Obama Loses

Hurrah! We have a deal! Financial meltdown has been avoided! Well done Congress! As has to be the case in these circumstances it’s a case of making the best of a rotten and also ridiculous situation. Whether it lasts is a different matter, not least since this Congress cannot bind its successors.

In the larger scheme of matters it’s a smaller deal – $900bn in cuts now and, perhaps, $1.5trillion in the future – than most of what has been proposed in recent weeks. That’s not a surprise. Nor is it a great shock to discover that President Obama – and Congressional Democrats – have been forced to accept a compromise that offers them much less than it does the Republicans.

Obama began by insisting that tax increases account for a third of any deficit reduction deal (an approach not dissimilar from David Cameron government’s recipe); Republicans would have none of this. They won. The package contains no new taxes. The ratio of cuts to tax increases is, remarkably, 100:0. True, Republicans have merely postponed some difficulties (see Ezra Klein’s wrap-up for more on this) since they may have to choose between “revenue measures” proposed by the new Congressional Commission or huge cuts in defence spending.

The detail of the deal is one thing but the political repurcussions seem quite clear: this is a grievous defeat for Obama. He looks, as Ross Douthat puts it, a diminished President:

[W]inning a debate on points isn’t a substitute for looking like a leader. It’s one thing to bemoan politics-as-usual when you’re running for the White House. It’s quite another to publicly throw up your hands over our “dysfunctional government” when you’re the man the voters put in charge of it.

Quite. Voters may not be impressed by Congress, nor much encouraged by the sight of Republicans risking turmoil and economic crisis if the debt ceiling wasn’t raised, but that kind of disapproval is priced-in already. For better or worse they tend to expect the President to show leadership in these kinds of situation. Instead they saw a President strangely removed or distant from the fray, content to follow not lead. As Ian Leslie says he’s been the absent President.

True, Obama had a weakish hand. He had to avoid a default and Republicans knew that, in the end, the President would bend to avoid breaking the United States government’s commitments. Brinkmanship was rewarded and both sides knew that this would be how the game would be played. But that’s also why it might have been sensible for Obama to have taken a more active role way back in the beginning. That is, when his own Bowles-Simpson Commission made its recommendations. By punting then Obama was left to respond to an agenda set by his opponents.

And, as Matt Yglesias says, this can happen again:

Obama has successfully transformed massive debt ceiling hostage taking from an act of breathtakingly irresponsible brinksmanship into a proven effective negotiating tactic. Suppose he gets re-elected in 2012. What’s he going to do when this issue recurs in 2013? Every time the president’s party has fewer than 60 votes in the Senate, we may face a recurrence of this crisis.

True. Obama dared not call the Republican leadership’s bluff even though he – and the GOP leadership – knew it had to be a bluff since the leadership at least also knew some kind of deal had to be fashioned to avert a default. But there was just enough crazyness in the GOP Caucus to make the Democrats (and parts of the GOP!) think that perhaps House Republicans really were crazy enough to welcome the consequences of their intransigence. That’s an excellent negotiating position! No wonder the White House was forced to welcome any kind of deal. The detail mattered less than the existence of the deal. That’s not a strong position to be in.

Of course Obama could, in theory, let the Bush tax cuts expire in December 2012. That might produce trillions of dollars of additional revenue. But he and his advisors are, for persuasive reasons, wary of campaigning on a platform of significant tax inceases even if some – though by no means all – those increases hit the highest-earning Americans. Time and time again the Bush tax cuts – passed in an era when, as Dick Cheney put it, “deficits don’t matter” – have proven to be a landmine that detonates beneath Democrats not Republicans. That’s why Obama doesn’t want to let all the Bush tax cuts expire.

This isn’t like the Clinton vs Gingrich showdown. That was a) absurd and much more importantly b) in happier economic times. The President could blame Congress then in ways that, fairly or not, do not apply now. Besides, wasn’t it Obama who kept telling everyone he would change the way Washington works? Why, yes it was.

But given the current state of the American economy it’s not clear voters will be impressed by a President who too often appears to be reacting to events and, in the end, allows himself to be bullied or beaten up by the wilder wing of the Republican party. Perhaps that’s why Obama’s Galupl-measured approval rating fell to 40% last week. Playing the angles comes at a price when it seems you’re unwilling to take a stand for fear of finding yourself in an awkward political position. Eventually that kind of thing catches up to you.

Obama found himself in a poor position this weekend but what should trouble his supporters is that it was to a large degree a position of his own making. He put himself there. His re-election prospects, already more dependent upon the quality of his opponent than his supporters might like, took another hit this past weekend.