Lousy Negotiating Skills Are Not the Problem

August 1st, 2011 at 8:25 am

America wakes up this morning with the specter of a self-inflicted national default behind us, at least until 2013, according to the deal announced last night.

That is unequivocally a good thing for our economy not to mention our national sanity.  It’s a good thing in the same way that ceasing to bang yourself on the head with a hammer would be a good thing.

But really, what the h-e-double-hockey-sticks (sorry, I’ve got young kids) was that about??!!

If your conclusion is that Democrats got rolled because the President is a lousy negotiator, I disagree.  Not on his negotiating skills…as someone said in comments, I wouldn’t want him in the auto showroom with me when I’m bargaining for a better price.  I disagree that better negotiating skills would have made a big difference.  The problem goes much deeper.

What did we just go through and what does it mean for our national politics, our fiscal and economic policy?

–First, a small but influential group of extreme conservatives are so intent on shrinking the federal government that they would credibly threaten national default;

–Second, Democrats, including the president, do not have a strategy to counteract such extremism, so they accepted a plan far less balanced than they would have liked—the final deal could well turn out to be $3 trillion in spending cuts over ten years, with no revenue increases to offset the cuts.

–Third, and perhaps most importantly, like every debate about the size of government, it’s impossible for normal people, if not the “experts,” to figure out what anyone is really talking about and therefore to judge the deal.

What does it mean to cut $3 trillion in government spending?  How will it affect retirement security?  Education? Jobs in the short run and investment over the long run?  Does it put us on a sustainable fiscal path?

We’re about to agree to cut $1 trillion from something called discretionary spending.  That probably sounds great to some folks and bad to others.  But what does it mean?

The President bragged on this very point last night, telling America that discretionary spending as a share of the economy will come down to its lowest level since Eisenhower.  As if we’ve all been walking around thinking, “if only we could get this budget category down to Ike levels, everything would fall into place.”

In fact, these cuts will hurt our ability to pursue what I view as most positive aspects of the President’s economic agenda—investment in infrastructure, clean energy, research, education.  They will pinch programs that are already budget constrained…programs that help low income people with child care, housing, and community services.  (One piece to watch for here—defense spending is also in this category, and is supposed to account for about one-third of the cuts…that helps, of course, take pressure of these other parts.)

Then, in part two of the deal, we unleash the gang-of-twelve who are assigned to come up with $1.5 trillion more in deficit savings.

They’ll be hitting the entitlements—Social Security, Mcare, Mcaid—and more defense, but if they deadlock—a non-trivial probability—automatic cuts ensue.

The White House, showing a bit of actual bargaining skill, tells us that “the sequester would be divided equally between defense and non-defense program, and it would exempt Social Security, Medicaid, unemployment insurance, programs for low-income families, and civilian and military retirement. Likewise, any cuts to Medicare would be capped and limited to the provider side.”

OK—that sounds good.  But it just raises deeper questions: after you’ve already taken $1 trillion out of the system, how the heck do you come up with $1.2 trillion in cuts without hitting these rich targets that R’s are obviously gunning for?

And remember, these automatic cuts are spending only.  No revs allowed.  Which raises another question: can we really achieve fiscal sustainability without new revenues?  That one has an answer: no.

Here’s the point of all this:

This was an ugly debate where reckless ideologues got the better of the grown-ups in the room who were not willing to risk the economy to protect the government.

But before you go blaming the grown-ups, and I totally agree they’re terrible negotiators, understand that the grown-ups had virtually no-one behind them.  Sure, there was me and Jon Cohn and Ezra and a bunch of others who tried to explain the stakes, but as usual, we were marching in front of a parade with few behind us.

If too many Americans don’t believe in or understand what government does to help them, to offset recessions, to protect their security in retirement and in hard times, to maintain the infrastructure, to provide educational opportunities and health care decent enough to offset the disadvantages so many are born with…if those functions are unknown, underfunded, and/or carried out poorly, why should they care about how much this deal or the next one cuts?

Those of us who do care about the above will not defeat those who strive to get rid of it all by becoming better tacticians.  We will only find success when a majority of Americans agrees with us that government is something worth fighting for.

 

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52 comments in reply to "Lousy Negotiating Skills Are Not the Problem"

  1. bakho says:

    There are good analysts who can explain what it means pretty clearly. However, our media focuses on the process and not the policy and they prefer controversy to build interest over the boring details.

    This is a good example of explaining the implications of the policy:

    http://news.yahoo.com/blogs/daniel-gross/debt-deal-done-does-mean-063125258.html

    Excerpt:
    How will this deal affect growth?
    Poorly. Government spending is demand. If you don’t believe it, try asking Wal-Mart or any food retailer what would happen to sales if food stamp payments were to be disrupted. As we’ve noted many times, government, at all levels, has already been throttling back employment for many months. The private sector is driving growth and will increasingly have to do so on its own. Cuts in discretionary spending, even if they are backloaded and spread over ten years, will mean less money for scholarships, for education, for health care, transportation and infrastructure — all vital parts of the economy.


