Thursday, July 07, 2011

Debt deal does not compute

I was glad in a way to read in the Times last night that Obama has allegedly widened the scope of the deficit reduction talks to include about $1 trillion in new revenues over ten years, approximately the benchmark (conservative but not outlandish) set by Bowles-Simpson and by Obama's own plan floated in April. But the notion that such an enormous deal -- including tax reform and social security reform as well as large Medicare/Medicaid and defense cuts -- can be hammered out and agreed on before August 2 simply does not compute. Not only Cantor and McConnell but Boehner too continue to swear that no deal can include net tax increases -- that any closure of tax expenditures must be offset by reduced marginal rates. Also, the sheer scope and complexity of the deal smells like a two-or-three year project, not a product of a few weeks of intense negotiations.
Ezra Klein thinks that Obama is setting up Republicans to take the rap for a debt default -- proffering a deal so palpably fair from a Brooks-conservative point of view that Republican extremism will be manifest to all but the inner sanctum. That does not sound like Obama to me. But I can't fathom what he's thinking.

Many observers have lamented that Obama did not scream early, loudly and often that any attempt to hold the debt ceiling hostage to budget negotiations would constitute a wildly extremist gambit that he would not tolerate. That's what every other president faced with the shadow of such brinkmanship has done. Instead he has positively embraced the debt ceiling deadline as "a unique opportunity to do something big."  Unless the whole drama is in some sense pre-scripted -- that is, unless he has some kind of ironclad guarantee from Boehner that the GOP will not trigger a default (and does Boehner even have the power to deliver on such a guarantee?) -- that framing makes Obama in a sense complicit in the hostage scenario.

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