Thursday, October 3, 2013

Obama Hangs Tough

(This photo and video from

Today the President spoke at the M. Luis Construction Company in Baltimore, Maryland. Luis Construction was founded by immigrant parents, with little English, who set out to build something useful and valuable in the construction field with a truck, a wheelbarrow, and a shovel. When their daughters were born, they grew up helping out in the business, went to college (Mom and Dad had little schooling) and then bought it from their parents. It's now a $40 million dollar construction firm, a real going concern - crystal clear evidence of the American Dream that drew Mom and Dad to this country. The top photo is the President with some of the company's employees. The video is his hard-hitting and uplifting speech.

It's possible, but by no means certain that some Republicans are beginning to get the box they are in, though I think most are still in denial. The President will not negotiate on either the CR or the debt ceiling. This runs completely contrary to GOP expectations: Obama "caved" in 2010 December by agreeing to extend the Bush tax cuts for two years. He "caved" again in 2011 when his negotiations with Boehner collapsed and he had to accept the sequester deal in order to avoid a debt ceiling debacle. And more recently, he "caved" in the fiscal cliff deal by moving his "wealthy" cutoff point up to $400,000 from $250,000. This time, he will not cave.

Why not? In each of the three "cave-in" incidents, there were strategic reasons to make the calls he made:
  • In 2010, the economy was still very fragile; there was zero chance of further fiscal stimulus; and keeping the tax cuts in place would prevent the fiscal drag of higher taxes from taking place.
  • In 2011, Obama thought he had a deal with Boehner that would have generated the $4 trillion in deficit reduction the Bowles-Simpson Commission said was needed - $3 trillion in cuts and $1 trillion in new tax revenues. When Boehner pulled out, Obama was left with just the cuts (immediate budget caps ($1.8 trillion) followed by the sequester ($1.2 trillion) if a Congressional Supercommittee could not get a deal.)
  • In the "fiscal cliff" deal, moving the $250,000 threshold up to $400,000, Obama wanted a deal to prevent middle class taxes going up; there was a time bind; and he chose to make a concession.
It's different now. Republicans are not making any budget argument in what should be budget discussions. They are attacking Obamacare, and holding it hostage, and trying to insist that it's unfair, unpresidential not to negotiate. This is not a legitimate argument, and the American public mostly gets that it's not. Moving to the debt ceiling - and with two weeks to go, it is no longer possible to keep these discussions in separate boxes - the President has said repeatedly, and very clearly that he will not negotiate on the debt ceiling. He makes both of these arguments in his speech today (above).

The President is not bluffing. He will not give anything on either the CR or the debt ceiling, because there is nothing to give that doesn't compromise his principle that it is illegitimate for one party to hold the Government hostage.

Will Republicans realize this in time? I think so, but I am not at all sure.

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