  2. Stephen Edie says:

    About blaming the grown-ups and the grown-ups having ‘no-one behind them':

    Polling on the issue has consistently shown the Tea Party Congress to be far to the right of public opinion — even to the right of most Republicans on the issue. Obama himself came out right-of-center in his opening bid and never once stated what the vast majority of Americans feel: that having this conversation right now is absurd! Americans are far more concerned about jobs than the deficit and have been all along. They want Democrats to stand up and fight for them. It seems Obama failed to realize the Tea Party won only because so many disaffected voters stayed home!

    I believe the public would stand behind Obama if he refused to give in and invoked the 14th to get us out of this mess. So when you say “no-one was behind them” who else do you mean? Is there anyone else that should matter?


    • Jeff says:

      I agree that the 14th amendment would have been a good try and the President should have come out and guaranteed that the US would not default on August X.

      The paragraph about how the “deal” will hurt Americans demonstrates that this isn’t a “good” deal. It is somewhat like going to the doctor’s office and the only choices the patient is given is bad and worse!

      Of course without knowing the details it is difficult to make a concrete observation at this point, but it certainly APPEARS that the Democrats cave in almost every instance!

      Is there anyone in DC speaking and watching out for the average American?


  3. Fargus says:

    Jared,

    What of the argument advanced by Chait and others that the Democrats missed two key opportunities, namely tying the debt ceiling to the tax deal in late 2010, and refusing to accept anything but a clean debt ceiling bill?

    Taking them in reverse order, my own feeling is that on the second, we still would have wound up roughly where we are now, because the President wasn’t willing to plunge the country into default, but the Republicans were. On the first, though, do you think the Democrats could have defused this particular bomb by raising the debt ceiling early, as a part of that big deal? Did Harry Reid’s reasoning for not doing so ever make sense?


  4. James says:

    With all due respect, just what do you mean that you and the young Mr. Klein were “marching in front of a parade with few behind us”? That is simply not true. The entirety of the Democratic Party and the majority of the general public were “behind you.” Please. Obama chooses to listen more to the conservative beltway punditocracy and his utterly worthless advisors. He has consistently shown the utmost disdain for the people who support(ed) him, which formerly included myself. No, not just the “professional left” and the “liberals” but people like me, just ordinary people who had hopes that Obama and the Democrats repair at least some of the damage to the middle class that Republican policy has visited upon this country.

    This latest debacle has pretty much convinced me that the Democrats, as you noted above, are incapable of formulating a strategy to counter the malevolent GOP and the dysfunctional media that enables them, at least at the Executive level. I’m thinking that we might do better supporting a non-crazy Republican — Huntsman or Romney, for example — and put our efforts into electing better Democratic senators. At least they might filibuster the really bad stuff. I truly do not believe any longer that any Democrat can function at the Executive level.


  5. Phil DiCarlo says:

    The summaries I’ve seen are pretty ambiguous as to whether the trigger kicks in if the committee fails to produce a recommendation or Congress fails to pass it. There is a big difference. If it’s the former the committee produces a recommendation that fails to pass, then the debt limit would have been raised for the 915 billion in cuts that VP Biden originally negotiated.
    When you factor in that the Bush cuts are still on the table to expire, you c could wind up with $915 b in cuts and either $700 b or $3.6 T if you let all or some of the Bush cuts expire.
    I think this is going to be similar to the budget debate in the spring where early consensus was that the President got rolled and after a few weeks the opposite became evident.


  6. ryaison says:

    “If too many Americans don’t believe in or understand what government does to help them, to offset recessions, to protect their security in retirement and in hard times, to maintain the infrastructure, to provide educational opportunities and health care decent enough to offset the disadvantages so many are born with…if those functions are unknown, underfunded, and/or carried out poorly, why should they care about how much this deal or the next one cuts?”

    Which brings us to the real question, and one of the real failures of the Obama Administration…

    Where is the powerful voice in defense government? Where are the arguments that government not only provides essential services, but is, in itself, essential? Where is the leadership to guide or convince people that the time to invest is now (idle resources, cheap money, etc)?

    After 8 years of government done wrong and everyone feeling the negative impacts, where is the liberal rebuttal that government done well can produce positive outcomes?

    There are entire generations out there who have known nothing of government other than misguided Republican tropes, and despite their tendencies toward social liberalism, have seen nothing to convince them that economic liberalism has anything better to offer than the status quo.

    Opportunities are being missed to differentiate Democratic principles from Republican extremism at every turn, and from the outside looking in, it really can seem like all politicians are the same, which is inherently absurd given current Republican behavior. Where is the leading Democratic voice in this debate? Where is the guy with the biggest microphone?

    He’s there, but he spends an awful lot of time sounding like a Republican.


    • John B. says:

      ryaison is absolutely right. The Tea Party traitors who held a gun to the head of the nation’s economy and their Wall Street and media-corp enablers have exposed the utter failure of both political parties and several recent presidents to educate the public about and advocate for good government and all that it does for average citizens to make life richer, longer, and happier.

      It is sometimes said that organizing congressional Democrats is like herding cats. But the time surely has come when all of them need to be locked in a room or go on a retreat to some isolated place — just by themselves, no speakers or formal dinners or crap like that — and hammer out the core of a unified message that reflects the very best principles of good government and a long-term strategy for showing Americans its virtues.

