Debt ceiling deal is a defeat -- what next?

Chris Lowe

The debt limit deal is a defeat: A defeat for the country, a defeat for the Democratic Party, a defeat for the economy, a defeat for Oregon. It poses fundamental strategic questions about the way forward. We can only address those questions by recognizing the defeat for what it is. That means giving up any inclination to support the spin by the DC Democrats, who were forced into the deal by blackmailing deadbeat extortionist extremists, that it was somehow a victory. We dodged a bullet to the head by taking a gut shot. A gut shot is not a victory.

The strategic questions affect what we do in Oregon, and need to be discussed here in Oregon, as well as in more nationally oriented venues.

The debt limit deal (full text pdf here) is a defeat for the country because it represents the victory of Republican extremists in defining the terms of debate away from the American people's real and accurate priorities. It is also puts into place an anti-democratic "SuperCongress" procedure, to either force cuts in core values social insurance programs (Medicare, Medicaid and Social Security) that the people want protected, or put in place "automatic" cuts to infrastructure and education if the SuperCongress bipartisan, bicameral committee of 12 doesn't make recommendations or if their recommendations fail on a fast track vote, no amendments or filibusters permitted. Negotiated cuts would be made on the backs of working people, the poor, elders and the most vulnerable, automatic ones at the expense of jobs and the economy, again hitting working people and the poor hardest.

The deal is a defeat for the Democratic Party in a narrow sense because it represents the Republicans getting at least 70% of what they wanted, and the Republican Ultras getting at least 50% of what they wanted. The first round of deficit reduction is all cuts, no new revenues. The only form of revenues that might come out of the SuperCongress would come from "tax reform" in which rates for the wealthy would be lowered in exchange for loophole closure -- no rate increases allowed. Medicare, Medicaid and Social Security are all on the table. If they are protected, the process will almost certainly go to automatic cuts. There are limited (ca. $35 billion / year) military spending cuts envisioned, but no change in wars, occupations, or other elements of U.S. imperial posture and structures. Republicans will get a symbolic Balanced Budget Amendment to the constitution vote, though it requires an unattainable 2/3 majority of each house. Daily Kos has an interesting analysis of how the Republicans can likely game this definition of issues to their advantage (h/t to Kari for this link).

And the debt ceiling deal is a defeat for the Democratic Party in more profound ways. It represent a Republican victory in defining the ground and controlling the terms of debate. As long as the Democrats continue to try to fight on those grounds in those terms, they lose. Poll after poll shows that 50% or more of the public sees the jobs crisis as the most important issue and priority, while only 10% see the long term debt that way. Poll after poll shows that about 60% favor Medicare and Medicaid and don't want the deficit to be reduced by cutting them, with even larger support for Social Security. The deal will leave the Democratic base (voters, not ideological activists) confused, uncertain, insecure and disappointed if not feeling outright betrayed. It will do nothing to ease the jobs crisis. The base will stay home in droves. Apparently President Obama's advisers have persuaded him that he can gain enough independents on the right in a shrunken electorate to compensate for loss of Democratic base voters. Apart from the question of whether that's any way to run a party, the president's loss of 10% of his support including among independents since he started strongly putting long term debt over jobs as a priority suggest they are wrong. Regardless of whether he ekes out an individual victory, the path laid out by the debt deal means Democratic disaster in the Congressional elections. If Obama loses, the country gets a Republican president and a Republican Congress with the Ultras champing at the bit. If Obama wins, the country gets him negotiating and compromising with the same kind of Congress.

Finally the debt limit deal is a defeat for the economy. Long term debt is a side issue to the continuing economic crisis faced by the country apart from the financial markets. Fixing the economy would help the deficit problem, while cutting pubic spending in the name of long term debt reduction will keep slow growth or throw us back into recession, leading to a spiraling demand for more cuts under the current terms of debate. Growth last quarter slowed to 1.3%, and it turns out that first quarter growth was originally much exaggerated. Unemployment has increased again due to public sector cuts in state and local budgets, driven by exactly the kind of economic reasoning behind the deal.

