In strategic terms, here’s what just happened. Obama tried to force battle on his terms, and Republicans refused the engagement. No one has lost or won the big battle over “how the republic shall live,” because we haven’t had it yet. Accepting battle on Obama’s terms was never a good idea. Some thoughts:
1. Rush Limbaugh has been right about something all along: the 2 August date was an artificial construct. It was never a date on which the US had to default on our debt service, nor was it a date on which government would have to grind to a halt.
2. In outlining the case, it’s worth pointing this out one more time: if federal spending had remained at the level of 2008, 8-2-2011 would have been just another day. It was not necessary to add $3.7 trillion to the federal debt in the last 31 months.
Even taking reduced revenues into account – the product of a faltering economy – the cumulative annual shortfall in 2009, 2010, and 2011 need not have exceeded $2.5 trillion.
Of course, $2.5 trillion is a ridiculous number, but adding that amount to the total debt at the end of the Bush administration — $10.6 trillion – produces a sum of about $13.1 trillion, or about $1.2 trillion less than the debt ceiling of $14.294 trillion set by Congress in February 2010. At the 2008-level spending rate, a debt ceiling of $14.294 trillion need not have been encountered until sometime in FY2013. It’s because we spent faster than we were spending even during the Bush years that we encountered the debt ceiling in August of 2011.
3. Obama’s policies, whatever their purposes were, are what precipitated the crisis deadline that just passed. Much is made of the fact that the sheer size of our mandatory spending makes it a fiscal behemoth compared to discretionary spending, and that there have been natural increases on the mandatory side. But there are reasons why that doesn’t parse as an excuse for the Obama deficits. Here are a couple:
First, Obama has added to mandatory spending as well as to discretionary spending. A spending gimmick in the Obamacare bill has already produced $105 billion in new mandatory spending in 2011 – about the same amount as the increase in Social Security benefits payments between 2010 and 2011, when Baby Boomers started turning 65. That $105 billion is to be expended annually on a mandatory basis for the next 9 years.
(For his proposed 2012 budget, Obama has also reclassified certain types of spending from discretionary to mandatory: Pell grants and some transportation expenditures. That accounting legerdemain moves about $68 billion onto the “untouchable” rolls of mandatory spending in FY2012. Moreover, some of the stimulus funds have been funneled through Medicare and food stamp programs, beefing up expenditures by those programs beyond what demography and eligibility factors would dictate. Not all of the increase in “mandatory spending” programs has been due to eligibility triggers in the American population.)
Second, however, the lion’s share of mandatory spending increases – the increases in Social Security and Medicare payouts due to demographic factors – was entirely predictable. (Spending on welfare, unemployment, and food stamps was not quite as predictable, but certainly could have been foreseen with some accuracy given economic trends.)
With mandatory spending bound to increase by a largely predictable amount, and revenues declining, a president could have foregone the $787 billion stimulus package, and proposed net cuts in the spending he had control over. That wouldn’t have prevented annual deficits, but it could have held them constant or reduced them instead of increasing them. Obama and the Democratic Congress had that option from January 2009 to January 2011—but they didn’t use it. If they had, it might have been possible to add even less than $2.5 trillion – the figure suggested by a continuation of the 2008 spending level – to the national debt.
4. So much for the structural causes of the 8-2-2011 deadline. Now for the handling of that deadline. At no time prior to 8-2-2011 did the deadline have to become a threat hanging over our debt service, Social Security and Medicare payouts, or the operation of the military. Sometime after the 8-2-2011 date such a crisis could have arisen, but nothing mandated it on 2 August. How the funds on-hand were managed would have been up to the president.
In stage-managing the 2 August date, Obama (and the Senate Democrats) chose the option that invited a pitched battle at the deadline. The point here is not whether Obama is a terrible person, it’s that if the battle had been fought over the 2 August deadline, it would have been fought on the terms he set up.
His handling of the debt-ceiling deadline is what defined the problem and set up the stakes and risks. There never had to be a “crisis” on 2 August; objectively, the problem could have been defined differently. It just wasn’t.
The president holds the high card if the crisis is defined on his terms. Although there need not have been a threat to debt service, Social Security, and military pay, Obama had the discretion to make good on the implied threat. He could also, by contrast, have issued assurances about what his priorities would be, in order to mitigate fear and uncertainty – but he didn’t. In either case, he had the discretion to act on his own authority, at least within a timeframe of weeks.
The very fact that he cast the situation unnecessarily as a calendar-date crisis is an indicator of how he would have handled a post-2 August showdown. But a perfect prognostication in that regard wasn’t necessary for Republicans to judge – probably correctly – that giving battle on his terms was a bad idea.
A number of people did want to see Obama’s “bluff” called: they wanted to go past 2 August without a deal and see what he would do. That would have been fighting the battle on his terms; we will never know if it was possible to win that battle, since it wasn’t fought.
But because it wasn’t fought, Obama was unable to steamroll the GOP on a tax-rate increase. The point is also correct – and salient – that the big thing the Tea Party Republicans have done is change the debate. Unlike every previous debt-ceiling negotiation, this one has not closed the books on the underlying issues regarding the size of government, for which the debt ceiling is a proxy. The contingency built into the latest deal is real: the Democrats will have to fight again to realize gains from this agreement. That has never been the case before. Yes, the Republicans have to fight again too. But the outcome is not foreordained.
This is a tough time for the republic. A whole lot of people who don’t care to think about government all the time are having to do just that. Republicans, libertarians, conservatives, independents, low-information voters and former low-info-vos – millions of people who can never match the left in natural passion for “government” are having to spend time and effort on it, because the direction it’s going threatens to destroy our way of life. If this summer doesn’t teach us the wisdom of keeping government small and not letting it acquire an ever-lengthening lease on us, nothing will.
But make no mistake, the campaign for smaller government continues. It hasn’t been stopped. In a sense it’s just getting started. Of course the Democrats have unleashed the talking points about how this round went to their advantage, and Republicans will have no choice but to concede everything in the next scheduled confrontation. That’s how they prosecute their campaign, and as long as their man is in the White House, they can’t be overridden on the definition of the crisis. Don’t despair over that. Obama defined the crisis this time, but he didn’t get the Republicans to accept battle on his terms.
It may not be “the end of the beginning” yet; but maybe it is. People won’t agree in medias res on when the end of the beginning falls. Churchill perceived the end of the beginning on 20 November 1942, when Hitler’s armies occupied most of Europe and roamed Western Russia, his navy was sinking allied shipping right and left, and his air force was successfully bombing targets in England and killing hundreds of civilians each month. The bloody campaigns to recapture the territories of Southeast Asia and the Pacific islands had barely begun.
Few could imagine what victory would even look like, much less discern progress toward it. Still, the US had just invaded North Africa, and Stalin had just launched a counteroffensive in Western Russia. Conditions were grim, but was Churchill wrong to focus on the resources, plans, and hopes he did have, rather than what he didn’t, in characterizing the situation in that dark November?
If great fights could only be won by a series of uncontested victories, with no setbacks, no stalemates, and no periods when things look bleak, World War II would have been over by mid-1940. We’re still in the fight, shipmates. It’s not over. Don’t give up the ship.