      I thought we might have elected a leader in Obama who would be a catalyst and a convincing voice for something along these lines, particularly when he came into office at a time when everyone — even Wall Street — was looking to Government to save the nation. FDR was such a voice in closely analogous circumstances. Teddy Roosevelt was such as voice for the common man at the end of the Robber Baron era. Lincoln was such a voice and even rallied the nation when it fractured along deeply partisan lines.

      Looks like I was wrong. Obama doesn’t have what it takes. Quite likely, however, someone who does will emerge once the Congressional Democratic Party decides to stand up for civic virtue and the good that government does.


  7. Sandwichman says:

    Here’s the point of all this:

    This was an ugly debate where reckless ideologues got the better of the grown-ups in the room who were not willing to risk the economy to protect the government.

    Maybe it would be worth exploring the reasons for the ugliness of the debate. Obama’s mantra of bipartisanship completely misreads the conflicted nature of the conservative movement. These are not just some nice folks who have different priorities than progressives. They are factions of a “cause” that could not abide each other without a common enemy to scapegoat.

    The conservative movement is an uneasy and unstable alliance of economic libertarians and social traditionalists. Those are their own terms. An “unpleasant skeleton in the family closet” — is how William Campbell summed it up in a Heritage Foundation speech a few decades ago.

    The glue that holds these two disparate factions together is “cultural conservatism” — something that leaves the positive content to each factions imagination but defines the negative content as “political correctness,” “multiculturalism” and “cultural Marxism.” Cultural Marxism is another one of those vague categories that can be interpreted variously by the two factions. For the traditionalists CM is “sex, drugs and rock & roll,” that is to say modernity. For economic libertarians CM is primarily “the welfare state,” that is to say Keynesianism.

    To the cultural conservative, “fiscal stimulus” is shorthand for impregnating their teen-age daughter and aborting the fetus. How are you going to negotiate with someone whose conceptual categories are so malleable? Why would you even want to try?

    What is cultural conservatism?


  8. AndrewBW says:

    Let me ask a different question. Looking back now on how this debate unfolded, do you see anyplace where the administration could have done something differently that might have led to a better outcome?


  9. Cat says:

    “This was an ugly debate where reckless ideologues got the better of the grown-ups in the room who were not willing to risk the economy to protect the government.”

    “We will only find success when a majority of Americans agrees with us that government is something worth fighting for.”

    The American Public need to be shown how much the Government does for them by giving them a brief taste of the GOP vision for Government. The polling of people who use government services but don’t realize it mind boggling and no awareness campaign is going to change it.

    The economy is useless to the majority of Americans given the current state of Government in America because the Government puts the needs of the top 1% above the needs of everyone else and this only gets worse if we continue down this path or having liberal republicans run as Democrats and Robber Barons run as Republicans.


  10. foosion says:

    1) This appears to be the outcome Obama wanted. He wants to cut spending, including Social Security and Medicare. Glenn Grenwald has a column today with lots of evidence. http://www.salon.com/news/opinion/glenn_greenwald/2011/08/01/debt_ceiling/index.html

    He could have passed a debt ceiling increase while the Dems controlled the House or as part of extending the Bush tax cuts.

    2) He has adopted the Republican talking points, govt must tighten its belt, the confidence fairy, the austerity fairy, etc.

    3) He says this is a good deal. How does that square with any attempt to move in another direction, let alone attacking Republicans for pushing for this deal.

    4) “We will only find success when a majority of Americans agrees with us that government is something worth fighting for.”

    The public wants more jobs, wants a stronger economy, does not want any cuts to Social Security or Medicare and is fine with higher taxes if necessary. They’re not the problem. Look at the polls.

    5) Obama appears to delight in alienating Democrats, believing we have no where to go and the Democratic objections will help with independents. He’d rather focus on process (I’m the adult great compromiser) than to focus on substance that will help people. His advisors appear on TV and say the left has nowhere to go, so they’re not worried.

    – they’re ignoring that he’s going against vast majority opinion, not just the left

    – no one cares about, or even notices, process

    – he may be able to defeat a Bachmannn, but a Romney (if he acts sane) is another matter.

    – what’s the slogan, vote Obama, you’ll get Republican policies, but only after prolonged negotiations?


  11. Jim Edwards says:

    I may humbly suggest economists share more than a small part of the blame. If I look at online courses for macro economics they are nearly non-existent. Every other discipline is easily studied. Nor are there books written for laymen. There are great books about if you knew economics you would know this is silly such as “Accidental Theorists,” but not books that walk through the sillyness and attaching it to formulas and laws. The right, going back to Hayak does write easily grasped mantras. Maybe because wrong is easy to fit on a bumper sticker. There are very few websites where those interested can learn more about macro. Most of the ones I’ve found are Chicago types trying to intelligently design the free markets.

    I know Carl Sagan, Stephen Hawkins, Mr. Wizard, and Bill Nye are rare breeds, but they exist. And you and Paul Krugman and John and Jamie Galbraith and others write well, explaining what your analysis indicates, and helping us see what is happening. If we are ever going to get beyond he said, she said economic analysis we need to have a basic education on fundamental macro economics available to a wide variety of people in a form that is as engaging as so many other sciences have been able to do.