The strategic question for progressives, then, ought to be how to change grounds and the terms of debate. Ideally this would be an idea taken up by the national Democratic Party, because on the current grounds and terms the Democrats lose and lose and lose again, and will get hammered in the elections. The Ds could run in 2012 on a platform that made it a referendum on "Republican extremism": help us take back the Congress to protect the core value safety net programs that the American people support, raise the revenue needed to do so, focus on jobs, wind down the wars and excessive military spending, and deal with long term debt issues in a solid way when the jobs crisis has ended, not driven by blackmail and extreme rhetoric.

Getting there would be tough, though I would urge party activists to try, because it would require a big change in direction from President Obama. But the course he is setting is the wrong one, and he needs to be persuaded of that. Should it prove impossible to change the national party's course for the elections, I think progressives should still be working for such change in the aftermath of likely defeat in 2012, and as the grounds for fightback against probable Republican dominance if the Democrats embrace the course set out in the deal rather than using it as a foil to run against Republican blackmail tactics.

That's my take, anyway. What do you think? And if I'm even partly right, how do get the DP to focus on changing the grounds and terms of debate?

Comments

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    So far no response possibly because your analysis is 100% right-on!

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      I 100% agree with you Stephen if it’s the part about “because on the current grounds and terms the Democrats lose and lose and lose again, and will get hammered in the elections.”

      Sorry, couldn’t resist :).

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    I think it is wrong to think of this as a defeat for Democrats or Obama, but right to think, as you put it, as a “Republican victory in defining the ground and controlling the terms of debate.” Arguing about the debt limit was their turf. This compromise permits moving on from concerns about extending the debt limit (the “ground” defined by Republicans) to other grounds of more importance to the country and Democrats (like jobs now). So what you suggest is right: Democrats need to resume advocacy for programs important to us.

    As for the compromise itself, I value the cuts and potential cuts in defense and security related programs more than you seem to. I think the defense cuts are significant.

    I think we Democrats are shooting ourselves in our feet with a narrative of “defeat” or “surrender.” We had a legislative battle (on grounds selected by the opposition, which we could not avoid) and we came out fairly equal. Now we can looks for terrain more hospitable to us and fight on.

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    I don't see this as a defeat. SO the premise of your article is off base form the outset.

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      Well, defeat or not, do you think the deal provides good grounds and terms for debate and carrying on successful progressive politics, or do you think we should work to change the grounds and terms? I'm genuinely interested either way. I'm trying to think about a strategic situation that I think calls for more from us than defending this week's talking points.

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        I think this clears the deck to make the focus about jobs plans from now until November 2012. The GOP has no excuses left, so every day it needs to be "where is the GOP jobs plan"...?

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          Sounds good. Unfortunately the terms of the debt ceiling deal constrict possible Democratic jobs plans & the DP is going to need to figure out how to handle that -- but making jobs the central focus is something people can rally around.

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          I suppose if you're a partisan this makes a bit of sense (if you ignore the probable December debacle that will arise from debate over the second round of cuts), inasmuch as "The Team" still stands a shot at winning. But, if you're concerned about policy that gets implemented, getting the Great Compromiser back in office is a pretty milquetoast reward. All these cuts with no revenue plan--and only the limpest hope of one in the second round--are going to put the screws to a huge swath of the population.

          Yet still, the Republicans have managed to turn the frame of every debate toward their favor, often in the most radical terms. How is this supposed jobs debate going to be different?

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            Clay, it might not be. Turning things around is going to take engaged mass politics, IMO both social movement politics and electorally/legislatively oriented politics, and people working in both kinds connecting with one another and working out unity in action despite differences. If the Ds as a party or a lot of party activists within that party take up the jobs focus that is the overwhelming main concern of Americans in the polls, that can help the reframing effort. Not enough in itself, but the right place to start. If not, the effort at reframing still has to go on but it would be harder and take a different course.

