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January 01, 2013 12:21 PM New Year’s Day: The Deal and An Open Thread

By Ed Kilgore

So the fiscal deal got done, and passed the Senate early this morning by a 89-8 margin. It’s exactly what everyone heard all day yesterday, with the addition of a two-month delay in the appropriations sequester created by Congress at the end of the debt limit battle of 2011.

It is interesting that of the five Republican “nay” votes, two came from potential 2012 presidential candidates, Marco Rubio and Rand Paul.

While virtually everyone is predicting House passage of the Senate bill, perhaps as early as today, it could get tricky. Both House Caucuses are meeting within the hour, and the big challenge may be deciding how many and which Members get “free” votes to oppose the deal and how loudly they may denounce it. Indications are that House Democratic leaders were in the loop with White House negotiators during the Senate discussions; it’s not quite so clear Boehner—much less restive House conservatives who will be under pressure to vote no—were directly involved.

As I said yesterday, the true meaning of the deal won’t be apparent until we see how the next negotiations—which will now revolve around both the debt limit and the delayed sequestration, plus whatever else both parties decide to place on the table—begin to unfold.

Here’s how Krugman put it:

[O]n the principle of the thing, you could say that Democrats held their ground on the essentials — no cuts in benefits — while Republicans have just voted for a tax increase for the first time in decades.
So why the bad taste in progressives’ mouths? It has less to do with where Obama ended up than with how he got there. He kept drawing lines in the sand, then erasing them and retreating to a new position. And his evident desire to have a deal before hitting the essentially innocuous fiscal cliff bodes very badly for the confrontation looming in a few weeks over the debt ceiling.
If Obama stands his ground in that confrontation, this deal won’t look bad in retrospect. If he doesn’t, yesterday will be seen as the day he began throwing away his presidency and the hopes of everyone who supported him.

I wouldn’t go nearly that far; Obama’s presidency will always remain at least a limited success for the enactment of the Affordable Care Act, the mitigation of the 2008-2009 financial disaster; and avoidance of what a radicalized Republican Party sought to do to the public sector, and would have done had Obama blown this last election (as Krugman acknowledges). But there’s no question the next phase of the fiscal battle will be fateful for Obama’s legacy and for real-life conditions in the country—perhaps for a long, long time.

Any thoughts on the deal or anything else on your minds are welcome in the comment thread. I’ll have another holiday post later in the day, particularly if the House acts.

Ed Kilgore is a contributing writer to the Washington Monthly. He is managing editor for The Democratic Strategist and a senior fellow at the Progressive Policy Institute. Find him on Twitter: @ed_kilgore.

Comments

  • Consumatopia on January 01, 2013 12:40 PM:

    I'm a bit surprised not to see more progressives enraged about fighting the debt ceiling and the sequester *at the same time*. To put it simply, it's kind of inevitable that liberals will have to make some concessions over the sequester given the inherent asymmetry (neither Obama nor the GOP wants military spending cuts). Obama has been promising that he wouldn't make any concessions over the debt ceiling. But now that he'll be fighting both issues at the same time, when Obama makes a concession, there's a question of what he's conceding to. If he conceding to the sequester or the debt ceiling?

    This means that progressives lose twice over--the GOP can claim victory in a debt ceiling fight (thus more debt ceiling fights in the future), Obama can concede whatever he decides to concede without having to admit that he conceded over the debt ceiling.

  • JB Allen on January 01, 2013 12:42 PM:

    So wait, the President draws lines in the sand, retreats, and then repeats this until a deal is achieved? Isn't that just negotiation? Is that absent from economists' dictionaries?

  • Otis on January 01, 2013 12:42 PM:

    as a progressive, very disappointed in both the process and the result .. from my perspective, it removes all the pressure from the Republicans and gives them leverage into the next round of negotiations. My only hope is that the House will refuse to go along and once again save Obama from himself .. although it would not surprise me if in that case, he'd retreat even further in the name of reaching a deal. sigh .. better than the alternative, to be sure, but for the hopes he raised in all of us 4 years ago, it certainly feels like we're settling.

  • Darsan54 on January 01, 2013 12:51 PM:

    If Democrats did even half the things Republicans constantly accused them of, there wouldn't be a single Republican living outside of a jail cell.

    I am angry with the meager tax hikes. Obama had the advantage here but didn't have the stones to go through with it. It's a decent deal for dealing with absolutely batcrap crazies in the right, but we can not and should not give an inch on the debt ceiling. The public should be reminded again and again when the US credit rating is damaged just exactly whose fault it is.