    To understand my point see how long it takes you to completely understand the foundation of Intelligent Design, study the scientific issues at hand, and understand the science that refutes ID. It should take about an hour. After which you will be able to shred any person who believes in ID in a debate on any aspect. Same with climate deniers, young Earth geology, even light as a particle or a wave.


  12. John says:

    Other than my own comments here – asking who would be the anti-Norquist that would entirely oppose spending cuts in this environment – I’d not heard a single person opposing spending cuts, until yesterday, when Prof. Krugman said we shouldn’t even be talking about spending cuts, that there’s no light at the end of this tunnel.

    The means and method to oppose the economic terrorism of spending cuts without revenue increases was revealed, and rejected. Instead, balance and compromise were sought, with no purpose other than balance and compromise for their own sake. And in the end, no good purpose is achieved – not even balance and compromise – indeed, they are no longer possible, an opposite precedent having been established.

    Now, if the “pivot” to jobs ever happens, the question from the terrorists will be “how are you gonna pay for X,” where X is some job or economy promoting initiative. Their purpose was never to promote either, but to destroy the government they have usurped, and that was obvious to anyone not captive to their own cognitive dissonance.

    Of course this isn’t a “balanced deal” – it’s not balance – it’s one-sided; and it’s not a deal – it’s capitulation. Calling it a balanced deal would be a flat lie.

    Welcome to Babylon, and the new American Civil War. Mene, Mene, Tekel, Parsin:

    Mene: noun “mina” – a denomination of currency, a number of shekels; verb “to count.”
    Tekel: noun “shekel,” verb “to weigh.”
    Parsin: noun “half-mina,” verb “to divide.”

    Daniel 5:22-27: “… you have praised the gods of silver and gold, of bronze, iron, wood, and stone, which do not see or hear or know, but the God in whose hand is your breath, and whose are all your ways, you have not honored. Then from His presence the hand was sent, and this writing was inscribed. And this is the writing that was inscribed: MENE, MENE, TEKEL, and PARSIN. This is the interpretation of the matter: MENE, God has numbered the days of your kingdom and brought it to an end; TEKEL, you have been weighed in the balances and been found wanting; PARSIN, your kingdom is divided …”

    This isn’t the end – it’s just the beginning.


  13. larry borowsky says:

    quoting from above:

    ” . . . . .the grown-ups had virtually no-one behind them. Sure, there was me and Jon Cohn and Ezra and a bunch of others who tried to explain the stakes, but as usual, we were marching in front of a parade with few behind us.”

    I disagree. The “grown-ups” (so called) have the entire American public behind them. The public is with you Jon Cohn, Ezra Klein et al — but the grown-ups (ie Obama administration) are against the public. Every opinion poll shows that the public wants deficit reduction to be achieved via a mix of new revenues and spending cuts. Every opinion poll shows that the public would prefer tax increases (esp. on the wealthy) to cuts in SS and Medicare benefits.

    If it wanted to, the Obama administration could rally that vast army of supporters and pull the debate in a different direction. The administration chooses not to.

    So you are correct — the Obama administration doesn’t have bad negotiating skills. It has bad priorities. It shares the priorities of Wall Street, not the priorities of Main Street.


    • Jonno says:

      You, sir, have hit the nail on the head. But that’s the thing. These “adults in the room” only bother to look around enough to see that nobody is behind them in the parade. When they have prioritized “compromise” and “bipartisanship” above the will and welfare of the people and then cannot believe everyone is behind them then they are the problem. Obama is fighting for the political deal, that is all he talks about and that is his goal. People want jobs and economic security, and ten year old everywhere can understand that Americans get no jobs nor economic security from the political deal.

      What is so hard about understanding that?


    • Caroline says:

      As of July 10, 42% of Americans opposed a debt ceiling increase altogether. 22% supported it. Gallup poll.

      Americans who said they were “paying very close attention” to the debt debate were opposed to a debt ceiling increase 2 to 1. Same July 10 Gallup poll.

      The “American public” was against Obama.

      Only when asked about how to deal solely with deficit reduction did they align with Obama.


  14. Alyson Metzger says:

    I agree that the problem is that “too many Americans don’t believe in or understand what government does to help them.” The only reason I voted for Obama was because I thought he was the one with the best gifts to make that case. And instead, he’s made the opposite one. I don’t think we’ll get another chance.


  15. Bill says:

    The Democrats will be in the wilderness because government is discredited. And they are the stewards of good government.

    You need to rehabilitate good government. I could run a program and bring donors together with someone like your backing. It needs to be a big progressive multifaceted media education and entertainment (for real) campaign to rehabilitate the image of government. I’d rally behind uniform service men local and federal and build from there.

    This is a longer term strategy. Alliances with banking elites won’t get you very far in an environment where a sizeable part of the population thinks that elected officials gave the shop away to the banks (and are they really wrong??)


  16. Mary says:

    I have no idea what you mean by this: “We will only find success when a majority of Americans agrees with us that government is something worth fighting for.”