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    so, Chris, do you plan to shoot yourself, leap from the Marquam Bridge, take poison or walk under a MAX train?

    because after all the times in my life i've been told the end is nigh, surely this time it must be.

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      Where did I say the end is nigh? I'm positing an idea about a strategic situation, and what I think the best way forward may be. In particular I say there's a way forward even if I'm right but the path isn't changed for whatever reason, and there's a bad result in the near term. Of course I may be wrong. If so I'd be curious to hear discussion of other strategies, and why they'd win for the people and the issues of greatest concern for them, beyond narrow electoral calculus.

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    Chris, I have noticed a stiffening resistance here against any progressive analysis, particularly concerning Obama, including, for example, by my friend T.a., above.

    Is it that the term "Blue Oregon" refers not to progressivism but rather to the blue states of the dem party, which is something quite different? Why did I assume this was a progressive discussion? Can somebody clarify for me the premise of "Blue Oregon"?

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    For the time being, we should focus on the recall elections in Wisconsin. Polls are encouraging and predict the recall of at least 3 tea party Republican state senators in their Aug 9 election, putting the state senate under Democrats control. That could send an important signal to the national Dems. So visit democracyforamerica.com and contribute cash or make phone calls from your home to get out the vote.

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    “I have closely followed the debate over our debt ceiling and have been deeply disappointed at what’s going on in Washington,” Giffords said, in a statement from her office. “After weeks of failed debate in Washington, I was pleased to see a solution to this crisis emerge. I strongly believe that crossing the aisle for the good of the American people is more important than party politics. I had to be here for this vote. I could not take the chance that my absence could crash our economy.” Gabby Giffords

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    While I try to be a "glass is half full" kind of guy, the efforts by the national Dem. pundits to put a positive spin on this turkey of a bill are nonsense at best and fraudulent at worst. Can you imagine the headlines on April 16, 1912 if the Dem. pundits were writing them? Probably something like "Titanic is Stragically Repositioned After Hitting Iceberg". Why not call this bill what it really is - a disaster for the middle and lower class and the US economy - and then just move on.

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    Can someone please tell me what, exactly, is getting cut BEFORE the trigger? Defense spending and...?

    I haven't seen a break down of immediate budget cuts (program by program) anywhere. Until I see that, I'm not calling anything a defeat. Also consider that the trigger is timed to coincide with the lapse (finally!) of the Bush tax cuts. I see some revenue v. cuts horse trading happening in the lame duck session next year.

    Medicaid and Social Security are NOT on the table should the joint committee fail to come to an agreement on further cuts (see: http://www.washingtonpost.com/blogs/ezra-klein/post/winners-and-losers-policy-edition/2011/07/11/gIQAToGRnI_blog.html#pagebreak) and I'd bet my bottom dollar no one is going to agree on anything in this Congress.

    From what I've read, all of the immediate cuts (not the joint committee/trigger cuts) come from defense and ... not Social Security, Medicaid or Medicare. I have no idea where the money is coming from - I've been trying to figure that out for 24 hours - but unless you know, I wouldn't call this defeat just yet.

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      Jessica, You haven't seen it because it hasn't been decided (just as you haven't seen any specification of the military spending cuts). That's part of what's wrong with the deal. The quantities are almost completely arbitrary, set to meet the constraints of a negotiated algorithm, including minimum length of debt ceiling extension (from the President Obama), 1:1 ratio of ceiling rise and 10-year spending cuts (from Speaker Boehner), broad categorical division between "domestic discretionary" cuts and military spending, and attribution of quantities to immediate vs. SuperCongress process.