  • Consumatopia on January 01, 2013 12:53 PM:

    So wait, the President draws lines in the sand, retreats, and then repeats this until a deal is achieved? Isn't that just negotiation?

    Not good negotiation. You make offers, they make counter-offers, and so on. It's a very bad idea to say that you will never accept an offer that you later accept--it means that you'll never be believed the next time you say that.

  • Sue on January 01, 2013 12:53 PM:

    Well said, Otis.
    We seem to have elected a moderate republican as the democratic standard bearer. Twice

  • Geoff G on January 01, 2013 12:54 PM:

    "Limited success?" Sure, if nearly every other president, most definitely including his two immediate Dem predecessors, were abject failures. Then again, Ted Williams had limited success at the plate - in his very best year, he was put out 60% of the time, yet somehow got into the Hall of Fame. Maybe similarly lax judgments by historians in the future will pull poor old Barack out of infamy.

  • Gandalf on January 01, 2013 12:58 PM:

    I never cease to be amazed at the whining of liberals. Let's see Obama didn't really give up anything but didn't get everything. Where's that perfect world?

  • JackD on January 01, 2013 12:59 PM:

    Maybe the House will reject it. Let's hope.

  • ex-curm on January 01, 2013 1:07 PM:

    He did give up the larger revenue figures he could have gotten from the fiscal cliff. Obama campaigned on restoring taxes for the top 2 % (the $250,000 level). 70% of Americans in polls supported this(not just progressives). The deal restores taxes for only the top .075 % ($400,000 & $450,000); and according to Robert Reich, former Clinton Labor secretary, the estate tax "compromise" is a large cave-in.

    Obama keeps saying he wants to cut Social Security via the chained-CPI, he doesn't want to cut defense spending, and he seemed eager at one point to consider Medicare changes, so none of this bodes well for the next set of negotiations.

  • bleh on January 01, 2013 1:08 PM:

    On the substance of it, I think both Krugman and Kilgore are right. Things came out pretty well this round. (And they certainly should have, given the leverage Obama had.)

    On the process of it, we gotta fight fire with fire, and that means acting as a counterweight to the Teatards: no less than 110% of what we want.

    Imagine Obama saying something like Roosevelt is supposed to have said: "I agree with you. Now make me."

    Or as Stalin said, "not one step back."

  • Josef K on January 01, 2013 1:15 PM:

    Any vote scheduled in the House yet? What happens if, say, the GOP caucus hands Boehner another bad vote?

    An outside possibility I grant, but with this caucus I'm not sure anything is beyond the pale.

  • FlipYrWhig on January 01, 2013 1:27 PM:

    Anyone who begins their statement "as a progressive" is giving away that they were intent on being disappointed and moaning about it all along. First we were supposed to be all up in arms about the Medicare eligibility age. That didn't happen. Then we were supposed to be all up in arms about Chained CPI. That didn't happen. But now we're supposed to be all up in arms anyway, because of something related to style? Look, if you want to sulk in a corner, just go do it, don't keep making up reasons why you're forced to.

  • IndigoJoe on January 01, 2013 1:34 PM:

    This is not a done deal yet. In my opinion, the House will try to add a poison pill amendment, such as the chained CPI. Up to now, this was kabuki to make McConnell look good and to set up the House.

    What happens when the House adds a poison pill? Obama caves on that now, or later over the debt limit. He's already shown all of his cards and what he's willing to give up, and that he still caves as always. Further, he has a deficit fetish that only those who flunked Economics 101 could have. This does not augur well for the Democrats, now or in 2014. Obama couldn't be doing more damage to the Democratic brand if he tried.

  • Mimikatz on January 01, 2013 1:37 PM:

    The Dems got important things that have to be passed by Congress such as 1 yr extension of unemployment benefits and 5 yr extension of the EITC and other stimulative benefits for the working poor and median income folks. These are very important, and will mitigate some the jump back in payroll taxes. Plus extension of the green energy credits. In return they gave up raising the 33% bracket to 36%, lowering the estate tax exemption and raising the dividend rate. Many Dem Senators did not want to raise the 33% bracket since they already have taxes go up because of the ACA and would bear the brunt of any lifting of the SS wage cap. That by the way, is still on the table as a tradeoff for any benefit cuts.

    Krugman is right that we have to wait to see how the debt limit/sequester fight plays out in 2 months. No one but media drama addicts wants a rerun of yesterday or of the summer 2011, when the Dow dropped about 1800 points and we had a downgrade. That's why I think the GOP is overestimating it's leverage. And the trade-off of entitlement cuts for defense spending, which is what Fix The Debt wants, is almost as unpopular at this point as trading them for tax cuts for the rich.

