Sunday, September 29, 2013

The GOP is drunk on the proven power of extortion

I am looking past the pending government shutdown to the looming debt ceiling standoff -- the point in late October when Republicans can, worst case, cause a global economic cataclysm, or, second worst, hamper U.S. economic growth for decades to come.

As Republicans keep cramming more fantastic demands into their debt ceiling ransom note, Obama is saying now what he should have said the first time they made fantastic demands ($2.5 trillion in spending cuts over ten years with no tax increases) a condition of raising the debt ceiling in spring/summer 2011. On Friday, he said:
I will not negotiate over Congress’s responsibility to pay the bills that have already been racked up.  Voting for the Treasury to pay America’s bills is not a concession to me.  That’s not doing me a favor.  That’s simply carrying out the solemn responsibilities that come with holding office up there.  I don’t know how I can be more clear about this.  Nobody gets to threaten the full faith and credit of the United States just to extract political concessions.  No one gets to hurt our economy and millions of innocent people just because there are a couple of laws that you do not like.
The continuation, though, rather airbrushed Obama's own history on this question:

It has not been done in the past; we’re not going to start doing it now.  I’m not going to start setting a precedent not just for me, but for future Presidents where one chamber in Congress can basically say each time there needs to be a vote to make sure Treasury pays its bills, we’re not going to sign it unless our particular hobbyhorse gets advanced.
The problem is that Obama already set that precedent, and it's his conduct in the 2011 negotiations that has the GOP salivating now. When the GOP insisted on trillions in deficit reduction as a condition of raising the debt ceiling, never wavering in their pubic pronouncements in their insistence that no new revenues could be part of the package, Obama embraced negotiation under that ax as "a unique opportunity to do something big."  The result was accurately foreseen by our national Cassandra, Paul Krugman, in a piece titled "The President Surrenders":
A deal to raise the federal debt ceiling is in the works. If it goes through, many commentators will declare that disaster was avoided. But they will be wrong.

For the deal itself, given the available information, is a disaster, and not just for President Obama and his party. It will damage an already depressed economy; it will probably make America’s long-run deficit problem worse, not better; and most important, by demonstrating that raw extortion works and carries no political cost, it will take America a long way down the road to banana-republic status (my emphasis).
And down that path we go. Last time, Republicans limited themselves to a demand with a pseudo-mathematical or economic premise: cut spending by the amount we raise the debt ceiling. The current House GOP draft bill for a debt ceiling hike is a wish-list of practically every GOP policy proposal now current (except, as Brian Beutler has pointed out, entitlement reforms that would be politically difficult for Republicans):
  • Delay Obamacare for one year
  • The adoption of the Ryan tax reform plan
  • Approval of the Keystone XL pipeline
  • Additional offshore oil drilling
  • Additional drilling on federally protected lands
  • Revised coal regulations
  • Suspension of the Environmental Protection Agency’s attempts to regulate carbon emissions
  • A complete overhaul of the Dodd-Frank financial regulations
  • More Congressional power over the consumer Financial Protection Bureau by giving Congress more power of its budget
  • Repeal of the Social Services Block Grant program
  • Additional means-testing for Medicare
  • Repeal of the Public Health Trust
Banana republic indeed. The GOP is drunk on the proven power of extortion.  And while it's easy to feel rage at these economic terrorists for threatening national calamity (and personal: what do I do now with my financial crisis-whipsawed 401k?), I think it's important to acknowledge Obama's enabling role in this political devolution.

In fact, I think it might be salutary if Obama himself acknowledged that role, something like the Prince in Romeo and Juliet: "And I for winking at your discords too/Have lost a brace of kinsmen; all are punish'd." A mea culpa for negotiating under threat of debt default would give him the opportunity to walk back another error of the summer of 2011: renouncing the 14th Amendment option  - that is, invoking the 14th Amendment to issue new debt without Congressional authorization, under authority of the Amendment's assertion that ""The validity of the public debt of the United States, authorized by law, including debts incurred for payment of pensions and bounties for services in suppressing insurrection or rebellion, shall not be questioned."  Bill Clinton has said, and last week reiterated, that he would do so; Pelosi too recently chastised Obama for renouncing it. 

It would be hard to be more invested in Obama's success as president than I am. I want to believe that he will ultimately prove to have been a good and possibly a great president. If the Affordable Care Act does bend the healthcare cost curve, or catalyzes further changes that bend it, that one landmark accomplishment may secure the country's fiscal future and win him massive credit with historians.  But I do think that he has in various ways been too cautious, and too risk averse, too prone to splitting differences -- and catastrophically naive in the face of manifest Republican determination to sabotage his presidency, and the economy for which he is held responsible, at any cost.  Now must take a heavy risk to redress past errors in his budget negotiations with Republicans.  And he needs to amass and be willing to deploy every tool available to him if he is to prevail.

P.S.Thinking back on past shutdown battles, and other end-stopped battles* like the two expiration dates for the Bush tax cuts (the first postponed),  it seems to me that Obama has always projected that the shutdown's the thing: it's to be avoided, it would cause too much disruption and suffering, he's the adult in the room who won't subject the nation to that. But that's wrong. The focus should be on the policy outcome: look what the Republicans are trying to do to you (Draconian budget cuts, deprive millions of health care).  A shutdown, or a temporary automatic tax hike, is the price we may have to pay to avoid a horrendous policy outcome.Were Obama to take this approach, he might be able, with some lead time, to flip the scrip and announce his own terms for a budget he would not veto. 

*The debt ceiling is in a class by itself, in that missing the deadline for a deal can't be written off as an inconvenience or temporary hardship, a price worth paying. For that reason, I think the president, facing the current GOP, needs to put the 14th Amendment or equivalent in his pocket.

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