He blinked on Syria.
He blinked on Larry Summers.
Now comes the debt ceiling.
Three blinks and you’re out?
But of course it wouldn’t be just three.
The president blinked on the Bush tax cuts at the start of this year by agreeing to extend 82 percent of them, and on Tuesday the Congressional Budget Office (CBO) tallied the tab. It’s almost $4 trillion in additional debt over the next decade, a tide of projected red ink that Republicans will seize on to kill essential public investments. (In 2023 alone, according to the CBO, the revenue loss from extending the bulk of the Bush tax cuts will amount to as much as $700 billion).
How can we spend more on infrastructure, pre-school and research, the GOP will argue, with so much doggone debt looming?
How indeed when President Obama blinked and made permanent a set of tax cuts that Democrats had rightly shouted for a decade were unaffordable in an aging America?
At the time of the “fiscal cliff” standoff nine months ago, the White House declared victory (sounds a bit like Syria, in other words. Give it time.) To some of us back then, and to anyone looking at the outlook for progressive priorities now, it wasn’t a win. It was a capitulation.
As we head into this fall’s fiscal clash, it’s hard to avoid the sense that power is draining away from the president. I was in London the week that Margaret Thatcher died in April, and was struck by a theme sounded in virtually every assessment of her tenure as prime minister. It was a variant of “she seized the political initiative and held onto it like no British leader in the post-war period.”
No risk of that verdict being rendered on President Blink. Obama has made a specialty of winning the news cycle before losing his nerve.
As with his push for gun control after Sandy Hook. Or his jobs act. Or pre-school.
Our president’s state of mind too often seems a state of “never mind.”
Yet amazingly, we’re at risk of a repeat. Federal Reserve governor Dan Tarullo has been sounding the alarm about the dangers associated with banks’ continued reliance on wholesale overnight funding, where “runs” like those that triggered the 2008 crisis could recur. The vast majority of derivatives are still traded in the unregulated shadows, as an exhaustive Bloomberg piece chronicled. Sheila Bair, the former FDIC chair (and the closest thing we have to a paragon of banking virtue that is not named Elizabeth Warren), “sadly” concluded in the Financial Times on Tuesday that “banks are only marginally safer than they were before the 2008 crisis.”
Yes, the basic tier of bank capital has gone from 5 percent past 11 percent (assuming you believe the numbers and quality of this capital as the banks report them). That’s a good thing.
But Sen. Sherrod Brown (D-Ohio) has been pushing legislation that would lift bank capital to a far safer 15 percent. And before you sputter, “Well, that’s what a communist would want,” consider that Paul O’Neill, former Treasury secretary for George W. Bush and the Last Moderate Republican, told me in a phone interview on Monday that he’d hike bank capital to 20 percent, roughly what prudent Switzerland requires. (O’Neill told a senior Republican senator during the fight over Dodd-Frank that the best reform would be a two page bill requiring 20 percent capital and virtually nothing else; you don’t need 2,500 pages of micromanagement or talmudic Volcker rules, O’Neill argued, if you get the banks to hold enough capital. Too sensible for Washington.)
Obama blinked on bank safety well before aiming that high.
To his credit, the one place Obama has never blinked is Obamacare. In California, where I live, an army of 20,000 enrollment counselors backed by a big advertising budget is poised to make the Affordable Care Act’s roll out a success.
But not blinking has not been Obama’s way. Whenever debt ceiling time comes around, and a few dozen nihilistic Republicans take the country for another wild ride, I like to offer handy synonyms for “cave,” as a kind of public service for colleagues in the media. This season’s shortlist comes with a plea.
With the stakes so high, Mr. President, please don’t back down, give in, acquiesce, knuckle under, submit, succumb, relent, yield, kowtow or surrender. And whatever you do, don’t crumble.
Because, no matter what Washington wags say to the contrary, Vladimir Putin won’t be showing up with a budget plan (and a lecture) to bail you out.