    If we are lucky there will be a medium sized bargain that combines some tax reform with minor, gradual tweaks to SS that makes it more solvent (wage cap increases and little cuts for top beneficiaries), cuts to defense and a deal on the debt limit that goes to the end of 2014 and involves Congress getting to repeatedly and unsuccessfully voting down presidential increases of the limit, like last time. Then we have to push for a better outcome in 2014 than 2010.

  • Ron Byers on January 01, 2013 1:44 PM:

    Just exactly what leverage do Republicans have in the next round. If Obama just says NO to the debt ceiling and pays the bills anyway, the power of the Presidency is expanded, and the Republican hostage takers are screwed. The sequestration battle will pit entrenched Wahsington insiders against the Tea Party. That will be fun to watch.

  • yellowdog on January 01, 2013 1:46 PM:

    If Obama gets a deal out of the crazies that raises (anybody's) taxes, keeps Medicare and Social Security intact, and keeps the markets from being utterly freaked out, then he deserves huge praise. Krugman wants a pure process and pure results. Does he realize we have separation of powers, divided government, lunatics involved--that whole thing?...you know, people ready to throw the whole game to save tax cuts for people already rich enough to buy their own islands? Krugman expects neat, rational behavior from people who think Michelle Bachmann belongs on the House Intelligence Committee.

  • c u n d gulag on January 01, 2013 1:49 PM:

    I’m still not sure if the House will pass this, or not.

    But, either way, you can bet that after losing the stimulus and healthcare debates a few years ago, and then getting their billionaires to fund the Bircher/Jesus-freak/Teabagger’s in 2010, enough to win the House, and then, after this year, expecting to win big, and instead losing in epic and embarrassing fashion, to President Obama, as well as some win-able Senate and House seats, they will do whatever they can in the upcoming “Debt Ceiling” frothing-at-the-mouth, wailing, shrieking, and tearing at the hair and garments, hissy-fit, to make the lives of Obama and the Democrats as miserable as humanly possible.

    And that, if the results of their endless intransigence and hostage-taking, the country declines, or goes back into another steep Recession/Depression, they figure they can always shift the blame to anyplace and anyone, except where it clearly belongs – on themselve, the members of ‘The Repbublican Clown-car Congressional Caucus.’

    Party over country!

    PARTY UBER ALLES!!!

  • John on January 01, 2013 1:56 PM:

    This is not a done deal yet. In my opinion, the House will try to add a poison pill amendment, such as the chained CPI. Up to now, this was kabuki to make McConnell look good and to set up the House.

    Because House Republicans want to be on record voting for a social security benefits cut? I don't think you understand how this stuff works. If there's going to be a poison pill amendment in the house, it isn't going to involve entitlement cuts.

  • jjm on January 01, 2013 1:56 PM:

    Obama gave nothing on so-called entitlements, the main goal of the GOP. How anyone can see him as not winning with this deal is weird.

    As for the debt ceiling: the GOP was very badly burned by its debt ceiling shenanigans, which were designed to pretend all the debt was Obama's, when the bulk of it came under GWB. The people were smarter than they thought, though, and their consequent 7%-9% approval rating showed it. Their talk of the debt ceiling limit fight is, I think, and hope, is pure bluster. They really lost big in these elections (in terms of sheer numbers, though gerrymandering preserved House GOP seats).

  • max on January 01, 2013 2:06 PM:

    I wouldn’t go nearly that far; Obama’s presidency will always remain at least a limited success for the enactment of the Affordable Care Act, the mitigation of the 2008-2009 financial disaster; and avoidance of what a radicalized Republican Party sought to do to the public sector, and would have done had Obama blown this last election (as Krugman acknowledges).

    Two answers. First: I completely agreed with everyone arguing with the people who want a Nader repeat that would elect Romney resulting in (eventually) some kind of liberal utopia. Problem with that is, is that Obama himself is a man in search of a (beltway centrist) unicorn. So our economic policy over the last 4 years, right along with the 20+ years before that, has been dictated by Wall Street and I don't see that any good has come of it.

    Second, implicitly answering one of your commenters: I would say that, historically speaking, we have spent the years since at least 1983 in a period I was first inclined to call the Bourbon Regency, but now think should be called the Reagan Regency. One the one hand, the executive branch has become overweeningly powerful and a direct threat to the life and liberty of Americans; at the same time, the evolution of power centers based on that power have tended to result in Presidents constrained both by (wealthy) insider considerations and the demands of the various security organs, such that while Congress is incapable of direction, no President that can be elected can provide any direction other than more of the same, even when the same old same old is totally broken down. The US has been in similar situations (1837-1860, 1876-1901) before, and while they eventually ended, it does not bode well for normal people.

