Saturday, January 05, 2013

The risks of Obama's poor negotiating

Paul Krugman has been analyzing the "fiscal cliff" negotiations and what they likely imply for the Debt Ceiling II fight. He sums up his thoughts in his column Battles of the Budget New York Times 01/03/2013, and in two blog posts leading up to it, Conceder In Chief? 12/31/2012 and That Bad Ceiling Feeling 01/03/2013. Also, in Instant Backstabbing 12/31/2012, he reminds us that no matter what kind of bargain they strike, the Republicans will use any cuts in benefits to Social Security, Medicare and Medicaid endorsed by Obama against the Democrats.

Steve Kornacki provides us a helpful timeline for the next round in The new conservative purity test Salon 01/04/2012:

... Republicans are convinced they can cut a new deal over the next few months, one that will reflect their zeal for making deep cuts in safety net programs. They believe this because this week's deal left the big questions about entitlements unresolved. So instead of addressing Medicare and Social Security in the face of a deadline that seemed to give President Obama more leverage, Republicans will now pursue their agenda in the face of three deadlines they think will give them the upper hand: the debt ceiling (which must be addressed by early March), the $1.2 trillion sequester (automatic cuts now slated to be go into effect on March 1) and the continuing resolution that funds the government (due to expire in late March).
So we're looking at a March deadline of some kind. I saw somewhere that Chuck Todd is already calling it "March Madness," but "March Farce" is likely to be more appropriate. I'm going to stick to "Debt Ceiling II crisis" for now. Whatever we call it, the consequences are going to be serious.

Krugman points to the unreality of Obama's explicitly expressed hope that deals on budgets and cuts to Social Security, Medicare and Medicaid over the next six months will then clear the decks for a postpartisan future where corporate taxes, business regulations, international trade deals and the vague "infrastructure" that everyone likes to talk about, all to be considered in a friendly, practical atmosphere of bipartisan agreement without "ideological" dissent. It's a fantasy vision, as Krugman writes:

For the reality is that our two major political parties are engaged in a fierce struggle over the future shape of American society. Democrats want to preserve the legacy of the New Deal and the Great Society — Social Security, Medicare and Medicaid — and add to them what every other advanced country has: a more or less universal guarantee of essential health care. Republicans want to roll all of that back, making room for drastically lower taxes on the wealthy. Yes, it's essentially a class war.
Krugman also points to the fact that Obama has established such a record of caving in on positions he insisted he would not compromise, and has shown such a reluctance, even fear, of following through on a threat that the Republicans will not take his threats seriously in the Debt Ceiling II Crisis and will delay a deal as long as possible, confident that Obama will keep making concessions:

OK, now for the really bad news. Anyone looking at these negotiations, especially given Obama's previous behavior, can't help but reach one main conclusion: whenever the president says that there's an issue on which he absolutely, positively won't give ground, you can count on him, you know, giving way — and soon, too. The idea that you should only make promises and threats you intend to make good on doesn’t seem to be one that this particular president can grasp.

And that means that Republicans will go right from this negotiation into the debt ceiling in the firm belief that Obama can be rolled.

At that point he can redeem himself by holding firm — but because the Republicans don’t think he will, they will play tough, almost surely forcing him to actually hit the ceiling with all the costs that entails. And look, if I were a Republican I would also be betting that he’ll cave.

So Obama has set himself and the nation up for a much uglier confrontation than we would have had if he had set a negotiating position and held to it.
And if the Republicans succeed in jerking him around this year like they did in Debt Ceiling Crisis I in 2011, Obama will have largely frittered away his domestic mandate from November's election: "The only thing that might save this situation is the fact that Obama has to be aware just how much is now riding on his willingness to finally stand up for his side; if he doesn't, nobody will ever trust him again, and he will go down in history as the wimp who threw it all away."

Krugman also cites Noam Scheiber's Democrats' Cliff Compromise Is Bad; But the Strategic Consequences Are Disastrous New Republic 12/31/2012, in which Scheiber warns, "Obama has already shown his cards on the parameters that will define his negotiations with Republicans throughout his second term."

He argues that the contrived "fiscal cliff" crisis offered Obama a chance to show the Republicans he was no longer going to act like President Pushover in negotiating with them and to assert his mandate from the 2012 election:

He could afford to be unyielding because the economic consequences of going over the cliff for a few days or weeks would be relatively minimal and almost entirely reversible. And doing so would immediately demonstrate to the GOP that public opinion was emphatically not on its side—polls showed that the public reaction to going over the cliff would be both intense and heavily trained on Republicans. Throw in Obama’s post-election bump in approval ratings, and there was never a better time to hold out.

Instead, the emerging deal will reinforce the convictions that have made the GOP such a toxic presence in Washington. If Obama will cave even when he’s got all the leverage, when won't he cave? Never, the Republicans will assume. If Obama’s too scared to stop bargaining and let the public decide who’s right in this instance, when the polls appear to back him, then he must think our position is more popular than he lets on. Suffice it to say, these are not sentiments you want at the front of Republicans’ mind as they prepare to shake him down over the debt limit in another two months. The White House continues to maintain that it simply won't negotiate over the limit. After this deal, why would any Republican ever believe this? I certainly don’t, and I desperately want to.
Obama is a talented campaigner. But he's also essentially conservative in his economic outlook. And he's a bad negotiator. Even if you assume, as I do and as Obama has said repeatedly throughout his Presidency in various way, that he wants a Grand Bargain to cut benefits on Social Security, Medicare and Medicaid, the way he approaches these negotiations still doesn't make sense. He's just too desperate to make a deal and too unwilling to walk away from the table when the other side is dealing in bad faith.

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1 comment:

Anonymous said...

I disagree that Obama is a bad negotiator. Look he got the GOP to vote to raise tax rates for the first time in 22 years. If you had said a year ago that 40 Republican senators and over 80 GOP house members would vote for a tax rate increase people would have called you insane. The are no spending cuts in this deal. In 2011 the GOP had come of their victories in the 2010 mid term elections and Obama was at a low point in the polls, the the economy was doing poorly, yet Obama got the GOP to sign off on $500 billion in defence cuts in the sequester without touching Social security or Medicare. The President was playing a long game, pundits tend to focus on the short term of who won and who lost. Now the President can tell the GOP to "Please Proceed" with a default on the debt ceiling and when credit markets seize up, all those small business owners will call their congressmen, realtors willcome calling for lack of mortgage financing, this will spell the end of the GOP as a governing party for a generation.