    Americans don’t need to believe that government is something worth fighting for. They need to believe in their country. It’s not about the government and it’s not about you or Ezra. It’s about the people of this country.

    Your argument is that Obama’s negotiating skills are bad, but even if they were better, it wouldn’t have mattered. If it’s not the negotiating and not the president, then what is it? Is it the other party? We all know that Republicans are snakes. They have always been that way. But it didn’t prevent Clinton from being a successful president. They even impeached him.

    So it is the American people. The American people are always ignorant of the facts. That’s also nothing new. They don’t have the time to try and figure out what is happening over in your rarefied political heights, as you acknowledge, “it’s impossible for normal people, if not the ‘experts,’ to figure out what anyone is really talking about and therefore to judge the deal.” Frankly, I don’t think the experts know what they are talking about — so many of you have been wrong many times.

    Last time I checked, I thought that was the president’s job – to get the American people on his side. And you know what’s involved in doing that, all of the skills you seem to offhandedly dismiss. He managed to lose the support of one the most passionate bases I’ve seen in a long time. But this is not his fault. It’s the fault of the American people, the people who adored him and put him in office, right?

    Do you truly view this as an objective analysis?


    • Jim Edwards says:

      You nailed it. The office of the president is designed to be weak, but the bully pulpit makes the position incredibly strong. By giving away the bully pulpit and the inherent strength that provides, any other negotiation is going to appear weak because it is.

      Congress is tasked with creating a budget in the Constitution. When the Banana-Republicans say Obama has no plan on the table, Obama should respond “Holding the debt ceiling hostage to budget cuts was a house decision. Insisting those cuts come when the country is in economic peril was a house decision. Demanding those cuts violate the will of the people was a house decision. And the house complains I have not put a plan on the table to destroy the recovery, pander to the wealthy, and turn my back on the American people. I say I have a plan. Rebuild the American dream. Make America the envy of the world once again. Make America a place where trains don’t fall into rivers, oil doesn’t fall into rivers, cars don’t fall into rivers because we won’t invest in the future. Show the world that the American worker is still the best educated and most productive worker in the world because we do have the greatest universities and we do invest in future technologies. We reject an America that is second to China in infrastructure improvements. We reject an America that is behind France in education and healthcare. We reject an America that cannot pull itself up by the boot straps to be the greatest nation in the world once again.”

      Then who gives a crap if Obama has never written down how stupid Tea (is there a word worse than Santorum?) are.


  17. memekiller says:

    Does Obama hope to win this argument by attempting to sell the ransom he just paid as an good buy?


  18. Fred Donaldson says:

    “If too many Americans don’t believe in or understand what government does…”

    This only proves our educational system has dumbed down many Americans by emphasizing feelings, social issues and group hugs, instead of economics and civics (required in HS in the 50s).

    And the other way an oppressed society reacts is to disengage from the political process, because the people are beaten down to have no hope in the crumbs who represent them.

    Add to that a media that is dominated by corporations and investor groups (I worked for such), and you have the perfect formula for a herd that bleats, but doesn’t bite.


  19. Tex Shelters says:

    And whose fault is it that they didn’t have a strategy?

    Uh, I’m waiting.

    Obama set this up by not starting at a stronger position and not being willing to say no and walk away in the midst of blackmail and raise the ceiling on his own.

    His negotiating style through out his presidency was to start with compromise before the Republicans put an offer on the table. That might have worked in the state legislature in Illinois, but not with this bunch of Republicans.

    Start weak, end up weaker.

    Peace,
    Tex Shelters


  20. Robert says:

    Jared,
    I agree lousy negotiating skills was not the problem. The problem was the lack of understanding by all parties to the debt ceiling debate of the sectoral balances accounting identity equations put forth by the “modern monetary theory” advocates. The US economy is being strangled by a balance sheet recession, which means the private sector is struggling to pay down its debts accumulated over the past decade. Since the US is running a current account deficit as far as the eye can see, it won’t be able to grow the economy with a weak, non-spending private sector and a government sector that is significantly reducing its spending. The foreign sector, private sector, and government sector cannot all reduce spending at the same time without causing the US economy to shrink. IMO the government sector needs to spend sufficiently, at a minimum, to cover the current account deficit otherwise the economy will contract. Unfortunately with all parties agreeing to prolonged fiscal austerity, I’m afraid the US is now committed to a weaker economy than we would have had otherwise.


  21. denim says:

    So Obama and Congress are trying to run out the clock to obtain this:
    To bad, so sad, we used up all our money bailing out the wealthy and now have nothing left to help you, Main Street.


  22. ifthethunderdontgetya™³²®© says:

    Second, Democrats, including the president, do not have a strategy to counteract such extremism, so they accepted a plan far less balanced than they would have liked…

    Wrong order!

    First, the President decided he wanted to cut Social Security and Medicare back in February, 2010, when he made Alan Simpson and Erskine Bowles co-chairs of his Catfood Commission.

    How was that supposed to rally Democrats?

    Of course, when that’s the starting point, the deal with the Republicans is going to get much worse. It’s the same thing that happened with ACA.

