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How the cuts from 2011 are undermining the deal in 2012

Everyone remembers that in 2011, the Boehner-Obama negotiations fell apart. But fewer remember what happened next: Congress agreed on deal to raise the debt ceiling. That deal included the passage of a bill called the Budget Control Act, which cuts discretionary spending by about $1.5 trillion over the next decade

Obama, Boehner meet at White House. (Getty Images)

So when Obama and Boehner were negotiating in 2011 -- before the passage of the BCA -- there were all these discretionary spending cuts that could be used to get to tax increases:spending cuts ratio that Republicans liked. Now those cuts are gone. That's having a huge effect on the negotiations.

Think of it this way, says Bob Greenstein, president of the Center on Budget and Policy Priorities. "Suppose that in the Budget Control Act, Congress and the president passed discretionary cuts of half the size of what they actually passed in 2011. And let’s say that in the most recent Obama offer, he reduced discretionary to the same level he actually reduced it in 2011, but because in our example the 2011 cut was smaller, the discretionary cuts Obama offered this week could be larger. You’d end up in exactly the same place but Boehner would be satisfied. The tyranny of a 1:1 match is you can’t cut what you’ve already cut."

You catch all that? Because Republicans pocketed so many spending cuts in 2011, there's simply fewer spending cuts available for a deal today. "You can’t take more out of discretionary without doing real damage to the basic functions of government," says Greenstein. "It’s already down to the lowest level since 1962."

Thinking back to 2011 puts today's deal in fairly sharp relief: After Republicans won the midterm election, they didn't go for a balanced package. They went for all spending cuts. Now that they've lost the 2012 election, they're demanding a balanced package. But because of those 2011 spending cuts, it's hard to get to a balanced package, because so many of the cuts that would've been part of a package in 2011 are no longer available.

"If you follow Boehner’s logic here," Greenstein says, "then the only deal that is acceptable would have to be a deal to the right of where Obama and Boehner were in the July 2011 negotiations -- even though Obama won the subsequent election, and Boehner’s party lost."



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Neil Irwin · December 19, 2012

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