Obama Loses Game of Chicken with GOP

    In 2011, Obama played the fight the deficit game with the GOP, by signing the 'Budget Control Act of 2011". It mandated across the board spending reductions of 5% or so for non-entitlement spending of the government, not evaluating or specifying where or how the cuts were to be made. Just an ax to every discretionary program.

    Nothing like this had ever been done before. Obama gambled it wouldn't happen. Doing so may have helped him win the election. Or maybe not.

    Obama now calls the sequester "Just Dumb". Maybe his making this deal with the GOP in 2011 was dumb, and thinking they would back out of it now was also dumb. The GOP is the Party of dumb. Obama should know that by now.

    What is clear now is the game of 'budgetary chicken' inherent in that act, that the GOP would never sanction $40 billion plus cuts to the Pentagon, and would raise taxes or close loopholes to prevent it, was false. Obama risked the cuts to programs that help the neediest Americans, and cuts to our 'seed corn', the CDC, NIH, food inspection, special needs education, aid to poor pregnant women, aid to the unemployed or disabled, research grants and infrastructure spending, to play this game of deficit chicken. He lost. We lost. America lost.

    The Republicans don't care if the government fails, they don't care so fervently they are willing to even cut the Pentagon. The only good thing is now we surely can't afford another war!

    The only stick he had to wield against the GOP was the expiration of the Bush tax cuts. Republicans would do anything to avoid resurrection of Clinton tax rates. Obama settled for half a loaf there, he got $600 billion or so of tax increases, only about one dollar of tax increases for four dollars of cuts. Even Simpson Bowles called for about one dollar of tax increases for two dollars of cuts. Federal tax revenue as a percent of GDP is now the lowest in 50 years. While corporate profits are so high it is called a 'Golden Age'.

    Obama was thinking last December, make a deal on the Bush tax cuts, even if not the best, and with the sequester get more revenue. It hasn't happened.  He could have let the tax cuts expire, which would have sent the GOP into meltdown. Then, roll the whole thing, tax cuts, deficit, sequester, into one big deal in the new year. He didn't.

    Now Obama may spend the next, what,  2 or 4(?) years trying to run a financially crippled federal government?  While people living in poverty are turned out into the streets and poor pregnant women are turned away from health care or nutrition assistance, etc etc. This is not a formula for national prosperity. Obama is once again coming in focus as the student who writes his thesis the last night, thinks it is good enough to get by. Doesn't plan ahead or think things through. He gets by, but fails in doing so.

    Tell me I am wrong on this analysis, please. Pardon me if I hope Hillary in 2016 can do better.


    Meanwhile, the NYT reports that corporate profits are soaring, while at the same time many are cutting jobs.

    Wall Street bankers say “the market wants more austerity”, and why not? As long as unemployment is high people will take any job at any pay. They will shun unions. Those with any cash will put it into stocks, and raise stock prices, as they get virtually no interest on bank deposits.  Bernanke and the Fed, using the excuse of helping the unemployed, give away 0% free money to the big financial players on Wall Street, a policy which seems to help bankers more than consumers or savers. All while the poor get it upside the head from the sequester. See The Poor Face Most Pain from Budget Cuts.

    Robert Reich on the topic:

    ...in the months (or years) ahead, federal money will be reduced for poor schools, child nutrition, preschools, and mental-health services.

    Some 3.8 million who have been unemployed for more than six months will see their jobless benefits cut.

    Some 600,000 low-income women and children will no longer benefit from the federal nutrition program for women and toddlers.

    Lower-income Americans are already suffering disproportionately from high unemployment. But they will bear even more of the burden of joblessness as the economy slows because of the sequester.

    Meanwhile, America has become far more unequal than it was in 1967. Then, the richest 1 percent got 9 percent of the nation’s total income and paid a top marginal tax of 78 percent (and an effective rate, after deductions and credits, of 54 percent).

    Now the richest 1 percent get over 20 percent of the nation’s income and pay a marginal tax of 39 percent (and an effective rate of 23 percent — or, if you’re in Mitt Romney’s league, less than 19 percent). The richest 400 Americans have more wealth than the bottom 150 million combined.


    Tell me I am wrong on this analysis, please.

    Unfortunately, you're probably not wrong to look at the situation in the way you do.  The post might also have been titled "Obama's Faustian(?) Bargain".  He might have thought he needed to do what he did in order to take away the deficit issue as one that might have cost him re-election.   You identify another course he might have tried to take.  

    The Republicans don't care if the government fails, they don't care so fervently they are willing to even cut the Pentagon. The only good thing is now we surely can't afford another war!

