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ThePlumLIneGS whorunsgov plumline
Posted at 12:56 PM ET, 07/11/2011

Obama ups the ante against GOP on taxes

If one thing was clear from Obama’s presser, which just wrapped up, it’s this: Far more than he has in the past, the President seems determined to make Republicans pay the maximum political price for their intransigence on taxes.

At the presser, Obama laid down a firm line for the first time: There will be no deal unless the GOP gives ground on revenues. Previously, Obama had hammered the GOP for protecting low tax rates and loopholes that benefit the rich, but he had stopped just short of saying he couldn’t back a deal which didn’t bring in new revenues.

But this time, asked directly whether he would support a deal if the GOP didn’t give ground on revenues, he said No.*

“I do not see a path to a deal if they don’t budge — period,” Obama said. “If in fact Mitch McConnell and John Boehner are sincere, and I believe they are, in that they don’t want tos ee the U.S. government default, then they’re going to have to compromise.”

As part of this drive to ratchet up pressure on Republicans, however, Obama also confirmed in his clearest terms yet that he is willing to give ground on Social Security and Medicare in a way that will certainly alienate many Democrats. In his previous presser, Obama seemed to draw the line against any cost-shifting to seniors. But today, Obama seemed to draw something of an equivalence between Republicans who are refusing to give ground on taxes with Dems who have drawn a hard line against any benefits cuts.

“There is frankly resistance on my side to do anything on entitlemetns. there is strong resistance on the Republican side to do anything on revenues — but if each side wants 100 percent of its ideological predispositions are, then we can’t get anything done,” Obama said. “The leaders in the room here at a certain point have to step up and do the right thing, regardless of the voices in our respective parties that are trying to undermine that effort.”

Finally, in a move that’s likely to annoy liberals, Obama explicitly endorsed the idea that the deficit issue is the primary obstacle to focusing on jobs. After acknowledging that major stimulus spending is now impossible, he said:

What we can do is to solve this underlying debt and deficit problem for a long period of time so that then we can get back to having a conversation about, all right, since we now have solved this problem, that’s not -- no longer what’s hampering economic growth, that’s not feeding business and uncertainty, everybody feels that the ground is stable under our feet, are there some strategies that we could pursue that would really focus on some targeted job growth -- infrastructure being a primary example...
We can’t even have that conversation if people don’t feel as if we don’t have our fiscal house in order. So let’s act now, let’s get this problem off the table, and then with some firm footing, with a solid fiscal situation, we will then be in a position to make the kind of investments that I think are going to be necessary to win the future.

This is at least partly an endorsement of several tenets of conservative economics — that deficits feed business “uncertainty” and so on. As Atrios and others have noted, there’s good reason at this point to think that Obama actually believes to some degree in this worldview. But there’s another way of reading what Obama said here: This is his blueprint for pivoting to jobs and by extension to winning reelection.

Obama plainly believes that the only way to manage any kind of pivot to jobs is to take the deficit off the table as an issue first. Obama thinks the GOP will ultimately capitulate to some degree on revenues, but knows full well it will be a bad deal for Dems. By signaling openness to entitlements cuts that will anger the Dem base, he hopes to increase the political price the GOP pays for intransigence on revenues and is hoping to preemptively blame Republicans for the lopsided nature of the ultimate deal. More important, he is putting them on notice that once a deficit deal is reached, they’ll have run out of excuses for opposing job creation measures that require government spending.

I don’t know if this will work, either politically or in terms of job creation, but this is clearly the course he’s chosen.

UPDATE: Edited for accuracy at the asterisk.

By  |  12:56 PM ET, 07/11/2011

 
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