Wednesday, December 21, 2011

Obama's uncertain trigger finger, cont.

It is perhaps a measure of Obama's poor negotiating track record that as I read both Republican and Democratic assertions that Democrats have all the leverage in the fight over the payroll tax cut and unemployment benefits extension, I worry that Obama will find a way to cave.

Nate Silver, who asserts that Obama's recent poll bounce is likely due more to economic upticks than to his more confrontational stance over the last two and a half months, provides the rationale for another 'hostage negotiation':

This debate over interpreting Mr. Obama’s approval ratings has some implications for the current argument in Congress over the payroll tax cut. If you believe that his improved ratings reflect his outmaneuvering Congress, then perhaps it is to his benefit if the argument extends on past the new year. But if you believe instead that the ratings have more to do with improved economic confidence, this could be a dangerous game. Even if the tax cuts are eventually extended, as seems likely, a temporary decline in Americans’ take-home pay in January would nevertheless represent a disruptive influence at the very moment that Americans are starting to believe in the economy again.
Compare the underlying logic here with Obama's justification a year ago for extending the Bush tax cuts for the wealthiest:
Now, I know there are some who would have preferred a protracted political fight, even if it had meant higher taxes for all Americans, even if it had meant an end to unemployment insurance for those who are desperately looking for work.

And I understand the desire for a fight. I’m sympathetic to that. I’m as opposed to the high-end tax cuts today as I’ve been for years. In the long run, we simply can’t afford them. And when they expire in two years, I will fight to end them, just as I suspect the Republican Party may fight to end the middle-class tax cuts that I’ve championed and that they’ve opposed....
CHUCK TODD: If I may follow, aren’t you telegraphing, though, a negotiating strategy of how the Republicans can beat you in negotiations all the way through the next year because they can just stick to their guns, stay united, be unwilling to budge -- to use your words -- and force you to capitulate?

THE PRESIDENT: I don’t think so. And the reason is because this is a very unique circumstance. This is a situation in which tens of millions of people would be directly damaged and immediately damaged, and at a time when the economy is just about to recover. 

Those "unique situations" do keep arising, don't they?  The Times editorial board argues from real economic impact to make the case for what most Democrats would perceive as a cave:

Assigning blame, or avoiding it, has come to replace actual governing in the Congress. If the tax cut dies, Democrats will accuse Republicans of killing it, and they will be absolutely right to do so. It might even help them regain the House next year among an electorate disgusted with partisan gridlock. But the cost to individual families and the nation is too high a price to pay.

The House may well back down; several Senate Republicans are urging them to. But if Mr. Boehner refuses to bend, as painful as it will be, Mr. Obama will have to ask the Senate in the next few days to return to Washington and negotiate with the House. It may not do any good, but there are too many paychecks at stake to give up.

Obama himself is probably something of an economic determinist, convinced that the actual economic impact of any policy that gets adopted or fails to get adopted is likely to affect his reelection chances more than the optics of any policy showdown.  And that's true, too. The wild card, though, is that effectively deployed political pressure and successful political combat can determine the outcome -- and that sometimes you have to be willing to risk a bad outcome to get a good result -- e.g., allow a few weeks' expiration of tax cut and benefit extension. If Obama gets sucked into a pre-New Year's negotiation for a year-long payroll tax cut and unemployment benefit extension Boehner and his Tea Party puppeteers are sure to pull the football away again.

Of course, the White House is going all out to pin the looming expiration of the tax cut on the GOP and to pressure the House to cave -- cf. Obama's unscheduled appearance at a press briefing yesterday, where he declared that "the bipartisan compromise that was reached on Saturday is the only viable way to prevent a tax hike on January 1st", and its floating of a Twitter hashtag, #40dollars, inviting people to write out, 99%-style, what losing that amount per week (on average) should the payroll cut expire would mean to them. So the current signs are against a turn back to negotiation in the absence of passage of the Senate bill.  Recently, too, Obama let the supercommittee fail and the sequestered spending cuts for 2013 and beyond become law with perfect sang froid.  But I'm still not entirely convinced that if Boehner dangles something shiny, Obama won't bite.

See also: Obama's uncertain trigger finger

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