. Quite the contrary.
Failing to negotiate with the Republicans is the thing which would have gotten Obama’s fingerprints all over the bullshit S&P downgrade. Your claim of perceived responsibility on that issue makes little sense.
In this negotiation, the President was successful in making the Republicans look like the extremists they were. He got re-elected in the middle of a very troubled economy fairly soon after the debt ceiling negotiations; it is impossible to overstate how important it is to keep this GOP out of the White House until they regain their sanity.
The Bush tax cuts were done away with for the top tax bracket at the very beginning of 2013.
I was off on the timeline; Obama got re-elected while the debt ceiling negotiations were getting hotter and hotter.
Oh? The actual polls at the time showed that Obama and the Democratic Party’s reputation absolutely cratered during the debt ceiling negotiations and ended up recovering well after the debacle — after the clown car performance of the 2012 GOP Presidential nomination contest. That sure doesn’t seem like the American public viewing Obama as the reasoned adult negotiating with extremists. Face it: he got played like a fiddle in a situation where he held all of the cards in such a way that encouraged indefinite hostage-taking, which is why he bears a significant amount of responsibility for the downgrade.
What Obama should’ve done the first time around is what they did the second time the Republican Party tried to hold the debt ceiling hostage; told them to get bent. But they didn’t, so in order to avert the fiscal cliff that happened as a result of the first round of debt ceiling negotiations, Obama had to cash in the Bush Tax Cuts bargaining chip. A bargaining chip that he could’ve used for, say, climate change legislation or stimulus relief had he not foolishly tried to negotiate with the Republicans like a good VSP lapdog.
Been saying this from the beginning. Your analysis fits mine precisely.
I don’t know if a Grand Bargain is something Obama personally believes in on his own ideology. But it matters not. What transpired is exactly how I view it. It led Sterling Newberry to make the ridiculous assertion that Obama could potentially be our “worst” president because of how dangerous it was to legitimize the debt ceiling as a serious negotiation. I don’t find that persuasive at all, but I do think it was by far his worst error.
Anyway, I had this discussion with Booman in person and he does not believe Obama had all of the cards, and that by telling them to get bent he was handing his own re-election and placing it into the GOP’s control. I don’t believe this to be the case, either.
The primary thing that BooMan is asking us to consider here is this: what is the President doing now? If a goal of his entering office to get a Grand Bargain which sells out the New Deal/Great Society programs, with the Congress we have right now he has the perfect partners. Yet, Barack has never been further away from that Grand Bargain than right now.
He doesn’t talk about it any more in generalities or specifics, his last two budgets didn’t include the Social Security offer that enraged and worried all of us, and in both his rhetoric and actions he’s showing that he won’t acquiesce to the Republican Congress- the veto pen is being used and will continue to be used. Those who think Obama entered office wanting to accomplish the biggest White Whale conservative policy goals have to explain why he’s not doing so.
“with the Congress we have right now he has the perfect partners.”
That’s funny because reading this, I come to the exact opposite conclusion. I wouldn’t call someone who is not able to deliver on agreements a “perfect” negotiating partner. They’re probably the worst partner there is.
After all, that’s why Obama gave up negotiating with them in the first place. He can barely keep the government open because of the bad faith in his partners. He knows he can’t rely on Democrats for cutting Social Sscurity like he can for keeping the government open (even though that funding bill cut food stamps significantly). The votes would have to be:
A. Attached to must-pass legislation — and I mean must pass, like the debt ceiling
B. Come with a hefty number of Republican votes
You might have a point here. I’m theorizing that Obama would find a cohesive Congress if he were to push for “Social Security and Medicare reform”, but the one thing he actually is doing which is a Chamber of Commerce wet dream, the Trans-Pacific Partnership, is having challenges getting thru Congress.
Thank God it’s having problems getting thru Congress, BTW. ‘Cause that legislation, particularly the secretive fast-track aspect of it, is truly despicable. This is no way to run a democracy.
The Democratic Party’s reputation cratered, but the GOP’s reputation went through the floor.