    The problem is our Democratic President does not believe in Democratic ideals.
    ~


  23. Peter Friedman says:

    Somehow we’ve got a Congress and a President who are either convinced that taxes are theft, government always sucks, and free markets always are wonderful or THAT ISN’T CONVINCED OTHERWISE. So until we either undo those premises or tie conclusions to those premises, we’re going to do no better than the disastrous budget deals we’ve got.


  24. general c. san desist says:

    …let’s acquiesce to Ike-’50’s tax rates while were at it.


  25. Taryn H. says:

    It’s so much worse than we didn’t get the deal we wanted.

    No one sensible thinks austerity is a good idea to begin. In fact, it’s a 1937-type bad idea – it’s the type of bad idea that is remembered in the history books. So, let’s be very clear on that.

    So, okay, we’ve bought into expansionary austerity. Let’s move onto the next completely discredited economic theory. We should, at least, have something balanced, right? Nope. That would hurt the “job creators.” That’s just straight-up, supply-side voodoo.

    It’s hard to imagine ideas with less support by legitimate economic theory.

    And we have 9.2% unemployment and no one cares? That’s very, very high. That’s sound-the-alarm high. But it’s just ho-hum.

    What is going on? Seriously, what is happening? If economic policy is not being driven by legitimate economic theory, what is driving it? How is it that 9.2% unemployment isn’t a drop-everything-and-fix-this crisis?

    Well, I hate to sound all conspiratorial, but any time policy decisions are being made contra sound science, there are billionaires at work. This is not different than the tobacco junk science or the global warming junk science. We are making policy decisions based on junk, pseudo-economics. That’s as good of a billionaire-detector as there is.

    And those billionaires have engaged in a decades-long PR campaign to convince people that government is the problem. The government-is-the-problem slogan is the Swiss Army knife of the billionaire – it saves the day any time pesky regulation is in the way, it keeps corporate and capital gains taxes low. Oh how billionaires must love the government-is-the-problem slogan. I often wonder what billionaire love more – the government-is-the-problem slogan or a good taxpayer-funded bailout (hypocrisy is a small price to pay to be a billionaire).

    So yes, I agree, we need to convince people government isn’t the enemy. But just realize very well-funded interests – Big Tobacco, Energy, Health Insurance, Wall Street and on and on and on – have told the American people for decades and in every forum possible that government is the problem.

    That’s what we’re up against.


  26. Bob Hall says:

    With all due respect, whatever do you mean “no-one behind them?” Every poll demonstrated a majority of Americans were most concerned about jobs and the economy, not the deficit. And when asked about the deficit, the majority of Americans wanted a “balanced” approach, including both spending cuts and revenue increases.

    The budget deficit sad story is not about a failure of followership, but a failure of leadership.

    Bob Hall


  27. John says:

    Americans are right not to support uncontrolled runaway spending, which they have to pay for. Because when they think about government, they think of:

    1) Welfare queens gaming the system with food stamps, wic checks, free health care, section 8 housing, having unruly, fatherless children and only working when forced to.

    2) 12 Department of Transportation Workers leaning against shovels while one guy pretends to work.

    3) Cops and firemen who retire at 55 with gold-plated benefits and months of vacation and sick time every year.

    4) Teachers who refuse to be held accountable and work 180 days a year at full time salaries. A school system that expels a kid for having a plastic knife at lunch.

    5) Politicians protecting the interests of the entrenched unions and corporations.

    6) Endless lines at the Department of Motor Vehicles.

    7) Unlimited taxes on everything we do.

    8) Rules about how much water you can use to flush a turd. Criminal penalties for using lightbulbs not endorsed by Mother Jones.

    9) Endless rules about who is allowed to do what. 1200 hours of classroom instruction time to cut hair for a living.

    10) And on and on and on.

    You talk like we don’t see what goes on around us. The problem for you is THAT WE DO.


    • John says:

      Just so you know, Dr. Bernstein –

      The above is by a different John, not me, the socialist who comments here regularly. I don’t know if your blog software lets you see commenters’ email addresses, but it clearly doesn’t force unique names.

      John is after all, one of the most common names. I don’t own it exclusively; but that’s OK with me, since I’m a socialist, and we socialists don’t insist on owning things exclusively – we like public ownership.

      On the other hand, this new John sounds like a pretty conventional bigot to me. The kind I’ve had to deal with my whole life. He apparently doesn’t know – or just doesn’t care – that I’m a black man with a PhD whose been unemployed for two years – with no public assistance except COBRA, which has now expired – having been laid off by a bigot like him. And bigotry knows no color of its own; Alan West is as much a bigot as David Duke.

      If you doubt there are such people in our society, doubt no more.

      I apologize for this being violating your commenting rules, but I’m hoping you’ll allow me to invoke a point of personal privilege in this one exceptional case. If not, you’ll have one less commenter to deal with – me. From my perspective, he’s violated your rules himself, but his bigotry speaks for itself, at least to me, if not to you.


