Saturday, March 02, 2013

Did the two-year budget war just end with a GOP victory?

[Update 2]: I usually try to avoid the blog-first-ask-questions-later temptation but may have succumbed to it in this case. Important qualification of news on which this post is based from Brian Beutler. The question is whether Obama has announced intention to sign a continuing resolution by March 27 that funds the government through Sept. 30 at levels incorporating the sequestration:

it's hard to write about this. My understanding is that he will not sign CR that makes the sequester caps the new top line...

however he will sign one that preserves the existing top line, even if sequestration makes him cut beneath it.

Technical but important difference.

yes indeed! Can there really be a "here's the budget but you have to cut below it" provision?
that's what we have today under sequestration. The new CR would simply carry the current budget forward, soup to nuts.
 More qualifications in updates at bottom.  So perhaps the answer to the question in the post title is 'not yet,' though I still think that Obama has maneuvered himself into a bad position. Here's the original post.
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Every time the next budget showdown looms, Dem-side writers always eagerly game out what will happen when Obama refuses to yield and Republicans are forced to propose x, or defend y.

It never happens. Obama always punts, or caves.

The next showdown was to be March 27, when the continuing resolutions funding the government run out, and new funding bills will have to be passed, either at sequestration levels -- or not.  Here, for example, is Brian Beutler on February 26:
The most important factor in this fight is probably the reality that Obama doesn’t have to face voters again and thus is willing to veto sequestration replacement bills if they’re composed of spending cuts alone. Congressional Democrats are fully aware of this, too, and that creates a powerful incentive for them to hold the line.

So sequestration will begin. Obama won’t cave. And then the tension sequestration was intended to create — and in fact has created — between defense hawks and the rest of the GOP will intensify and actually splinter the party. If that doesn’t happen quickly enough, then the sequestration fight will become tangled up in the need to renew funding for the federal government at the end of March. If Republicans don’t cave before then, they’ll precipitate a 1995-style government shutdown, public opinion will actually begin to control the outcome, and it’ll be game over.
But what did Obama do on the eve of sequestration? The Times' Michael Shear and Jonathan Weisman report:

...both the president and his Republican adversaries said they would not carry the fight over the cuts into a coming legislative effort to finance the government through Sept. 30, essentially declaring a cease-fire in the budget wars that have dominated Washington since 2011. ..

After a public relations blitz lasting weeks that was aimed at stopping the cuts, Mr. Obama said he is prepared to extend a stopgap law that finances the government to March 27 if Republicans stick to an agreement worked out in 2011 about the level of federal spending. The decision will most likely allow the across-the-board spending reductions to remain in place for months if not years. 

White House officials and Senate Democrats had considered making one last stand around the March 27 deadline, declaring the Senate would not pass another government spending plan unless it undid the across-the-board cuts. But Senate Democrats were leery. The first furloughs are likely to hit in April, and the Democrats feared that little political pressure would have built on Republicans before the current stopgap spending law expired. 

“The president has made it clear he does not want to shut down the government,” Senator Patty Murray of Washington, the Senate Budget Committee chairwoman, said Friday. “None of us do. That is another disruption that we just can’t afford right now.”
That last has always been the Obama post-showdown (or post non-showdown) line: "we can't afford that right now." He has never picked a moment to accede to short-term pain to force the Republicans to assent to minimally sufficient new revenue -- or to prevent them from inflicting disastrous spending cuts.  Not to repeat myself a fourth time, the real crux came on Jan. 1, when the Bush tax cuts expired. That was Obama's point of maximum leverage, and he blew it.

