January 3, 2013

ON OBAMA'S NEGOTIATING SKILLS





THE DAILY BEAST MICHAEL TOMASKY

The standard liberal position in the run-up to the cliff deal, or at least a position taken by a number of prominent liberals, was that Obama should have let the country go over the cliff, because he’d immediately have more leverage after Jan. 1. Taxes would go up, the argument went, most of the country would blame the Republicans, and boomity-boomity-boom, they’d come crawling to Obama ready to sign a deal on his terms.

I will readily confess that the logic is, if not impeccable, only mildly peccable. The Republicans would have been over a barrel. Of course predicting what those people will do and how they’ll respond to any given situation is risky business, but presumably they would not have wanted to be blamed for middle-class tax rates going up, so they’d have done something vaguely rational.

I get it. But here’s what I think proponents of that argument don’t get. Obama isn’t some co-speaker. He’s the effing president. People want the president to lead. They may blame Republicans more than Democrats for obstruction, and that’s a good thing. But they still want the president to Get Things Done, and, however naively, they still think he ought to be able to just assert his will and Get Things Done.

There is, in other words, a responsibility that comes along with being the president. It may be unfair, but the leaders of the House and Senate can play all the silly games they want to. Half the country or more doesn’t even know who they are. But the president—he’s supposed to do stuff. Obama really and deeply understands this—perhaps to a fault, but better that than believe he only has to represent the third of the country that loves him.


Sometimes acting out the jobs of Captain Liberal and Mister President can be done in harmony. But sometimes not; in fact, I’d say most often not, given that this is not an especially liberal country. So Mister President Obama was absolutely right to make every effort to hit the deadline. To your average person, failing to hit it would have been a terrible reflection on him, and an explanation from him about his increased leverage would have just sounded like more game-playing.

Relatedly, I’ve been amazed to read, sometimes from people I’ve considered quite knowledgeable, that Obama held “all the cards” here. He didn’t, by a long shot. This was a negotiation. Negotiations are hard. The other side wants exactly what you don’t want. Like it or not, liberals, the other side legitimately represents 47 percent of the country, so they had every right to get something out of this. And as it happens the other side also had the ability to block anything from happening. And they would have, too, if Obama had given them half an excuse.

As a matter of fact, think of this. If Obama had done what these liberals wanted and sent any signals as the New Year approached that he was ready to go over the cliff, the House Republicans would have publicized that, and then, if we had gone over the cliff, Obama would have shared the blame. It was Obama’s strict, good-faith adherence to the deadline that helped shift all the blame to the Republicans, and that is what made them play ball.


Now let’s talk a few of the specifics in the deal. First, how much does it really matter whether the revenue level for the higher tax rate is $250,000 or $450,000? I’d have much preferred the former, but the important thing is the principle. If he had to give a little ground on the amount in order to get the Senate Republicans to shake hands, so be it. It’s a shame the temporary payroll-tax relief will come to an end. This is the item liberals are most upset about, because it was a form of stimulus, and about the only stimulus Obama is going to get. But even Hill Democrats didn’t want that extended. What was Obama supposed to do?


The biggest complaint, given voice by Paul Krugman and Noam Scheiber among others, is that the recent negotiation basically showed that Obama is weak and too anxious to get a deal and will thus be steamrolled by the GOP in March into accepting steep budget cuts because he wants to avoid default.

I have tremendous regard for Krugman and Scheiber, but I don’t agree. Obama has negotiated with the Republicans four times now—the December 2010 extension of the Bush tax cuts, the spring 2011 government-shutdown threat, the summer 2011 debt-ceiling talks, and these recent cliff negotiations. On three—all but the summer 2011 talks, which were a fiasco—he came out looking pretty good. Now, it’s unfortunate that the one on which he didn’t do well involved the debt ceiling, the locus of the upcoming talks. But he vows that he’ll be tougher this time, and I take him at his word. He’s gotten a lot done, he got himself reelected when lots of people thought he couldn’t, and I say he’s earned a little bit of my trust. We’ll see.