    The 2nd sentence is one part of the post I disagree with, at least from 2017 on if we end up with a Republican president.  Since when does this Republican party care about having clear, attainable, reality-based objectives before getting us into wars?

    The Republicans, given their shitty unpatriotic values, have no incentive to move on budget policy until at least the middle of next year, and probably not even then.  If they think they can blame the slowed or reversed recovery and increased misery the sequesters cause on Obama and his party and use that to pick up Congressional seats next year, I would think they surely will do that.  The only development I can envision that might change their political calculus is if there develop large-scale public protests against the budget cuts which the GOP fears may work to its electoral disadvantage.  

    Layoffs of government employees forced by the sequesters helps the GOP weaken public employee labor unions.  Trying to finish off what is left of the unions is one of the key GOP strategies to try to compensate for the adverse demographic trends they know they face.       

    Good points. Only in America are poor children and the disabled deprived of housing assistance in order to protect the low taxes for millionaires, billionaires, folks like Romney.

    I would ask Obama, if this deal was so dumb, why did you make it? Why didn't you try to fix it in December, when Congress had shown exactly zero initiative for over a year to do anything about it?

    Meanwhile Helicopter Ben is dropping $85 billion a month in 'qualitative easing' on the fraudsters of Wall Street, which is exactly the amount of this years sequester, including the Pentagon.

    Now TPM is reporting the Republicans are planning some budget jujitsu, restoring $7 billion in sequestration for the Pentagon as part of a debt increase measure, and daring Obama ot the Senate to vote against it and shut the government. They have O by the jewels.

    They have O by the jewels--IF the dominant media narrative is that their MO is an acceptable way to conduct the nation's business, and IF they avoid taking the lion's share of the blame for the human consequences of sequester cuts that go into effect (most of that won't begin to be evident for a few months). 

    I don't think either is a given.  The side that holds the White House has the advantage in unfiltered or less filtered direct media access to the public.  Bill Clinton was able to use the bully pulpit to inflict grievous damage on the GOP Congress in the mid-1990s when the latter shut down the government, overcoming the media's default "they said/they said" tendency to apportion blame as between the two partisan sides roughly equally.   Messaging has to be simple and accessible to win this fight, as Clinton knew.  He was able to execute by speaking an accessible language of values and consequences for real people, staying away from glazed eyes budget process arcana. 

    Meanwhile, far from being relegated to passive bystander status and waiting to see exactly what this latest train wreck in the making ends up looking like, members of the public who are fed up with this crap can organize, mobilize, and demand that the GOP grow up and stop damaging the economy and wrecking the lives of upstanding Americans.  Your analysis as to why Obama shares a major part of the responsibility for the current predicament makes sense to me.  What makes the GOP and not Obama the appropriate target for the expression of public grievances right now is that, whereas Obama does not want the sequester cuts to go into effect, the GOP clearly does.  And they will block any actions that would avert the cuts unless they feel major heat from the public, and perhaps even if they do. 

    If you note that Obama himself agreed to the December 2011 deal that is the current reality, true.  And the GOP will not tire of pointing this out, no matter what his appeal to the public is.  But I think it's also true that to many members of the public staring into the abyss of looming layoffs and service cuts, December 2012, let alone December 2011, is ancient history.  Obama and his team hopefully will be able to devise a "circumstances have changed" or other argument to defuse the GOP charge on this. 

    Surprise!!! The intransigence serves the plutocracy. Each side can blame one another and Surprise!!!  that too serves the masters of both parties. 

    Next thing you know, the peasants will be killing one another for the crumbs and Surprise!!!!!   that serves the plutocracy too.

    Did I hear correctly, that the Republicans are going to allow another 6 Billion dollars, to escape the budget cuts to the Defense department?

    Let me guess, its for domestic defense?

    It may be $7 billion. The plutocracy is loving Obama's second term as stated above, austerity for the peasant class, free money from Uncle Ben, new highs on Wall Street, what could go wrong?

    When does the White House pull out the Congressional district maps for the Tea Party boys and start doing some good old style hard ass politics with federal budget cutting? Oh, I forgot Obama is above that. He's dealing with the GOP Mafia as if they have the integrity of the guys on Mount Rushmore. Wouldn't be surprised if the Republicans demand a spot for Boehner there before O's term is over.

    pull out the Congressional district maps for the Tea Party boys and start doing some good old style hard ass politics with federal budget cutting?

    Wouldn't that be great; of course they would cry" it's all about politics"

    and Obama could reply "No Shite Sherlock"  Two can play this game.