      So where could cuts in "discretionary domestic" spending come? TANF ("welfare"), SNAP ("food stamps"), Head Start and other education spending, federal aid to law enforcement, federal courts, law enforcement agencies & penal system, transportation and other infrastructure projects, funding for parastatal entities (postal service, AMTRAK/Conrail, CPB, Arts-Humanities-Science Endowments, Democracy Endowment), functional service agencies (NOAA, Census Bureau, national labs, CDC, public health service etc., FAA, Bureau of Labor Statistics, Small Business Administration etc.), regulatory agencies (SEC, EPA, FCC, IRS, parts of FAA & NTSB, etc.) Some of this stuff comes as line item "programs" that could be cut completely but mostly it is going to be cutting jobs of public employees in continuing agencies such as the number of food safety inspectors or clerical support staff for given entities and offices. A comparable example although it predates this deal is that the Census Bureau is closing a number of its regional headquarters, meaning mostly managerial lay-offs with some long distance supervision and some relocation of lower level staff. In many areas this will mean the government works worse, for which anti-government types will then blame it (cf. FEMA & New Orleans). The cuts will be worked out in Congress' budget & appropriations process.

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        As for the SuperCongress process, it was set up to create pressure to cut Medicare, Medicaid and Social Security, with the active support of President Obama for that. There are strong incentives for the Rs not to let the automatic process go forward, as it would leave Medicare, Medicaid and Social Security benefits untouched, though it would reduce provider reimbursements in Medicare which would weaken the program, and make bigger cuts than most Rs would want in military spending (though see Daily Kos on the politics of military cuts). But if that's what they're avoiding, presumably what they would get out of the SuperCongress would be cuts to the social insurance safety net programs and smaller military cuts. What they'd have to give up would be something on revenue, but that's quite limited because rates can't be raised so it's only what could come from closing loopholes, minus whatever lowered rates on the wealthy are part of "tax reform." From the D side, the SuperCongress pits Medicare, Medicaid and Social Security against the rest of "domestic discretionary spending." Assuming the Rs appoint only strong conservatives and ultras, and the Ds appoint a wider range including "blue dogs" or equivalents on the Senate side, and that the Rs maintain their usual party discipline, it is highly likely that the SuperCongress will come up with cuts to Medicare, Medicaid and Social Security. The question then would be would those go through the full Congress.

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    @Mitchell Gore: how can there possibly be any effective jobs plan/stimulus when Obama has conceded that the focus is to be on Chicago-style, Milton Friedman economics?

    And, on the silver lining of this debacle, at least it makes the funding of the CRC black hole even more tenuous than it already is.

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    @Jessica: I believe how the plan works is to say that if the bipartisan Supercongress agrees to cut Social Security, then it will be cut. SS is excluded if the Supercongress can't reach agreement and the cuts go in automatically.

    Let us hope the Democratic appointees to the Supercongress are more friendly to SS than was Obama's choice for deficit commission co-chair, Democrat Erskine Bowles.

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      Yes, but that's a big "if":

      1) IF the bipartisan committee agrees to cut Social Security AND,

      2) IF a deeply divided Congress approves that deal, only then

      will Social Security get cut.

      The trigger is the more likely option.

      A helpful flowchart: http://voices.washingtonpost.com/ezra-klein/debt%20ceiling%20flow.jpg

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    Does anyone else feel like this Dem vs. Republican struggle is all staged. I know there are well meaning Democrats, but I feel like the Wall Street/Blue Dog/Neo-liberal (or whatever you'd like to call them) Democrats are supporting the elite just as much as most republicans. I say this because if the Democratic Party was competent and effective in the way most democratic voters would like it to be then the Super-Rich would be easily defeated by the "Other 98%."

    In my view, the Super-Rich have captured the republican party and a good chunk of the Democrats. We the people can't fight back, because they own too much of our party.

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      Steven, I think your point is self-evident. When the tea party reps in the House became unmanageable, the corporate interests turned to the dems, who came through for them.

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    And, @Jessica again: to read what Bernie Sanders say will be part of the immediate $900 billion cuts, refer to John Nichols' latest article in The Nation, entitled, "Senate Approves 'Immoral, Grotesque, Unfair' Debt Deal, as Palin Declares Tea Party 'Victory'".

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    And, @Jessica: we'll see. I hear Obama talking a lot about the "need" for entitlement reform.

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