Debt Limit Truth or Dare: Why Obama is Turning Up the Heat on Boehner

Conventional wisdom is wrong, again: It's President Obama and the Democrats turning up the heat to reduce the federal deficit by $4 Trillion over the next 10 years, while the Republicans are turning tail as Speaker Boehner is telling people a $2 to $2.4 trillion deal is "more realistic." But President Obama and his team are not ready to let go just yet. Secretary Geithner went on Meet the Press yesterday and basically called the orange man a cut-and-runner (transcript):

And, and, you know, just one thing to Republicans, we know this is very hard to do, but they should not walk away now from trying to do something good for the country. This is very important for the country now. For the economy to be growing long-term, restore confidence that Washington can actually do things and solve some problems, you need both sides to come together now.
Pitch. Perfect.

President Obama has cranked up the pressure himself, boldly challenging Speaker Boehner and asking him, in essence, to go big or go home. And he's threatening the Republican lawmakers with the worst possible ailment for them, working.
President Barack Obama told top lawmakers on Sunday to be prepared to meet every day this week to hash out a deal to cut the federal budget and raise the debt limit, a Democratic source with knowledge of the talks said.

The Democratic official said that Obama pressed Republicans at a White House meeting Sunday evening to aim for a broad, $4 trillion deficit-reduction package rather than a more modest one.

"If not now, when?" the president asked them when some said it was not the right time to try to craft a far-reaching deal, the official said.
It turns out that Obama is not ready to let Boehner off the hook on the taxes either. He pointed out that even a $2.4 trillion deal would require some revenue increases, and the White House made the point that Republicans are playing games and failing to make any serious dents into the debt.
Officials said Obama time and again pressed for a larger package. He also pointed out that the smaller deal of up to $2.4 trillion still would require tax revenues and that not all of the details had yet been worked out.

Earlier, White House Chief of Staff Bill Daley said in a television interview that Obama would not "walk away from a tough fight."

"Everyone agrees that a number around $4 trillion is the number that will ... make a serious dent in our deficit," he said.
I am sure there will be plenty of disgruntled lefties who will be very mad that the President is addressing the deficit at all, let alone so seriously. To them, I say this: Long term fiscal balance is a progressive issue, and it should be. The way President Obama is looking at it is exactly the way to address the long term structural deficit problem. As I pointed out last month, structural deficit and debt results in huge interest payments (which will be $800 billion a year by 2020 if we do nothing), which fund nothing of value and end up being a drag on both demand and investment as well as eventually increasing interest rates. So the President is trying to address it in a responsible way, looking for a structural solution while the Republicans are running away from serious solutions like a mouse from the house cat.

So back on track - what is going on here? Why is the president suddenly in command, after Eric Cantor so proudly walked out of the talks with Joe Biden? To understand, consider this comment yesterday here at TPV by "a night owl"(this, by the way is where I got part of the title for this post! - Thanks, a night owl!):
In my opinion, the game here is not poker, but Truth or Dare. PBO has said to Boehner: I dare you to make a bold move with me that will hurt us both but that will truly make a dent in the debt, OR we will tell the world the truth about what a farce Republican "concern" for the debt really is. Here's the kicker, and many here won't like it: he's serious about the dare.
Precisely. The President was and is indeed serious about the dare. The President is willing to do tough entitlement reform - my guess is along the lines of the recommendations of the fiscal commission: adjusting COLA increases by the inflation rate for the upper half of social security recipients and raising the retirement age except for those who are unable to work beyond a certain age (but the White House made clear that benefits may grow for a slower rate for some but will not actually be slashed from current levels), controlling costs in Medicare through a payment-for-care rather than a payment-for-service system, requiring more drug discounts and giving the Independent Payment Advisory Board authority to implement cost savings if targets are not hit. Maybe even do some means testing.

By the way, a word for the Leftopolis here, please, don't give me the utter baloney about how means testing will destroy a program's popularity; tons of programs with means testing are popular: Medicaid, Pell grants and federal student loans come to mind, for example. By the way, Social Security benefits are themselves already means tested to an extent, as benefits replace a (much) smaller portion of the income for higher income earners. This type of means testing assumes that those who earn more are likely to retire richer, which in general is true.

The President was willing to do these tough reforms. That was his dare.

