I rather liked this tart assessment by the Economist's Lexington columnist on what has just happened in American politics:
The president, it is true, did not lose the fight because he lost the argument. He lost because he was not willing to be as reckless as the Republicans.
And yet s/he notes that the appearance of losing even a skirmish is still damaging. The far right is busy piling on insult after insult, and blaming Obama for the downgrade and other idiocies. They sense blood in the water. But that they wielded the stability of the entire global economy for a petty, short-term adrenaline shot tells you all you need to know about their fitness to govern. They are unfit to run a lemonade stand.
But it seems also clear to me that the crucial fight – presaged by the debt ceiling nonsense – is still to be had in the next few months. This was a skirmish on which the president's ideological opponents exhausted their heaviest leverage. Now, both sides are equal, and my worry is that Obama, advised by the same people who thought it was wise to duck the debt issue head on in the SOTU and budget, will let the Congress take (or not take) the lead again. Yes, the Congress needs to do this. But there is also an obvious way for Obama to use his bully pulpit to push the Super-Committee toward success. There's a way to fuse his core messages: that he wants long-term fiscal reform that is balanced; that we can get past the red-blue culture war through pragmatism; and that we can and must restore confidence in the economy now.
The answer is tax reform. It's clear that the GOP is resistant to any raising of taxes of the sort that is scheduled to occur in December 2012. And Obama, for reasons to do with keeping demand alive at all in this period, has conceded the logic that raising anyone's tax rates in a de facto recession is risky. So change the subject to a positive proposal: Reagan-style tax reform that is revenue positive.
In my view, Obama should focus on this in stump speech after stump speech in the fall. Let the country know where he stands with a specific position that is good for all of us and very resonant with Independent voters and Obamacons. Here's the gist:
We all know we have to tackle this deficit and this debt or it will keep on tackling us. But we need a balanced approach of more revenue and less spending to make anything like the progress we need. At the same time, we have a tax code of grotesque complexity, riddled with loopholes that allow the rich to get away with evasion, while working families struggle to make ends meet.
I propose a solution that slashes the debt, lowers tax rates, and sends the corporate lobbyists back under the rocks whence they came. By ending or phasing out all the loopholes and economic micro-management, we can reduce rates while we increase revenues. Reagan's Grand Bargain is the model. I implore the GOP to come together, to keep tax rates low, while raising the revenues necessary to balance the budget. I am prepared to put entitlements on the table; the GOP must be prepared to put defense on the table; but together we can agree on tax reform in the great bipartisan tradition of Ronald Reagan.
Keep it simple; make it look like the deus ex machina that really does square our ideological circles (because it does!); frame it as a natural outcrop of your core 2008 message that we need both right and left to succeed as a country and this crisis demands shared sacrifice and compromise on both sides. Explain that there are some things we cannot avoid: the catastrophic legacy of Bush, the European sovereign debt crisis, the Fukushima disaster. But note what we can also now do. Decline is not a fate; it's a choice. and radical reform of taxes will reduce the debt, undermine the lobbyist culture in DC, and level the taxation playing field between rich and poor. All the while reducing tax rates to improve the incentives for hard work that will create jobs. Cite Krauthammer in the red states.
Don't muddy the issue. And keep it simple and repeat it again and again: tax reform, not tax rate hikes. In my view, that should have been the core of the last SOTU. In the greatest error of his presidency (apart from Libya), Obama played the Washington game. He was elected not to play that game. He was elected to tackle the profound challenges we face with practical solutions.
And to those who believe we can never break this cycle of partisan warfare and political gridlock, raise the banner once more, and repeat after me: Yes. We. Can.
(Photo: U.S. President Barack Obama pauses as he makes a statement at the State Dining Room of the White House August 8, 2011 in Washington, DC. Obama spoke on the economy, S&P downgrade and the loss of Navy SEAL members in Afghanistan. By Alex Wong/Getty Images.)