Lessons for the Next Debt Fight
Robert Schlesinger

Obama the gambler, the not so bully pulpit, extortion pays, and the GOP's deficit problem

"Debtmageddon" ended not with a financially cataclysmic bang, but with a classic beltway whimper, sounding like a political football being punted. Faced with a fiscal Gordian knot, the nation's leaders banked the cuts they could agree on and pushed the intractable problems to a congressional "super committee."

While we wait for that skirmish, here are five lessons from this one.

1. Obama is a gambler

In office, President Obama has confounded friends and underwhelmed adversaries with his stubborn fidelity to the politically possible.

So while he became the president who finally enacted healthcare reform, he infuriated his base by not pushing a public option hard enough. But if he is a cautious player at the political card table, he is also one with a keen sense of opportunity -- and a gambler's willingness to push all of his chips into the middle of the table. So while he folded on the public option, he bet everything on closing the healthcare deal even after Democrats lost their filibuster-proof Senate majority. Presented the opportunity to rid the world of Osama bin Laden, Obama took a bold, risky approach -- sending in troops rather than bombarding the site with missiles. So too during the debt ceiling negotiations. Obama pushed for a $4 trillion "grand bargain" that would not only have fixed the nation's fiscal problems, but, he hoped, neutralize spending as a political issue. He didn't close that deal, but it illuminated the pragmatist's aggressive side.

2. Not so bully a pulpit

Progressives complain that Obama underuses the "bully pulpit." Not so on the debt ceiling. From June 29 until he announced the deal at the end of July, Obama held four press conferences, dropped by the briefing room to make statements three other times, made other brief White House remarks twice, and gave a formal national address. He also had a "Twitter town hall," a regular town hall, and made numerous local television appearances.

And it worked. Polls showed the public preferred deficit reduction with both spending cuts and tax hikes and, more broadly, a willingness to compromise over principled inflexibility. Critics say that Obama should have started this push earlier, but that overestimates the power of the pulpit. The country must be primed to receive a message. "The nation will listen only if it is a moment of great urgency," John F. Kennedy once noted. "But they won't listen to things which bore them. That is the trouble." And even with the polls showing Obama had won the PR war, the GOP dug in. The bully pulpit moved public opinion, but not enough to overcome the party's activist, virulently anti-tax base, which wanted hardball.

3. Extortion pays

It bears repeating: The debt ceiling crisis was a deliberate creation of the GOP.

Raising the debt ceiling used to be a matter of political routine, sometimes subject to political point-scoring by the opposition. But no one had seriously suggested not raising it because the debt ceiling isn't about new spending but rather paying bills Congress has already run up. Failure to pay would have cataclysmic economic consequences, which the GOP was willing to threaten unless it got its way. And the tactic worked because some of their number either didn't believe there would be negative consequences, or -- worse -- thought that economic harm was the kind of strong medicine the United States requires for its fiscal sins.

This deliberate crisis was defused. But the GOP's success guarantees there will be more. Senate Minority Leader Mitch McConnell has called this "the new template." And while Vice President Joe Biden caught flack for allegedly calling this political terrorism, McConnell doesn't mince words, describing the debt ceiling as "a hostage that's worth ransoming." He'll sing a different tune when a Democratic Congress applies this new paradigm to a GOP president, but in the meantime Republicans have a breathtakingly irresponsible new tool to press their policies.

4. The GOP has a deficit problem

The Republican Party doesn't care about the budget deficit. They care passionately about cutting spending. And they have a theological fervor on the topic of keeping tax rates low. A key part of the conservative catechism is the idea that we don't have a taxing problem, only a spending problem.

But this is simply untrue: Federal tax revenues as a percentage of gross domestic product are at a 50-year low. Nevertheless the Republicans were prepared to crash the economy in the name of dealing with the budget imbalance, while only addressing one side of the ledger.

5. The angel's in the details

Obama's penchant for negotiating himself from a liberal to a moderate position even before engaging conservatives means that the GOP wins the top-line arguments in these showdowns. But give the White House team credit for winning the battle of details. The April deal averting a government shutdown included $38.5 billion in spending cuts (more than the GOP originally asked for), which upon further review was only actually $352 million. So too the debt ceiling deal. The initial cuts include a good chunk from the Defense Department. And if the "supercommittee" stalemates trying to find $1.5 trillion in savings, as seems likely, the triggered automatic cuts are smaller ($1.2 trillion), also strongly focus on the defense budget, and exempt Social Security, Medicaid, and Medicare benefits (payments to Medicare providers would be trimmed).

And taxes? With the Bush tax cuts scheduled to expire at the end of 2012, Democrats have the power of obstinacy -- inaction will lead to their policy goals.

Whether they will be able to take advantage of this friendlier political ground remains to be seen.

Twitter: @ihavenet

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