As pointed out below, the President’s approvals cratered during the debt ceiling debacle, but the GOP Congress’ approvals went below 10%, and subsequently majorities of the public have blamed the Republicans for every single episode of Federal brinkmanship.
The level of opposition and obstruction the GOP has pursued since Obama took office is unprecedented in the post-Civil War era. A discussion of process, which is what a “no negotiating on the debt ceiling” position was becoming, would not have been a winner, and this GOP Congressional caucus, we can agree, is not acting rationally. They weren’t cohesive enough in their new House leadership for us to know that could be counted on to pull back from the brink of disaster; they could have hurt the economy much more than they did, and it would have been under Obama’s Presidency.
If there would have been a true economic crisis at a moment when Obama was absolutely refusing to negotiate, he would have not just fingerprints on the outcome, he would have had the BLAME. That would have been wrong, but a lot of wrong things happen in this world. I can agree that President Obama and his Administration made mistakes feeling out their negotiation positions in the face of something pretty unprecedented, but that’s a different critique than the one that arrives here sometimes, that he outright wants to undermine the New Deal/Great Society.
I’ve long thought this was how they were negotiating, often with really good results, especially in the 2011 budget, which left the Republicans feeling seriously rolled. You could say that’s what has made them even more difficult to deal with since, bringing on the shutdown and other kinds of destructive craziness, and you could say it wasn’t very honest, but it’s clear now, even if it wasn’t then, that Boehner was never either (a) negotiating in good faith or (b) able to keep any commitments anyway, and what we got (including the ACA) was a lot better for the country and its economic recovery than what we would have gotten if Obama had been “triangulating” the way so many Firebaggers accused him of doing.
It may be the the president risked getting us stuck with a dreadful Grand Bargain, but it seems certain that wasn’t his intention and he did, in the end, avoid it–we should judge by the results.
Totally agree with most of this, and especially the last paragraph.
Totally agree with you and Booman.
also totally agree
Send in the drones? Obama Declares Venezuela a Threat to National Security:
Pivoting south because Libya, Iraq, Syria, Ukraine are all a mess with no good answers or end in sight? And that Pacific region re-militarization campaign has stalled since the splash of the big announcement. What’s need is a nice little war — like Grenada where Reagan demonstrated his resolute toughness and won one of the Gipper.
Hey! They’ve got oil! Let’s create a pretext to invade! It’s so 21st Century.
The Venezuelans are gonna be so sorry they asked the neoliberals back again. So sorry.
Venezula is completely screwed for at least the next generation no matter who they put into power. The huge amount of leaded gasoline that the population inhaled is going to cause large drops in IQ and titanic increases in crime and other social dysfunction.
As far as I can tell it’s just sanctions, no mention of war. Maybe you can pump the brakes a little
“National Emergencies” usually wind up with troops being deployed. They last a long time too. IIRC, Jimmy Carter ended the WWII and Korea emergencies. One small part of the WWII emergency powers that I was told about in the sixties was that it gave the federal government the power to force military uniform contracts on clothing manufacturers at prices that the government arbitrarily decides are fair. Of course, there are not any US clothing manufacturers anymore anyway. The last shirts I bought were made in Bangladesh. I didn’t want to buy shirts made by those exploited little girls, but the only alternatives were a very few shirts made in China. The good Honduras and Costa Rica shirts are gone forever, except in the far reaches of my closet (don’t fit any more).
My guess has always been that Obama wanted a deal that would avoid a debt ceiling debate until after the 2012 election. The thinking was that such a delay would allow time for the economy to recover, and Obama’s poll numbers with them. He would have preferred a grand bargain, because he believes in it.
If you go back and look at the numbers, Obama’s approval rose in November of 11, when a series of decent job reports came out. Obama’s approval barely moved from Jan of 12 to Nov of 12. In 2012 there was decent GDP growth, and on election day more that the economy was recovering than not.
The price of the debt ceiling increase was the sequester, the cost of which increases with each passing year.
A very convincing interpretation.