For Budget Deal, Obama May Cave on Debt Ceiling, Spending Cuts

After yielding to Tea Party demands for billions in budget cuts to stave off a shutdown, the president appears ready to cave in on the debt ceiling and spending cuts that would hurt the poor and middle class. It is time for Obama to come out punching, writes Eric Alterman.

Imagine a boxer who deployed a rope-a-dope strategy but spent the entire fight taking punch after punch on the ropes. Would we remember Muhammad Ali’s career the same way if he just let George Foreman beat the crap out of him without that come-from-behind-knockout in the “ Rumble in the Jungle?” Would The Fighter be as deeply satisfying a flick if Mark Wahlberg just let those other guys beat him up all the time? Well then tell me, dear reader, what in the world can President Obama be thinking?

Fresh after caving in to Tea Party demands that nearly $40 billion be slashed from the parts of the budget his supporters elected him to protect to prevent a government shutdown, Obama is apparently giving every indication that no, he has not yet had enough. He’d like to inflict a little more punishment on his own side in the course of yet another cave-in on the question of raising the debt limit. The only question, as the president prepares to address the country on the issue, is, “who is going to take it on the chin this time?”

A lightly sourced story in The Wall Street Journal had the president caving on key issues even before the bargaining began. According to Damian Paletta and Carole E. Lee, the Obama team was already “softening [its] earlier insistence that Congress raise the so-called debt ceiling without conditions, [as] officials now say they won't rule out linking an increase of the borrowing cap with cuts aimed at reducing the deficit—even though they'd prefer to keep the issues separate.” If true, this would constitute a reversal of the White House’s earlier position, as stated by Austan Goolsbee, chairman of the White House Council of Economic Advisers in January, who accused Republicans of "playing chicken with the debt ceiling and playing games potentially with the full faith and credit of the United States." David Plouffe may or may not have opened the door to more bargaining when, on NBC's "Meet the Press" he allowed that "in that process" of raising the debt ceiling "we should be able to reduce the deficit."

Meanwhile, a Washington Post report, also somewhat sketchily sourced, gives the impression that Obama will seek to resuscitate the previously dead-and-buried Simpson-Bowles commission recommendations of last year, which contain all manner of conservative-flavored recommendations, including three times as much money saved from spending cuts as new revenues raised. This line of thinking was given further impetus by an appearance Tuesday morning at the Center for American Progress, by Rep. Chris Van Hollen (D-Md.) who is a close ally of Speaker Nancy Pelosi’s. Van Hollen lauded the report that had been previously scored by liberal Democrats as having inspired "a really important dialogue" and represented "an overall balanced approach" to deficit reduction. That such progressives feel compelled to embrace cuts that fall so heavily on the poor and the middle class as the best deal they can get is further evidence—as if any were needed—that whatever one may think of its policymaking, the Obama administration has proven an utter and complete failure in making the case for the kind of affirmative government that has characterized the liberal approach to governance since the New Deal.

It’s a fundamental fact of politics—as of boxing—that nobody ever won a fight by turning the other cheek.

Clearly Obama and his advisers believe he benefits from refusing to take a side between battling House Republicans and Senate Democrats and appearing to hover above the bloody battlefield. What is most infuriating to liberals, however, is this time—unlike the government shutdown fracas or the extension of the Bush tax cuts—he is holding all the cards. As Jackie Calms reporting in the Times, noted, Republican minority leader, Mitch McConnell opposes a filibuster of the raising of the debt ceiling because he wants all the votes to have to come from Democrats. (A threatened filibuster, which would eventually have to come to cloture to be broken, would require 60 and therefore a few Republicans.)

Speaker John Boehner has also admitted a U.S. government default would constitute a “financial disaster.” And this view has even been endorsed by Paul Ryan, author of the radical Republican budget alternative that nobody—not even Ryan—expects will ever be enacted.

Obama is explicitly ignoring progressive alternatives that would put him and his party in a stronger bargaining position to strike a deal. For instance the Fairness in Taxation Act introduced by Rep. Jan Schakowsky, would raise marginal income tax rates to 45 percent for married couples earning over a million bucks a year. This is still far lower than they were until the 1980s, and it would allow Obama to at least pose as the defender of the progressive achievements of his predecessors. What’s more, it would be popular. As Nancy Folbre wrote on the Times Economix blog, when, in February, an NBC News/Wall Street Journal poll offered respondents 26 different ways to cut the deficit, “the most popular option, considered acceptable by 81 percent of respondents, would place a surtax on federal income taxes for those who make more than $1million a year.”

Or Obama might take another route, which would be to do away with the $106,9000 threshold for Social Security taxes, and thereby in one stroke, save the system before focusing on finding a fix for Medicare and Medicaid. The progressive-oriented “Strengthen Social Security Campaign” released a letter Tuesday from 300 organizations asking the president to take Social Security off the table in deficit reduction talks.

Another group, the Progressive Change Campaign Committee, has been circulating a petition among Obama donors and volunteers, asking them to withhold their support for the president’s 2012 campaign if he does not do more to defend Medicare and Medicaid. They claim to have mounted 40,000 signatures in just two hours. And has called on Obama “to lay out a truly progressive proposal that strengthens the middle class and makes the wealthy and big corporations pay their fair share.”

Of course, to do so would mean for Obama to reverse course on the conciliatory road he’s driven down since Day One of taking office. This is admittedly difficult to imagine, but it also might be a good idea. While the president has won over the punditocracy with his “moderation” (read: “capitulation”) there’s not much evidence that it’s doing him any good with voters. A Washington Post/Pew Research Center poll taken Thursday through Sunday found that 72 percent of those questioned blamed Obama as well as Democratic and Congressional leaders for the near-catastrophe of a government shutdown.

Democratic leaders in the House and Republican leaders in the Senate all bore at least some responsibility for the dispute over the budget nearly leading to a shutdown. But none of them are running for president next year. In the same survey, Obama gets only a 39 percent approval rating for his handling of the economy. As former top Clinton adviser William Galston observes, “Given current national trends and a credible Republican nominee, the presidential election would be very, very close, and President Obama might even lose. None of this is an argument for staying this passive course. It’s long past time for this president to get off the ropes and come out punching. It’s a fundamental fact of politics—as of boxing—that nobody ever won a fight by turning the other cheek.

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Eric Alterman is a Distinguished Professor of English and journalism at Brooklyn College and the CUNY Graduate School of Journalism, a senior fellow of the Center for American Progress and media columnist for The Nation. His most recent book is Kabuki Democracy: The System vs. Barack Obama.