I also think that “Obama is going to sell us out” columns somehow help make that eventuality come true. At the very least, they establish a tone and mindset that rank-and-file liberals imbibe and accept. Liberals should certainly pressure Obama to do as many liberal things as he can, but we should also recognize that he’s not the leader of a movement—he’s the head of a country. And he’s actually helped change the country pretty dramatically.

Sandy Flood Insurance

NY TIMES PAUL KRUGMAN

...the reality is that our two major political parties are engaged in a fierce struggle over the future shape of American society. Democrats want to preserve the legacy of the New Deal and the Great Society — Social Security, Medicare and Medicaid — and add to them what every other advanced country has: a more or less universal guarantee of essential health care. Republicans want to roll all of that back, making room for drastically lower taxes on the wealthy. Yes, it’s essentially a class war.

 The fight over the fiscal cliff was just one battle in that war. It ended, arguably, in a tactical victory for Democrats. The question is whether it was a Pyrrhic victory that set the stage for a larger defeat.
Why do I say that it was a tactical victory? Mainly because of what didn’t happen: There were no benefit cuts.
 
This was by no means a foregone conclusion. In 2011, the Obama administration was reportedly willing to raise the age of Medicare eligibility, a terrible and cruel policy idea. This time around, it was willing to cut Social Security benefits by changing the formula for cost-of-living adjustments, a less terrible idea that would nonetheless have imposed a lot of hardship — and probably have been politically disastrous as well. In the end, however, it didn’t happen. And progressives, always worried that President Obama seems much too willing to compromise about fundamentals, breathed a sigh of relief.
 
There were also some actual positives from a progressive point of view. Expanded unemployment benefits were given another year to run, a huge benefit to many families and a significant boost to our economic prospects (because this is money that will be spent, and hence help preserve jobs). Other benefits to lower-income families were given another five years — although, unfortunately, the payroll tax break was allowed to expire, which will hurt both working families and job creation.
The biggest progressive gripe about the legislation is that Mr. Obama extracted less revenue from the affluent than expected — about $600 billion versus $800 billion over the next decade. In perspective, however, this isn’t that big a deal. Put it this way: A reasonable estimate is that gross domestic product over the next 10 years will be around $200 trillion. So if the revenue take had matched expectations, it would still have amounted to only 0.4 percent of G.D.P.; as it turned out, this was reduced to 0.3 percent. Either way, it wouldn’t make much difference in the fights over revenue versus spending still to come.

Oh, and not only did Republicans vote for a tax increase for the first time in decades, the overall result of the tax changes now taking effect — which include new taxes associated with Obamacare as well as the new legislation — will be a significant reduction in income inequality, with the top 1 percent and even more so the top 0.1 percent taking a much bigger hit than middle-income families.
So why are many progressives — myself included — feeling very apprehensive? Because we’re worried about the confrontations to come.
According to the normal rules of politics, Republicans should have very little bargaining power at this point. With Democrats holding the White House and the Senate, the G.O.P. can’t pass legislation; and since the biggest progressive policy priority of recent years, health reform, is already law, Republicans wouldn’t seem to have many bargaining chips.
But the G.O.P. retains the power to destroy, in particular by refusing to raise the debt limit — which could cause a financial crisis. And Republicans have made it clear that they plan to use their destructive power to extract major policy concessions.
Now, the president has said that he won’t negotiate on that basis, and rightly so. Threatening to hurt tens of millions of innocent victims unless you get your way — which is what the G.O.P. strategy boils down to — shouldn’t be treated as a legitimate political tactic.

But will Mr. Obama stick to his anti-blackmail position as the moment of truth approaches? He blinked during the 2011 debt limit confrontation. And the last few days of the fiscal cliff negotiations were also marked by a clear unwillingness on his part to let the deadline expire. Since the consequences of a missed deadline on the debt limit would potentially be much worse, this bodes ill for administration resolve in the clinch.
So, as I said, in a tactical sense the fiscal cliff ended in a modest victory for the White House. But that victory could all too easily turn into defeat in just a few weeks.