Now, McConnell repeats for the umpteenth time, "“I will not be part of any back-room deal, and I will absolutely not agree to increase taxes,” said Senator Mitch McConnell of Kentucky, the Republican leader." The government is to be funded at sequestration levels through Sept. 30. If I understand this right, Republicans have even prevailed in their little scheme to make Obama own the cuts:
All that appears left to do in the short run may be a modest measure to give the Obama administration more discretion over how to mete out the cuts. That effort is already under way, led by Senators Mark Udall, Democrat of Colorado, and Susan Collins, Republican of Maine.
And here's the plan for funding through the end of FY 2013:
A “regular order” process to finance the government through 2014 will start quickly. The House Appropriations Committee will unveil legislation on Monday to cover spending through Sept. 30 at post-sequestration levels, with detailed spending instructions for the military to loosen some of the current spending strictures. That measure is expected to pass the House by Thursday, and lawmakers from both parties indicated they expected a quick resolution with the Senate. 
Some may say that Obama and the Dems need time for the cuts to bite and the howls of pain to escalate.  Maybe. But Republicans will just protest that they're willing to substitute smarter cuts.  It's hard for me to imagine a pressure point now that will induce them to an agreement that raises taxes. Maybe they'll give Obama a fig leaf -- $100 or $200 billion over ten years. When he agrees to chained-CPI, he can claim a little chunk of revenue from that, since tax brackets will be adjusted more slowly for inflation.

Progressive observers don't seem to be gnashing their teeth too much so far. Am I missing something? Looks to me like the budget wars that were kicked off when the 112th Congress was seated in Jan. 2011 are pretty much over, and Obama lost.

Someone tell me I'm wrong.

P.S. I can see that Obama might be in a bad position if he refused to sign a continuing resolution that funds the government at levels dictated by a bill that he signed -- and negotiated. The shutdown blame could go the wrong way. But that should have been clear when he negotiated the last deal at the end of last year.  If sequestration had come in concert with the tax hikes, he could have made restoration of most of the Bush tax cuts on his terms (generating $1.2 billion in revenue over 10 years rather than $600 billion) conditional on replacing the sequester.

P.P.S. [Update 1] I asked to be told I'm wrong -- see alternative scenarios sketched out by LOLGOP, Dana Houle, SquarelyRooted and SmartyPants here and here..  I am indulging in the Andrew Sullivan theory of blogging here -- react  now, ask questions later -- though I don't really subscribe to it.

Update 3: Elaborating on Beutler's point above, Don Taylor joins the conversation:
  1. ... Can there really be a "here's the budget but you have to cut below it" provision?
  2. yes. That is the rough definition of a sequester
  3. Would they make budgets and cut below them for ten years?
     6. they could, but they can always undo fully/partly. I  think O saying will sign CR that has the 85 B cuts, but not if new base
Nothing like tutorial-by-tweet....

Update 4: The WSJ's description of pending spending bills is more in line with Beutler's description above than is the Times's:
The more immediate concern is the need to keep the government operating after March 27. The House is expected to pass next week a Republican bill to extend funding for many government programs—including defense, education and veterans' benefits—at the pre-sequester level of $1.043 trillion for the fiscal year ending Sept. 30, the same level as the year before. But it would also carry a provision saying that sequestration would apply. That would bring the cost of the bill below $1 trillion, which is considered key to winning support from House GOP conservatives.

Senate Democrats haven't directly said what they would do with the House GOP bill, except to say they want to give domestic agencies the same protection and flexibility given the Pentagon. Democratic officials said privately it would be too risky a battle to try to undo the sequester on that funding bill, fearing that Democrats would be blamed if a fight forced a government shutdown.

1 comment:

  1. I don't think we've nearly reached the end of the budget war yet, but if you're correct, this isn't just Republicans winning the budget wars that started in January 2011. It's the ultimate victory of the starve the beast model. The long game was always a) insufficiently funding the government with the knowledge that it would be politically impossible to fully reverse the cost of such large tax cuts (you made this point in a recent post), and b) undermining public trust in government as a means to eventually shrink it.

    Smart commentators have been noting that Republicans could have had any of the things they supposedly want if they had agreed to make a deal with Obama - Medicare cuts, Social Security cuts, etc. - but by drawing out the budget wars and refusing to work toward a Grand Bargain, they have lent credence to the idea that government doesn't work and that our current leaders are incapable of solving the problems facing the country. The general reaction to sequestration has been a sort of resigned disgust that this is the new normal.