  28. Phillip Wynn says:

    This should be said, if it hasn’t been already. It’s time we stop thinking about umbrellas in the midst of a hurricane. The United States has signs of being in a pre-revolutionary condition, and quite possibly a two-step revolution, begun with one from the right. The feebleness of the national Democratic party in even slowing the drive to oligarchy and plutocracy has now been fully revealed. The drift of the Republican party to the right has become a headlong rush. Ideologues of the right have shown not only that they are impervious to facts and history, but adept at enlisting even the most seeming contradictory events to prove their ideology. One cannot know what the precipitating event will be, but surely, unless our feeble hopes in the neutered left bear fruit, a right-wing dictatorship is not far off. Crazy talk? We’ll see.


  29. RayK says:

    “But before you go blaming the grown-ups, and I totally agree they’re terrible negotiators, understand that the grown-ups had virtually no-one behind them. Sure, there was me and Jon Cohn and Ezra and a bunch of others who tried to explain the stakes, but as usual, we were marching in front of a parade with few behind us.”

    Ugh. This was soooo not the problem.

    Had Obama not actively allowed Republicans to link the debt limit to deficit reduction–I will not allow the American people to be blackmailed into accepting cuts to Medicare and Social Security and I will use all legal means at my disposal to thwart any attempt to do so–then he could have easily reframed the debate in a way far more hostile to spending cuts.

    Four sentences:

    “Here’s my plan to reduce the deficit by $8-10 trillion. My plan is based on raising taxes on the rich and cutting corporate welfare. I don’t expect Republicans to accept this plan as is–I’m ready to negotiate–but first Republicans have got to propose specific deficit reduction measures of their own–equal in size to my plan. Vague numbers aren’t good enough: we need to see the specific spending cuts and tax revenues Republicans propose to balance the budget.”

    This would have allowed Obama to propose popular deficit reduction measures–taxes on the rich, end corporate farm subsidies, cut defence contracts, reduce business subsidies–while forcing the Republicans to either (a) accept ownership of their unpopular ideas to reduce the deficit or (b) expose themselves as the phonies they are.


    • John says:

      >>> “Here’s my plan to reduce the deficit by $8-10 trillion. My plan is based on raising taxes on the rich and cutting corporate welfare.

      The problem with that theory is that Obama is smart enough to *not* want that. Raising taxes in this economic climate is suicide; employers would immediately start laying people off. For Obama to be re-elected, he knows he has to lay off the tax hikes.

      Why do you think he extended the Bush tax cuts?

      Here’s another piece of left-wing hypocrisy: You guys have been shrieking for higher taxes. Where were you when Obama granted a tax holiday for employees? You talk about everyone paying their “fair share”, meanwhile 50% of the citizenry pay NO federal income taxes.


      • rayk says:

        Nonsense. Why would paying more taxes cause anyone to layoff employees who are making them a profit? That’s just not how economics works.

        Furthermore, tax increases–and the ACTUAL economic effects of raising taxes on the rich–could be phased in starting a few years from now.

        Besides, this is all about bargaining positions. Such a plan would never pass a Republican House.


  30. hondr says:

    Sorry, lefties, but the mainstream of the country doesn’t support you. Simple.

    It’s good that you’re coming around to this. Now, let’s both get busy and get rid of all this spending burden that you’ve conjured up. It’s killing us.


  31. Chris V says:

    Well, John, congratulations. You win. You now have everything you could desire: government hamstrung by self-imposed spending limits, unions thought of interchangeably with corporations in the popular mind, teachers, police officers, and firefighters treated with contempt by those who depend on them for education and safety.

    Again, congratulations! Now you get to see what a decade or so of “Every man for himself” (because, let’s face it, just between you and me, John, you don’t think of women as equals, do you?) will do to this shining City upon the hill.


  32. Geoff Freedman says:

    The only thing good about this vote was that Gabrielle Giffords returned to the house floor to vote for the bill. God Bless Her.

    I appreciate what you say about Obama, but not to develop a strategy for people (Tea Party) who consider it smart to do the equivalent of steering a plane into a mountain? Please.

    If this is a the best we can do we are in deep trouble.

    It seems to me Obama must be willing to risk losing to really win against the kind of mentality and tactics used by the Tea Party and I just don’t think he is by nature a gambler and risk taker. Thats about the most diplomatic way I can say it right now.

    The biggest losers in the process are the low and middle class who will bear the largest burdon of closing the gap long haul because there are no revenue hikes and the rich don’t get direct spending from the government. The poor and middle class are the ones who can least afford this and they will have their ability to consume in general reduced even further by this measure.

    The best thing Obama could do is to let all the Bush’s tax cuts expire. If you read the paper linked below, written by Larry Zelenak, Pamela Lee Gann Professor of Law at Duke University and a tax law expert, it explains in great detail the hows and whys of the extreme regressivity built into the Bush tax cuts. It also explains how the shadow tax (Alternative Minimum Tax) has wiped out most of the tax benefits to at first the upper middle class, then later (in time) to the entire middle class. If you look at the effect the cuts have on the cost of government services, it put more burden of the lower and middle class, while distributing the the most significant after tax dollars mostly to the wealthy (ie. $17 per year in tax cuts to the lowest 20%, over 145,000 to the highest .1% – people with incomes of over one million per year).

    http://faculty.lls.edu/workshops/documents/zelenak.pdf/

    The other thing Obama needs to do is to try to end the wars now and reduce military spending. Even if he doesn’t do this its a good negotiating ploy because thats the one thing Tea Party people and Conservative Republicans in general really don’t want to cut as much.