    (I don't score the 'avoiding worldwide depression' as a big win, since we didn't really avoid depression. That was almost entirely a missed opportunity, and the fact that wealthy are the ones that made like bandits on their own disaster should tell you why that was not really a heroic triumph. Similarly, I don't expect to see much in the way of long term benefit from the health care bill because it will be sabotaged left and right, and the high muckety-muck Democrats are incapable of defending it. It might well be that Obama's lasting real achievement (one he in fact was not particularly trying to accomplish) was the advance of gay marriage. That is not nothing, but when we're talking about 2% of the population, it isn't very much to hang a legacy on. His other real achievement is essentially a negative: refusing to run a neo-conservative foreign policy.)

    I'd say our nation is split, and much like all those Presidents between Jefferson and Lincoln, he simply is over-matched by the issue at hand.

    max
    ['So three cheers for not having a Republican in the White House.']

    p.s. I do like Obama, but I think, at this point, that I have to say Krugman's pre-2008 primaries assessment of Obama was correct.

  • mudwall jackson on January 01, 2013 2:07 PM:

    "Democrats also secured a full year’s extension of unemployment insurance without strings attached and without offsetting spending cuts, a $30 billion cost."

    hey sue, what republican alive today, moderate or otherwise, would give a rat's ass about the unemployed?

    krugman can talk all he wants about the "essentially innocuous fiscal cliff" and in the greater sense he's right. but for the legions of long-term unemployed, any delay in receiving benefits would have presented a rather steep decline of the fiscal sort. a real consequence for people progressives are supposed to care about.

  • LAC on January 01, 2013 2:09 PM:

    I'll be sure to let the minimum wage worker at Starbucks know that, as soon as the poor dear can get my latte out, I will get on my iPad and get super mad at the Obama for not raising my taxes and blah blah whine whine. I will of course be doing this in the comfort of said Starbucks while smugly looking around, waiting for indigo joe to get there as fast as his Birkenstocks can carry him. God, I love being an emoprog!!!

  • spiny on January 01, 2013 2:11 PM:

    It seems to me that Obama gets very little from this deal, aside from some "bipartisan" lip service, over just letting the tax cuts expire. Well, actually they did expire today. So what's the rush?

    Certainly, a one year extension of long-term unemployment aid is good- but it is really small potatoes (about 2 billion) in a $500+ billion dollar deal. Don't you think Democrats could have found something to preserve these benefits post cliff?

    Honestly, the obvious conclusion is that Democrats are making sure their hands are tied for the upcoming debt ceiling/sequestration negotiations so they can be "forced" to agree to social security/medicare cuts.

  • exlibra on January 01, 2013 2:19 PM:

    Obama campaigned on restoring taxes for the top 2 % (the $250,000 level). -- ex-curm, @1:07 PM

    Yes, and it's disappointing that he didn't get it. OTOH, GOP wanted a million (and their "edge" thought it was a terrible, terrible cave in already, because, you know, the only tolerable compromise is to make the other side accept everything on your terms) and didn't get it, either. Seems to me, that it's the GOP who had to back off (compromise) further, on pretty much everything they'd been drooling over for years (as Mimikatz lists, @1:37PM).

    We'll see what the House does (if anything), now that both the Senate and they have managed to postpone the vote till *after* midnight of the New Year -- theoretically, they'll no longer be voting on tax rate increases for the rich (since tax rates have gone up, automatically, with the expiration of Bush's cuts), but on tax cuts for almost everyone. A strictly semantic difference, but one which allows them to save face, if only they're smart enough to take that option (not a given).

  • Francis Bacon on January 01, 2013 2:27 PM:


    I think the people who kept saying it's no big deal to go over the cliff and let the sequestration happen for a couple of weeks or so have no idea what they are talking about. Every involved part of government (DOD being the biggest) would have to start tightening the screws. In practice that means panic at the low levels and contractors get cut left and right and nobody can buy anything because they've been spending assuming there would be no cut. Wall Street knows it could go on a while with knock-on effects and bets accordingly. There go everyone's pensions again. It sucks all around, and there is absolutely no guarantee that people would broadly blame the GOP, or that it would even matter if they did. What would the end result of negotiations under those conditions be? I bet not much. Certainly the tea party caucus wouldn't vote any differently.

    The Dow will be up 400 points tomorrow (3%), book it.

