We’re All Ears, Mr. President

July 15th, 2011 at 12:26 am

I’m getting whiplash trying to follow all the twists and turns in the debt ceiling/budget showdown as each day brings a new lurch in policy.

A big plan…a grand bargain!—a small plan…clean McConnell (i.e., Mitch McConnell’s “you’re on your own, Mr. President”)…dirty McConnell (not a pleasant image, I know…read on).

To get organized re what’s transpired over the past few weeks along one dimension—the share of revenues and spending cuts in the various deals—I made the graphic below.

Source: My memory…

Here’s what stands out to me:

–keep in mind the historical context: in the last four major deficit reduction plans, revenues were between about 40% and 80% of the deals (and the 80% was President Reagan’s Deficit Reduction Act, 1984!).

–The President started out where the Fiscal Commission was, $2 of spending cuts to $1 of revenue (and $1 in lower interest payments excluded from the bars–$4 trillion total over 12 years).

–A couple of the plans were 50/50.

–The President has consistently and dramatically moved toward the Republican demand to lose the revenues.

His 2/3, 1/3 got whittled down to the point where conservative columnist David Brooks called this “the deal of the century” for the R’s: “trillions of dollars in spending cuts in exchange for a few hundred billion dollars of revenue increases.”

And still they would not budge.

Now, rumor has it, he’s offered a new deal: drop your dollar-for-dollar demand that deficit savings equate to the dollar increase in the ceiling, and I’ll lose the revenues (this is “dirty McConnell”—under the clean version, the R’s get to keep their fingerprints (i.e., votes) off of the debt ceiling increase, but the spending cuts are non-binding…under this version, they’re binding).

And still they would not budge.

As I’ve said from the very beginning, there is no negotiation here.  One side is bending over backwards…too much so, if that last bar is correct…to avoid default and make a dent in the deficit.  The other side is checked out.

Those who’ve read my work know that I deeply fear the wholly and easily avoided consequences of failing to raise the debt ceiling.  I’ve not even entertained the possibility because I can’t believe it could happen—that elected officials could so dramatically abrogate their responsibilities.  And I still don’t think we’ll default.

But let’s get real here.  You cannot negotiate with people who refuse to do so.  In that case, with the stakes this high, you have to call them out and, as the President allegedly said, “take the case to the American people.”

Take it to us, sir.  We’re all ears.


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9 comments in reply to "We’re All Ears, Mr. President"

  1. readerOfTeaLeaves says:

    Well, that is quite the bar chart Dr Bernstein has posted here.

    I wish there were another layer of data added to it. For instance, if it is true that 25 hedge fund managers claimed income of $22,000,000,000 in 2010, then it does raise the question of why there is no raise in revenues — no ‘blue’ — in the far right bar.

  2. David Blake says:

    Why should the Republicans compromise? They know that every time they refuse a deal they get offered a better one. And there’s a shrewd suspicion that Obama has been persuaded by Geithner that the only way to improve the economy is to give business leaders everything they want. Cut spending. Attack social security. Leave taxes alone. Then they might be nice.
    Obama cares only about his own re-election. He is prepared to throw everyone and everything under the bus if that helps him personally.

  3. Geoffrey Freedman says:

    Data and facts have nothing to do with this.

    This is purely partisan politics. It boils down to a power play pure and simple. Thats what partisan politics is ultimately about.

    It’s not about governing and its a shame how ineffectual our government is now. If we can’t make decisions (and we are in governing gridlock) we will deteriorate and destroy ourselves in a pile of our own hubris. We are at the same point in history that Rome was in centuries ago when their republic failed and became an empire.

    I sure hope we don’t go that way.

    We have met the enemy and he is us.

  4. Scott P. Dailey says:

    I cannot wait until the Presidential race gets underway. The GOP has a mess of a field of candidates and a Three Faces of Eve-like brand message. When they’re not isolating themselves with prayers to God for a better economy and scrubbing the gay off of homosexuals (aka “barbarians”), they’re infighting. Like US Men’s soccer, this party has no personality. No unified message, voice or approach to capturing that sacred 20% of moderates and undecideds. The President will win a second term by a margin comparable to ’08 and it won’t because he’s as popular as he was in ’08. It will be because he has proven time and again, often to the dismay of his base (me included), that he is the most bipartisan President in modern history. He’ll take this reality to the 20% of undecided and to America as a whole and win another 4-years. I suspect that in his second term, we’ll see more conventional Democratic Presidential politics and policy, incidentally. Thank you GOP for being so remarkably thoughtless, disorganized and leaderless (oh and divisive too. Let’s not forget divisive).

  5. John B. says:

    Obama is losing his soul (and his base) to save the nation from the relatively short-term disaster of default. If “Obama, Now?” turns out to be the plan I’m guessing the GOP will take it and default will be avoided. But then we can look forward with trepidation to the inauguration of President Romney and Vice-President Bachman in January, 2013 — a very long term disaster.

    Something has gone very wrong inside the WH. As Krugman says they’re pushing very bad policy and terrible politics.

  6. Lee A. Arnold says:

    The President must demand that the Republicans accept his long-term deal, INCLUDING the spending cuts + tax hikes on the richest people. That gives the Republican leadership two options: whip the House into voting yes, or else the U.S. cannot meet its basic obligations, credit dries up, and revenues fall below the amounts required for Social Security and military pay. 
    The President only needs to go on TV to explain to the public that the Republicans are doing this all to avoid tax hikes on the richest people. This is based on the lie that they create the jobs. No. They don’t create as many jobs as regular people with good ideas and access to credit. Look at this: we bailed-out the richest people when we had to bail-out the entire financial system, this saved their vast and clever empires from implosion, and NOW they won’t pony-up to Clinton tax rates after the recession is over, to help save the country? Is there anybody left but a Tea Party fanatic who won’t see through the GOP’s transparent horse manure?

    • Johnny from Florida says:

      Only a liberal would say that the Republicans are “refusing to negoiate”. Of course they are negoiating, but liberals dont like what they have offered, what they have negoiated is unacceptable, so liberals say “they wont even negoiate!” Thats liberal spin, pure and simple.

  7. David R says:

    “But let’s get real here. You cannot negotiate with people who refuse to do so”

    Why is it that everyone knows this except the White House?