State of Play & the Art of the Deal

The GOP Can Be the Winner

As he paces back and forth in the Oval with questions of his relevance and influence swirling among the chattering classes, President Obama can take heart from an unexpected quarter.

Tea Party Republicans, elected to oppose POTUS’ policies, quietly believe he is going to win a second term.

What else explains the drivers in the political debate over the debt ceiling?

The harshest opponents to the debt ceiling increase in the House, at least those willing to consider a deal, have held out for steeper cuts in spending – including entitlement reform –  and the approval of a balanced budget amendment; all of it sequenced before November 2012.

What but Obama’s reelection justifies the timing? And, paradoxically, the more the Tea Party Member press their artificial  timeline, the more likely they make Obama a second term president.

Certainly, the reality of the politics on the ground doesn’t support the Tea Party path.

Proof?

Before the ink was dry on the Boehner plan, Harry Reid promptly took a stake to it when it arrived in the Senate on Friday night.  The vote to “table” the Boehner plan – by a convincing 59-41 margin – ironically including three Senators with impeccable Tea Party credentials: Jim DeMint (SC), Mike Lee (UT) and Rand Paul (KY).

And if this current round of debt ceiling talks has taught us anything, it’s that no one wins when political gridlock threatens to unravel America’s AAA credit rating and throw the federal budget into chaos.

The economic reports out Friday, showing that US economic growth has almost come to a halt in 2011, is a useful reminder to Congress that no matter how impassioned Members are to restrain spending, their conduct in these negotiations will have an impact on economic expectations, and thus consequences that are both wider and more immediate to average Americans.

And ironically, simmering Tea Party impatience comes as the Republicans have already won a great victory.

In January, as the Frosh-87 took their seats, President Obama presented a budget that called for increasing the national debt by trillions more over the next ten years. It was later voted down in the Democratic controlled Senate, 97-0.

The President wanted a “clean” debt bill untethered from spending restraint. The last 90 days have instead featured a linkage first presented by Speaker Boehner, that any increase in the debt ceiling be matched dollar for dollar in spending cuts.

The President wanted a “balanced approach” that both raised revenue and cut spending. Yet the only Democratic alternative on the table – Harry Reid’s plan, contains no increased revenue.

So, in the space of six months, Tea Party Republicans have pulled the national debate entirely in their direction. The man who manged the organized extortion of Obamacare in the Senate is now championing spending cut triggers and debt reduction with no tax increases.

Should Harry Reid now give Mitch McConnell his sword?

Its astonishing.

So, where do we go from here?  The answer depends on what question is asked.

The apparent Tea Party question continues to be very narrowly focused and tactical; how deep can Congress  force spending cuts before 2012?

The answer necessarily involves a willingness to breach the debt ceiling on August 2nd, threatening our AAA credit rating and assuring budget chaos and possible global economic shock waves, all in the hopes that the ensuing pandemonium and panic will move Democrats to be more accommodating to Tea Party goals.

But that road is unrealistic and leads to ruin; for the economy, for average Americans and for the Republicans.  It is sheer folly to believe that in holding out for a deal that cannot pass the Democratic controlled Senate or signed by the President, voters will blame Democrats.

The right question to ask is broad-based and strategic: how to advance the Tea Party agenda of limited government, reformed entitlements and reduced spending over the next 15 months?  To set up the argument that will present the American people with the clearest choice in generations of who is the more responsible stewart of the public interest.

To get there, Republicans will have to take “yes” for an answer in the debt debate, and postpone  – but crucially not cede – some goals.

The elements of a compromise are present by cherry picking the plans on that have been placed on the table over the last two months.

1) Implement the Boehner plan’s $917 billion in cuts over ten years and raise the debt ceiling by an equal amount before August 2nd.  That will provide breathing room for lawmakers and assure markets and citizens.

2) Move forward with the creation of a Congressional commission, called for in both the Boehner and Reid plans, empowered to recommend budget reforms to include entitlements and the tax code. Consistent with the Boehner plan, those recommendations that are affirmatively voted out of the commissions should be transmitted to the Senate and House in legislative language, prepared for implementation.

3) Eliminate the Reid budget gimmick that baselines and extrapolates American involvement in Afghanistan and Iraq for ten more years, with current funding to support it, and then counts this unappropriated money as over $1 trillion in “savings.”

4) Incorporate the structure of the original McConnell blueprint that provided the President with authority to raise the debt ceiling in tandum with cuts to pay for it. This structure would cover the remaining $1.4 trillion in borrowing authority necessary to get the US through 2012.

and,

5) Charge the Congressional Commission with drafting a balanced budget amendment to the Constitution as part of its recommendations to Congress.

The 5 part plan has something for everyone.

The Democrats get a path through 2012 without another nail-biting debt ceiling showdown – a key goal of the White House and Democrats, though the McConnell vehicle does not come without strings and downside.

The second tranche of spending cuts are delinked from Comission deficit reduction recommendations and are conceived and presented at the pleasure of the President, providing flexibility and allowing Democrats to circle wagons around entitlements and cast the Republicans as “robber baron” villians in 2012.

And though there is a balanced budget amendment, it is now part of a menu of options, and critically, de-linked from a debt ceiling increase.

Republicans get $917 billion in hard spending cuts without revenue increases, on a dollar for dollar basis with a debt ceiling increase. Republicans get a Congressional commission to recommend serious and comprehensive budget reform.

Though Republicans can no longer count on hard cuts for the remaining $1.4 trillion in borrowing authority through 2012, the McConnell mechanism will force President Obama and Democrats to politically own the $1.4 trillion in new borrowing authority.

Under the mechanism, a debt ceiling increase is approved, unless it is disapproved by Congress. This allows the GOP to go on record against insufficient spending restraint by the President, while vulnerable Democrats will have to cast career ending votes to sustain a presidential veto if a disapproval vote is successful.

This also insures that the debt debate will remain in front of the public through 2012.

Additonally, the GOP has the Commission and a timeline for recommendations by the beginning of 2012.

While the recommendations will not be hardwired to the debt ceiling, the importance here is that the Commission’s work represents both policy recommendations and political tools for use against recalcitrant Democrats in 2012.  It is a platform for Republican style governance.

And if the Republicans win the election debate in 2012, and take the White House and Senate, the Commission’s recommendations can be HR 1 in the next Congress, including a balanced budget amendment, as they will have been publicly debated for over a year.

Call it “Almost Gratification.”

For Tea Party Republicans, “victory’ will not be had by imprudently taking America to the debt ceiling brink time and again over the next year in support of proposals that stand no chance of approval. At the end of the day, that approach will only cement a narrative of the GOP as incapable of credible governance and ensure a disappointing election result in 2012.

Victory for Tea Party principles will be had if the GOP pockets the concessions it has extracted in the month’s long negotiations so far, approves a mechanism for debt ceiling increases for the rest of POTUS’s term that places the burden on the President and Democrats, while creating a blue print for genuine, comprehensive reform for spending, including entitlements and the tax code, that can be implemented by a new Republican president and Senate.

It took the Tea Party 20 months from creation to victory in November 2010.

Is 15 months more an intolerable period of time to wait to realize the most important parts of the Tea Party agenda, particularly as the GOP is pocketing spending cuts along the way?

The logic speaks for itself.

But will logic speak for the Tea Party?

Or does the Tea Party have more confidence in Obama’s re-election than in their own principles in a fight for the heart of the American people?