The Beginning, Not The End

Aug 1 2011 @ 10:08am

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A reader helps put the current outcry from the left in some context:

I'm not sure what to make of you saying "what if Obama doesn't get re-elected?" in relation to the revenue trigger.  His re-election is incidental.  The Bush tax cuts expire three weeks before his first term ends.  And campaigning on that one is fairly simple: he can say he wants higher taxes on the top bracket, but wants to cut a deal to keep tax breaks for the middle class.  Populism 101.

To be clear, this isn't "the long game" in action.  This is simply round one of a new fight on an old topic.  The Democrats and Obama got rolled on this deal (round one), but that's what happens when you're the adults in the room and the opposing party is run by nihilists.  Round two plays out with the commission.  Round three is the 2012 elections and the Bush tax cuts.  And it probably goes a few more rounds, regardless of who wins in 2012.

The major concession on the right is to put defense on the table. This strikes me as, in fact, the most significant part of the deal. It appears to have been weakened at the last minute to include the entire security budget; but it reveals a big shift in Republican attitudes. Finally, the always-expanding, always-pre-eminent Pentagon will not be immune from the new austerity. "If no new taxes, then serious defense cuts" is not that bad a bargain to be wrung from the opposition, given their manic state.

Is this better than revenue? Of course not. There's no way to resolve the underlying fiscal crisis without more revenue. But it shows that the current GOP has been forced to offer defense cuts as part of the "balance". It's still amazing that this one House has been able to hold the entire political and economic world hostage to their no-new-taxes ideology; but that is what happens when you win an election on exactly those terms, and then proceed as if you care not a whit about the stability of the US or global economy. And some movement on defense is something.

Remember: yes, no one has used the debt ceiling as blackmail before. It's deeply irresponsible. On the other hand, we've never dealt with this level of debt before since the Second World War. Paul Krugman may call the president a comedian, but Paul Krugman could not win a majority of this country on the position that we need more debt right now, rather than a trajectory for less; or that all the savings must come from new taxes. And even if there were such a majority, the mid-terms ruled that option out.

My hope is that the super-committee does produce some replica of Bowles-Simpson in terms of cuts and tax reform. Then the expiration of the Bush tax cuts does the rest. Obama runs as the president who alone can check the far right, while backing major deficit reduction. 1996, in other words, repeated. The wild card? We're about to have a re-run of 1996 with the growth and unemployment rate of 2011. That keeps history interesting, doesn't it?

(Photo: Chip Somodevilla/Getty.)