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Friday, May 03, 2013

Intransigence got them the win. Intransigence keeps them from taking it.

Brian Beutler has an intricate and well-sourced account of how the Obama administration scopes out the task of creating a "permission structure" for Republicans to compromise on a budgetary grand bargain. Broadly, it's Gang of Six II, a new attempt to jump off the presidential shadow by staying in the shadows, averting what Ezra Klein called the paradox of power: "If you take a strong position, the other side will immediately take the opposite position."

So once again, as Beutler puts it, "Obama’s putative absence is key to creating the political space Senate Republicans need to negotiate in good faith." But the master hurdle is in the House, where the GOP majority is way more recalcitrant than the five-odd GOP senators who would be needed to get a bill through the Senate.  And there, Beutler's framing caught my eye, because it illustrates a second paradox:

For the purposes of a budget deal — which includes higher taxes, replaces sequestration, and takes the debt limit off the table — the aide notes that creating a “permission structure” amounts to manipulating the legislative and political processes in ways that will allow Republicans to obscure the fact that they’ve caved. 
Here's the paradox: any conceivable grand bargain would be by any reasonable accounting an historic victory for Republicans.  Even if they simply enacted Obama's 2014 budget, total spending cuts enacted since 2011 would exceed total revenue hikes by more than 2-to-1.  If they deal, they can raise that ratio to more like 3-to-1. Obama would almost certainly agree to replace the sequester with his own proposed $900 billion in more targeted spending cuts, plus another $300 billion or so in revenue, raising the ten-year revenue increase to about $1 trillion (Bowles-Simpson, projected into the 2013-2022 time frame, would have raised about $2.6 trillion).  Obama's proposed cuts include "entitlement cuts": chained-CPI, which reduces Social Security payments, and a variety of nips and tucks to Medicare benefits for wealthier seniors.


All budgetary grand bargaining since the GOP took the House and Bowles-Simpson first published has basically aimed to plug the $4 trillion 10-year revenue hole blown in the budget by the Bush tax cuts. There's more to it than that, since substantively the one true long-term budgetary imperative is to curb health care inflation, but $4-5 trillion in scoreable deficit reduction over ten years has been the accounting framework.

By dealing now, Republicans could complete a three-year negotiating cycle by plugging three quarters of that hole with spending cuts, including cuts to entitlements.  Yet they, and apparently the rest of us, would view that victory as a cave.

Intransigence put that victory within reach. A little rhetorical quick-step at the crucial moment would enable the GOP to lock that victory in. But they won't.

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