Politically, this has been, in many ways, a bad year for the White House, as a quick look at the polls will show. Economically, it’s been rough, as a look at the jobs numbers will show. But as far as the administration’s bitter, high-stakes negotiations with the Republicans in Congress go, it’s really been a surprisingly good year for the White House.
Thursday’s payroll-tax deal concludes the final of the four major negotiations of 2011. The first was in February, when Congress needed to fund the government or risk a shutdown. The next was in August, when Congress needed to raise the debt ceiling. Then there was the supercommittee. Then, finally, the expiration of the payroll tax cut and unemployment insurance.
These negotiations were ugly. Their endgames were alarming displays of Washington’s polarization and dysfunction. They drove the approval ratings of both President Obama and the Congress to new lows. But, in terms of the substantive concessions the two parties have won for themselves, the fact of the matter is that the White House begins 2012 in a very, very strong position. Much stronger than most would have expected at the beginning of this year. And not always through any fault of their own.
For starters, the government did not shut down — not once — and the deal Democrats cut to keep it from shutting down ended up being a nothingburger. The $38.5 billion in cuts ended up being more like $20-$25 billion, with less than $400 million falling in 2011.
The debt-ceiling debate was a mess, and it probably did real damage to the economy. Some of the deals that Obama offered Boehner — which would have taken the Bush tax cuts off the table, and raised the Medicare eligibility age — would have dragged federal budget policy far to the right. But Boehner didn’t take those deals. And, in the end, the debt ceiling was lifted in return for $900 billion in discretionary spending cuts and the establishment of the trigger-backed supercommittee — a deal that ended up dragging federal budget policy far, far to the left.
The key here was that the supercommittee failed. That left two major events on the budgetary horizon: the spending trigger, which cuts $1 trillion from the budget, half of which comes from the Pentagon, and none of which comes from Social Security, Medicaid, Medicare beneficiaries, or assorted other programs for low-income Americans; and the scheduled expiration of the Bush tax cuts, which would raise taxes by almost $4 trillion. Both events are scheduled to happen simultaneously and automatically on January 1, 2013 — a dual-trigger nightmare for the GOP. And taken together, they are far to the left of anything that Democrats have suggested over the past year, as this graph shows:
Finally, there was the scheduled expiration of the payroll tax cut and the expanded unemployment insurance benefits. On Thursday, Democrats and Republicans agreed to extend both for two months — and the expectation is that, after another ugly round of negotiations, they’ll both be extended through the rest of 2012. If that holds true, then in the 2010 tax deal, Democrats got about $4 of stimulus for every $1 of upper-income tax cuts, rather than, as it seemed at the time, $2 in stimulus for every $1 in upper-income tax cuts.
So, in 2011, there was no government shutdown, no default on the debt, and no contractionary spending cuts passed for this year or next year. In addition, 2010’s stimulus measures were extended into the beginning of 2012, and unless Congress and the White House come to an alternative deficit-reduction solution over the next year, the dual triggers will go off and we’ll see a deficit “deal” consisting of a bit less than $4 in tax increases for every $1 in spending cuts — and half of those spending cuts will fall on the Pentagon.
This may not be how the White House hoped the year would close out. They wanted a big deficit deal with the Republicans, and a more collegial, compromise-filled relationship. But the reality is, they begin 2012 with vastly more policy leverage than they had in 2011. And at this point, what does Boehner have to show for the brinksmanship of the last year, save for the discretionary spending cuts from the debt deal?