  33. Whatever says:

    I disagree. If you are not a good negotiator, if you are not able to hold the line and take a hit for your ideals then please dont stand there appearing to stand for us, and asking for our votes.

    Please get out of the way and let America die a quick merciful death than a long and prolonged painful one. You are not doing the country any favors by your pitiful and pathetic display of statesmanship.


  34. Bullet hole in the cowboy hat of America – Oakbox says:

    […] America dodged the default bullet, but the bullet was so close I think we really need to look at how we got in front of the gun in the first place. During the brinkmanship negotiations that have been going on over the last 6 weeks, I felt that Obama was throwing the progressive agenda under the bus to get re-elected. But now I’m not so sure. […]


  35. greg says:

    The reality is that there is no way we can avoid making significant cuts to entitlements. One chart is all you really need to see that:

    http://media.economist.com/sites/default/files/imagecache/original-size/20110312_WOC306_0.gif

    The only real question in re the budget debate is: What Democrat is going to have the leadership ability to point this out to the Democratic rank and file?


  36. Whatever says:

    May I point you to the frog in the pot fable?

    The democrats are enabling the water to be slowly and inexorably heated so that
    the frog (meaning the US people) will remain in the pot and never jump out. TRhe democrats are continuously fighting the fight, but losing every battle.
    Slowly you will end up killing the US economy, and no one will know any better.

    If you let the tea party and the GOP militants do as they please, the frog jumps, the people revolt and we start afresh. That is what is needed. Not this slow but sure descent into economic hell.

    So my earlier point stands. If you cant do the job, please step out of the way.


  37. George Arndt says:

    They say “you don’t know what you got till it’s gone” This could be the sentiment of many Americans when they see what “starving the beast” affects them. This will hopefully backfire against the tea party idiots.


  38. Alessandro Rosa says:

    I think that the Democrats calculus on this deal is that as a result of this protracted process the American people will come out in numbers and unseat the Republicans so that they will gain full control of the House filibuster-proof the Senate and carry the White House in 2012 and completely unwind this mess that has been put in place by the Cantor/McConnell/Paul contingent.

    If the polling was indicative of what the American public was truly thinking and redistricting doesn’t completely upset the apple cart, then maybe the Democrats will be able to win over the Independent voters. The biggest problem will arise in trying to sell this story to the Democratic base. If they, like a lot of the commentors on this post, throw a hissy fit, hold their breaths and sit home on election night, then this whole thing will implode.

    I think your second point sounds inaccurate, as you say raise revenue to offset cuts. My impression was that The President offered a 4Tr deficit reduction package with 3Tr coming from cuts and 1Tr funded by Taxes; well whatever deficit reduction means anyway. Does Deficit Reduction mean Debt Reduction or does it just mean balancing future budgets? Are they talking paying down 4Tr of the over 14Tr we owe or are we talking just closing the future budget holes, getting to level in the first place and being no where closer to Debt Reduction? Because if it is just balancing future budgets without addressing our debt load, then what was the whole fight about in the first place?

    We are never again going to see robust Jobs growth in this country until we address global disparities in wages. American business people will continue to send jobs and source components from low wage producers until such time as they are compelled to do otherwise. I never thought I would ever say this, but we need to punitively tax employers who sell their goods and services in this market but outsource that production. Until we statutorily link Employer and Executive compensation to the well-being and financial success of their employees, then they will continue to only have incentive to squeeze the American worker and increase margins by cutting costs. When humans become just a number on a balance sheet, then we have truly lost our humanity.


  39. Richard Heck says:

    Isn’t worth saying somewhere that the blame for this ought really to go squarely with the Republican leadership in the House? If they did not capitulate to the Tea Party nutters, then it would have been easy to put together a bi-partisan deal to do what has always been done.


    • David lai says:

      GOP leaders deliberately act helpless and let tea partiers run wild…
      What better way to bargain than to have bomb-strapped lunatics running around saying they rather blow up the world economy (and the Obama presidency) than to raise tax?


  40. Cas says:

    Really, can you all get off the fainting couch and give the hyperbole a rest. Under Obama’s proposed budget, TEN TRILLION dollars would be added to the deficit over the next ten years. TEN TRILLION. If these “cuts” actually happen, we still add SEVEN trillion dollars to the deficit. How is that shrinking government? Will people be starving and roads crumbling because we only incur 7 trillion dollars in new debt? Please. Just stop.


    • David lai says:

      Let’s put into perspective…how much have we spent on the wars thus far??? Didn’t we spent almost a trillion dollar alone bailing out wall st??? What do those money have to do with maintaining infrastructure and other social services?


  41. David lai says:

    Tactic matters. Some says tea partiers have hijacked the GOP. But from what I see it is rather the opposite– the Republican Party has hijacked the Tea Party. Mainstream Republicans, the ‘power that be’ majority plays dumb and pretends to be the helpless victim of conservative extremism while all along it has the power to bend the freshmen to its purpose.


  42. Everett Idleburg says:

    For all those wondering about firmware, I have now posted a sample firmware where I show how to access all the sensors, LEDs, and buttons.


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