But in exchange for these tough reforms, he presented the Republicans with a moment of truth: Agree to taking away corporate and ultrawealthy tax boondoggles. Had John Boehner taken that deal, he would have come out smelling like a rose and be credited along with the President for really tackling the nation's fiscal health. But of course, Boehner cannot do anything that may be disapproved by Grover Norquist and his whackjob anti-tax followers whose sole goal is to deprive the public good from needed revenues. The really odd part is that apart from the anti-tax loudmouth activists who, despite being on the fringe, apparently have the power to hold the Speaker of the House hostage, not only most Americans but most Republicans want a tax hike on the rich and the corporate moguls. Interestingly, the Republican Speaker of the House would rather be Grover Norquist's puppet than represent even his own party.

So the truth comes out: the GOP is not the least bit serious about deficit reduction. All the talk, all the jumping up and down - it's all for show. When push comes to shove, the GOP is not serious about tackling this nation's debt. This is becoming abundantly clear to the American people as the negotiations go on. I think the President understands it: that's why his team is suddenly emboldened and are calling the Republicans out. They are still daring them. The President will either get a substantial deal with tax reform and entitlement reform that really makes a dent, or will expose the Republicans for the frauds they are.

Along with President Obama genuinely caring about the fiscal health of the country, this is a stroke of political genius. Consider the following cards the President had from the beginning:
  • He knew Republicans would have to raise the debt limit as their Wall Street buddies wouldn't let them allow the federal government to default on its obligations.
  • He also knew that the GOP was never serious about making tough choices in trying to reduce the debt over the long term.
  • He understood that the Republicans were going to try to use the debt limit situation to try to bolster their fiscal responsibility image.
Republicans were banking on the President being unable to figure out exactly these three things, so they could use the debt limit talks as "leverage" to force the President to accept massive spending cuts and Paul Ryan's Path to Poverty. Instead, Obama turned the tables on them. If the Republicans wanted to go big, said the President, let's go big. Let's get serious and let's do something big. Let's make some tough choices. The President would give some, and so would John Boehner. Both would take on their respective party's sacred cows to reform both the tax code and the entitlement programs for the long term good of the country. The Republicans did not imagine the President would be serious about that. But he is. So now, they don't know which way to run. Once again, Barack Obama has them where he wants them, and he's making them look like complete idiots.

It will be interesting to see what happens in the debt limit talks over the next week. But make no mistake, the bold steps and demands from the White House and the tip-toeing of the GOP are clear indications that Obama, once again, is getting the better of the GOP. Right now, the Republicans know that Obama is onto their game, beating them at their own game, and looking good doing it.

DELICIOUS UPDATE: Obama tightens the screws

This morning, the President tightened the screws some more on the Republicans. And don't you know it - part of what he said looks almost lifted from this article ;-):
"It is possible for us to construct a package that is balanced, shares sacrifice, would involve both parties taking on sacred cows," the president said,
Tee hee! Ok, first, here is the video of the press conference:

Here's a few other choice words from the President's press conference: he is going big, getting bold, he's ready to take on sacred cows on our side, challenging the Republicans, and making the GOP very very uncomfortable. And no short term kicking the can down the road, please.
To congressional leaders, Obama urged immediate action on the debt ceiling issue, saying, "I've been hearing from my Republican friends for quite some time that it is a moral imperative for us to tackle our debt and our deficits in a serious way ... so what I've said to them is, 'Let's go.'" [...]

"I don't see a path to a deal if they don't budge. Period," the president said, accusing Republicans of having a "my way or the highway" posture. [...]

The president said that without the tax increases all the burden would fall on those who can least afford it. "And that's not fair," Obama said, arguing that most people would agree with him.

Obama also took aim at the common GOP retort, "Where are the jobs?"

He said resolving the debt limit issue while tackling the nation's longer-term deficit problems "can have a positive impact in overall growth and employment."

"So what's the holdup?" the president asked. [...]
The President also made it crystal clear that he would protect the most vulnerable:
"If you don't do the revenues, then to get the same amount of savings, you have to add more cuts, which means it's seniors, it's poor kids, it's medical researchers or our infrastructures that suffer," said Obama during Monday's news conference.
You know the Republicans are losing the message war when you hear that John Boehner's office was desperately sending out emails in the middle of the President's press conference. Mwhahahaha!

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