  • Jim, FL on January 01, 2013 2:29 PM:

    Don't you think Democrats could have found something to preserve these benefits post cliff?
    Ah, yes. "Something". Why didn't the Dems think of that?

    The thing about Obama being a moderate Republican is cute, and has a grain of truth in terms of the last fifty, or maybe seventy-five years, but it says more about the Republican Party than it does about Obama. Saying it with petulant self-righteousness reflects a curious ignorance of the actual state of the Democratic party, to say nothing of the broader political world. Do the names Baucus, McCaskill, Pryor, Johnson, Warner, Nelson, Landrieu, Feinstein and in this debate, Schumer, shed any light? You really think Obama is to their right? And that's the short list. These are the people you want to trust to protect the social safety net and the middle classes?

    Also, however unpopular the Republican House caucus gets, the US Constitution doesn't provide for a call for new elections before 2014, and if it did, I doubt many Tea Party types would lose their seats, or Boehner the Speakership nobody else wants.

  • Kathryn on January 01, 2013 2:35 PM:

    Sen. Bernie Sanders voted for the deal which is a bellwether for me. I can't help but wonder how Cong. Boehner and Cong. Cantor will muck it up though which is why I'm eating lunch with the TV off.

  • SteveT on January 01, 2013 2:50 PM:

    The "next phase of the fiscal battle" MUST be a step towards what should be the ultimate goal of the war -- to utterly discredit the fraud of trickle-down, Supply-side Economics AND its advocates.

    In other words, we need to get back to where we were in January of 2009, when the American voters had completely rejected the Republican Party. We have to go back to the time BEFORE Pres. Obama reached out his hand, helped the Republicans back to their feet and started to restore their credibility by declaring that Republicans had "good ideas, too".

    The Republicans aren't necessarily ALL evil, but they are True Believers and what they believe in is dead wrong. The Republicans are no different from faith-healing parents who let their child die from pneumonia rather than commit the "sin" of using modern medicine. So the in the upcoming debt ceiling negotiations, Democrats have to remember that Republicans are completely willing to send the economy into a tailspin -- AGAIN -- if the alternative is committing the "sin" of raising the taxes of their billionaire masters. They are perfectly content to let the American economy be destroyed, as long as THEY get to rule over the rubble.

    The future of the American economy is unsustainable. The only difference in the results we'll get from the Republicans' current plan to dismantle every part of the government except Defense and bedroom monitoring and instituting an Ayan Randian paradise and the Democrats' non-plan of minimizing the damage of the Republicans' plan is how quickly the inevitable implosion will come.

    Until Democrats recognize that the United States' economic survival depends on them supporting middle class workers, NOT gently urging corporations to stop squeezing their employees quite so badly, we will continue our downward slide. And until Democrats realize that while they are holding a negotiation, the Republicans are fighting a Holy War, they will continue losing battles.

  • guachi on January 01, 2013 2:51 PM:

    This deal stinks. The final deal does NOT have tax increases. The taxes are lower than if Congress had done nothing at all.

    This deal is, according to the CBO, a $4 trillion dollar increase in the debt.

    Not surprised the final deal involved less taxes and less spending cuts than any previous deal that's been floated.

    Hooray for deficits forever!!!!

  • Josef K on January 01, 2013 2:51 PM:

    Again, any House vote scheduled yet? Anyone care to even guess at the contingencies involved if Boehner can't deliver an actual vote?

  • elisabeth on January 01, 2013 3:06 PM:

    Ironically, Iowa's two senators both voted "no" on the bill -- one democrat because it didn't protect the middle class (Harkin) and one Republican because it "raises taxes" (Grassley). Iowa remains a wonderful example of the total division within the country. I'm feeling wistful about the secession movement -- I'd be willing to move if necessary to live in a reasonable US, not the Republican version.

  • Anonymous on January 01, 2013 3:41 PM:

    The next battle...is nothing settled then? Did they just kick the can down the road?

  • BrookLyn1825 on January 01, 2013 4:35 PM:

    I'm starting to hate Progressives nearly as much as I hate the GOP. Seriously Kilgore you consider Politico a credible source?! WTF.

    With all the things we got in this deal we should be singing the President's praises as a brilliant strategist and leader. Instead we have those with no sense of the way politics works claiming he caved. Mind you these are the same "thought-leaders" that told Democrats to stay home in 2010 and who didn't think Obama win a second term. The same thought-leaders who screamed for weeks POTUS would cut Social Security and Medicare.

    Democrats know how to get elected and govern. Progressives only know how to propose the impossible, lose and blame others--doubt me...Kucinich is gone; Sanders voted for this bill.