Obama Vs. Obama, Part 2: Of 'Grand Bargains' and Lost Hope

In negotiating with John Boehner, why did the Obama administration prioritize debt reduction? Millions did what Obama asked in 2008 and voted their hopes, but how many were hoping for the Grand Bargain we really got?
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I can't stop thinking about the Washington Post's long tick-tock piece detailing the collapse of the debt-reduction negotiations between President Obama and John Boehner. The piece, by Peter Wallsten, Lori Montgomery, and Scott Wilson, was titled "Obama's Evolution: Behind the Failed 'Grand Bargain' on the Debt," but it might just as well have been called "Obama's Devolution."

A few days before the piece came out, I made the case that the 2012 election has two tracks: Obama vs. Mitt Romney (assuming he'll be the GOP nominee) and Obama vs. Obama. This second track pits the soaring, audacious, hope-generating, change-seeking Campaigning Obama against the cautious, compromising, status-quo-maintaining Governing Obama. Campaign Obama came to Washington promising to change the way the system works, but in many instances he let himself become captive to the most destructive and entrenched Washington shibboleths.

One of these is the very notion of a big, bipartisan "Grand Bargain" in which the Very Serious Wise Elders of Washington finally have the courage to do the right thing about entitlements and the budget, and bravely stand up to seniors, the middle class, students, the disabled, the working poor, and children (whose influence, according to the Grand Bargain theory, dominates our political system), and tell them the party is over.

And it's never questioned why this courageously-doing-the-right-thing-bipartisan-Grand-Bargain somehow always means screwing the middle class and working people. It's just assumed, as it is in the Post story, that there's no other way to do business in DC. At least not any way that is considered Very Serious. Getting out of wars not in our national security interest? Not Serious. And a sign of being the party of wimps. Asking the wealthy to pay more? Not Serious. And class warfare to boot!

It's further assumed that the Grand Bargain, almost regardless of the policy details, is in-and-of-itself a good thing. Reaching a Grand Bargain deal is itself the win -- because it means Washington's actually doing something. Unasked is whether that something is actually good for the country. It's just assumed that it is. So, according to the piece, while the Grand Bargain on the debt was on the table, the White House saw Obama as "a politically selfless president willing to rise above the partisan fray and make difficult choices for the good of the country."

What is alarming is that President Obama himself bought into these establishment assumptions. Of course, it was known at the time that the president was seeking the Grand Bargain, and was in on-again, off-again negotiations with John Boehner. But what wasn't known was how committed he was to making it happen. As Jonathan Chait put it in his excellent post on the piece, "Obama was even more desperate to cut a deal than previously believed -- dangerously desperate, in fact."

The details of the deal included $1.2 trillion in government cuts, reductions in cost-of-living raises on Social Security recipients (Very Serious!), around $250 billion in cuts from Medicare by raising the eligibility age (Even More Serious!), and $800 billion in new tax revenues. This last part was pretty much total nonsense -- it was the estimated rise in revenue due to the growth that would come from reforming the tax code. And last but definitely not least, because a proposal is not Very Serious if it just screws middle class and working families without also containing giveaways to the rich (finally, someone brave enough to do that), the Grand Bargain would have extended the Bush tax cuts -- and dropped the tax rate even lower.

Chait's summary:

Okay, so the Republicans were demanding big tax cuts for the rich -- lower income tax rates, and keeping in place the tax breaks that most benefit the rich, thereby insuring that the burden of any higher revenue would fall on the non-rich. Obama, incredibly, agreed to that -- he agreed to a debt reduction plan that would exempt the wealthy from any sacrifice, and indeed protect them from the possibility that their tax rates would rise when the Bush tax cuts expire.

Not exactly the kind of change he campaigned on. Could such an odious deal have been what anybody was hoping for when they watched that beautiful moment of Obama and his family standing in front of the emotion-filled crowd in Grant Park on election night?