    Maybe the Commander and Chief could allocate the 7 billion dollars defense money, to infrastructure repairs, based upon the reasoning Eisenhower (?) used, to rationalize the Interstate Transportation system.

    I don't think even the Tea Party voters would be against spending the money IN AMERICA instead of over there. I'm having trouble thinking of any Democrat with the conviction necessary to do it, however. $7 billion is a lot of money and the Pentagon wants it, needs it and has to have it. Of course, it's OK if Republicans were to do it, they do whatever they want. They can even start trillion dollar wars for political reasons and get away with it.

    NO wait, Obama is striking back. HE IS CANCELING ALL WHITE HOUSE TOURS! These are arranged through your Congress person. This will hit the Tea Party very hard I am sure, a tough blow to all of them who had signed up to enter the evil den of the NObamaZero, right?

    What a ridiculous move by Obama, as it it primarily his supporters/admirers who by and large would want to tour the WH. Additionally, all other government workers and functions must continue at some level under sequestration, and stopping tours completely sets a very sour example.

    How can he stop us from going to OUR  house?

    Why not cut all the perks for this self serving Congress.

    I thought "WE",  were their employers?

    Work them less than 30 hours a week so we don't have to pay their benefits cut their pay, 

    If it's time to tighten our belts and get rid of the fat; start in DC. Set the example Congress.   

    Tell all previous congressional retirees; the moneys gone; they'll have to take a second job.

    Immediately bring to the floor, there will be no automatic pay increases.

    Just as they do for Clean elections; Put another check box on the 2013 tax form, Do you wish to raise your Congress persons pay?

    Congressional perks: Lawmakers' most surprising benefits | The ...

    How Are the Benefits? For Members of Congress, Not Too Shabby ...

    "tell me I'm wrong on this analysis"


    You're wrong.

    Obama has cut the DOD without touching the entitlements. If he'd proposed that at any time to Boehner it would have been scornfully rejected.

    The cuts in discretionary items will be painful but in many cases they provide their own pressure for correction. My government employee daughter regularly works unpaid overtime.And pays for herself many times over since her job is collecting fines. Big ones. I asked her if she'll compensate for her enforced holidays under the sequestor. " Oh , no" she said "they've got to be shown , there is a consequence to their actions"

    Hope you are right. Yet as Robert Reich notes above, it's the unequal distribution of wealth and the low federal tax revenues that need to be addressed. He should have at least stuck to the 250K threshold for taxes, and rolled in a deal on the sequester in December. Obama blew it on the half a loaf deal over the Bush tax cut expiration. Now the sequester looks like it may go on and on.

    Federal workers not being able to keep up plays into Republican hands as they will say (1) it's Obama's fault for poor leadership, (2) the government should be privatized (run by a cutout from a major corporation that pays low wages, few benefits and sends a % of the fat profits back to the Republican Party at election time). The GOP loves a government that fails in doing it's job, it's near the top of their mission statement.

    We can also not pay for retirement of the boomers by cutting discretionary spending. That $2 trillion in the SS Trust Fund, which W said was 'just IOU's in a drawer',  must be paid off with general revenue, or not at all as the GOP would prefer.

    The canceling of the White House tours gives me the impression that the Obama team has the spine of a noodle. This is not showing you are unflinching in doing the job of governing and fighting back, it shows you are capitulating. This is a Democratic President who starts his 2nd term by being screwed by a slim plurality in 1/2 of 1/3 of the government.

    The O Team: 'closing the White House for the first time since WW2 will show them'! BS. The Tealiban are laughing.

    At least O is ending the wars, will never appoint another Scalia to the bench, and will not couponize Medicare, Medicaid, education etc etc. But his team is pinned down financially by the GOP, and it's their own fault. 2-4 more years of the football being pulled by the GOP as O kicks seems to be where we are headed.

    I certainly didn't see it in 2011, but... it does seem like the notion that the Pentagon budget is somehow sacred to Republicans is just... false.  Now, if they were in charge of the Pentagon and, say, bombing the heck out of Iran, it might be a different issue.  But with Obama in charge and not bombing Iran and fighting his wars by remote control, the Republican response seems to be, "meh."

    Ha Ha Ha. Of course if the O Team got out (1) Congressional district maps (2) list of GOP corporate defense PAC/donors and made cuts accordingly Republicans would be howling like scalded cats, and dropping Benghazi to start new investigations. O could say screw you, and double down, but he isn't that kinda 'realpolitik' guy.

    Uh Oh. Talk about Obama capitulation, TPM reports O is getting plaudits from the Senator from South Carolina on what Obama is saying about 'a Grand Bargain', or the fleecing of the middle class I presume.

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