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Posted at 11:54 AM ET, 07/22/2011

Obama’s bad debt deal getting worse

With the August 2 deadline approaching for the debt ceiling, multiple news organizations are reporting that the outlines of the $4 trillion debt deal being ironed out by Barack Obama and John Boehner involve immediate spending cuts with promises of revenue increases later.

That’s bad enough, but Republicans are growing increasingly bold in their demands, according to the New York Times:

But the president and Mr. Boehner were moving ahead with their plan, aides said, trying to agree on matters like how much new revenue would be raised, how much would go to deficit reduction, how much to lower tax rates and, perhaps most critical, how to enforce the requirement for new tax revenue through painful consequences for both parties should they be unable to overhaul the tax code in 2012.
The White House wants a trigger that would raise taxes on the wealthy; Mr. Boehner wants the potential penalty for inaction to include repeal of the Obama health care law’s mandate that all individuals purchase health insurance after 2014.

I would be shocked if Obama agreed to this, but that Boehner is even suggesting ideas points to how far right the lines of negotiation have moved. Democrats are reportedly in revolt over the deal, which is completely understandable. The fact that raising the debt ceiling, which everyone agrees has to be done to avoid default, is coming with policy concessions for Republicans at all is absurd.

It was just last week that Senate Minority Leader Mitch McConnell all but surrendered, offering to allow Obama to increase the debt ceiling unilaterally in exchange for allowing Republicans to pummel him for it politically. Some Obama supporters tried to spin this as tactical brilliance, arguing that Obama’s offers to substantially cut entitlements were mere political maneuvering, an attempt to offer Republicans a deal they couldn’t refuse but one they couldn’t take.

The big problem with some of Obama’s supporters however, is that like some of his more unhinged detractors on the right they fail to take the man’s words at face value. Obama rejected the McConnell deal in favor of a “Grand Bargain,” a deal that, in the words of Lando Calrissian, seems to be getting worse all the time. Obama is already giving Republicans bipartisan cover for cuts to entitlements, despite the fact that Republicans’ aggressiveness in doing so has already become their biggest political liability. The fact is that cuts will likely harm an already weak recovery, and yet there don’t seem to be any efforts to create jobs included in the deal.

The president’s political rationale is particularly weak. Obama argued that debt reduction is necessary to avoid the possibility “that every time we propose a new initiative, somebody doesn’t just throw up their hands and say “more big spending, more government.” Time and again, from putting for the GOP alternative to Bill Clinton’s health care plan to ramping up deportations to entice Republicans into supporting comprehensive immigration reform, the president has assumed that tacking right would lead to cooperation from Republicans. It hasn’t worked before, and it won’t work now.

All this to solve a deficit problem that is almost entirely the result of eight years of Republican profligacy and an unemployment crisis Washington seems entirely uninterested in addressing. This is madness.

By Adam Serwer  |  11:54 AM ET, 07/22/2011

 
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