Apparently the biggest sticking point wasn't the fact that the deal called for reducing the budget deficit on the backs of seniors, the middle class, and the poor, or that it was a huge giveaway to the rich. It was the $800 billion in bogus revenue. But, according to Bill Daley, Obama's chief of staff at the time, "everybody was saying the right thing," and "we walked away feeling that we were 80 percent there." Characterizing support of most of the details of that deal as "saying the right thing" captures everything that's wrong with Washington. And a president who was "80 percent" okay with that deal is a far cry from the president most Obama supporters thought they were supporting.

Then there's this gem: "A senior administration official said the White House team recognized that the two offers were coalescing and that the time for a decision was at hand. People asked themselves, the official said: Is this something we can sell? Is this a deal we can live with?"

What they failed to ask themselves, it seems, is whether it was a deal millions of struggling Americans could live with. Of course, for those Americans, unlike the dealmakers, this wouldn't be a metaphorical question. But, as their lives got tougher, they could at least console themselves with the knowledge that some rich politicians in Washington were finally brave enough to stand up to them and give the money that used to pay for their benefits to some other rich people.

The piece goes on to detail that the deal collapsed when Obama tried to include elements of a bipartisan Senate deal floated during the White House/Boehner negotiations. Though, as Chait notes, the real collapse was likely because Boehner never had the votes in his caucus for a deal that included even phony revenue increases. And that's why, at the end of the process, after the president offered to accept the original deal, Boehner turned him down. And that's how the intransigence of those newly-elected Tea Party freshmen ended up saving Obama from himself.

After the deal collapsed, Obama made the "pivot" to jobs, but did so without ever acknowledging how far down the road of Republican dogma he'd gone. The deal fell through, the president said that week in a prime time address about the debt ceiling, because "a significant number of Republicans in Congress are insisting on a different approach -- a cuts-only approach -- an approach that doesn't ask the wealthiest Americans or biggest corporations to contribute anything at all." But, in fact, it would appear from this piece that the president was fine, or at least 80 percent fine, with not asking the wealthiest Americans to contribute anything at all.

Since then, the president has continued to pivot away from prioritizing the deficit and has been focusing on jobs. And he repeatedly lets his base know it. This is great, but it's a bit like a husband wanting credit for being faithful -- and then you find out later that it was only because he tried to have an affair but got turned down.

The piece also ominously notes that "White House officials said this week that the offer is still on the table." The White House disputes this, but, until now, they weren't exactly forthcoming about the extent to which it was not only on the table -- but on the verge of being served.

Why did the administration prioritize debt reduction in the first place? The answer is found in this excerpt from David Corn's new book, Showdown: "Plouffe was concerned that voter unease about the deficit could become unease about the president. The budget issue was easy to understand; you shouldn't spend more money than you have."

But in fact, unlike a family, the government doesn't have to tighten its belt in lean times. Indeed, the government can create demand by expanding when families are forced to contract -- and by growing the economy, it can help reduce the deficit. This isn't that hard to understand (though much of Washington and the media don't seem to), but Obama never trusted the American people enough to even try to make that case. Instead, his reaction to the midterm disaster was to pivot to the worst sort of Washington dogmas. Rather than double down on his own message, he adopted 80 percent of the other side's. "The depth of political malpractice here is just mind-blowing," writes Paul Krugman of the Plouffe excerpt. "It's the economy, stupid, not the deficit."

Or, as Greg Sargent put it, "Dems and White House officials knew that the policy justification for the pivot to deficit reduction was flimsy at best. But they decided they couldn't win the short-term argument, and went ahead and pivoted, anyway."

So now that the president has pivoted to jobs and growth, will there be any more pivots away from them in the second term? Will the lure of the Grand Bargain return? And if it does, how much is Obama willing to give up to sign it? Millions did what he asked in the first campaign and voted their hopes, but how many were hoping for the Grand Bargain we really got?

Hope is great, but what the country needs in an Obama second term is not hope, but real change.

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