Spending v. Revenues

How Quickly We Forget

Obama's press conference: He continues to have the big upper hand in the debt limit fight.

You're going to be hearing a lot in the next month from Republicans about how Obama got all these billions in tax increases in the cliff deal, and so now it's only fair that we cut cut cut, and it's going to sound reasonable as they say it.

And it is reasonable, provided history goes back only to Jan. 1. In fact, Obama has already agreed to nearly $1.5 trillion in spending cuts prior to the cliff deal. Of that amount, $900 billion is to domestic programs, and $600 billion to defense. So if you set all those numbers alongside the $600 billion in revenues, that's still a long way from balanced.

At his press conference just concluded, the main point of which was to emphasize that he is not finished yet with revenues, Obama invoked these numbers. He said that $4 trillion in deficit reduction over 10 years is still the goal, and we've done so far $2.5 trillion, so we're getting there.

He also went after Congress again on the debt ceiling. He laid out the costs of default, from maybe not paying soldiers to spiking interest rates, at some length. "They will not collect a ransom in exchange for not crashing the American economy," he said of congressional Republicans. This is pretty different from 2011, when he was much more passive and largely let the Repubicans set the tone. He's playing this pretty well.

Even this morning, I notice that the conventional wisdom on his refusal to invoke the 14th amendment or mint the platinum coin is moving from the idea that he's giving up a bargaining chip to the notion that doing so would actually give the Republicans an out. If he did mint the coin, he'd be letting them off the hook. Saying he won't mint it makes them play ball.

I say again: The Republicans will fold on the debt demands. Now, it'll be a little murky, because the White House and Congress will likely come to some agreement on sequestration, which will include cuts and which will hit some time around the time the debt limit is reached. But it will not be connected via legislation to raising the debt limit, as was the case in 2011. And if I'm right and this is what happens, the wingers are going to go bananas.