Obama v Boehner

If the test was likelihood of swaying the uncommitted, I saw no winner in last night’s broadcast contest. Obama and Boehner were both addressing mainly their own supporters. Neither rose above partisan talking-points.

The “balanced” approach advocated by Obama makes much more sense, though not because taxing corporate jets is a top national priority at the moment. Bearing in mind what is at stake, tirelessly underlining this point is ridiculous. The best thing about the White House’s approach is that it aims to backload the austerity (eg, by extending the payroll-tax cut). The GOP’s biggest mistake is to want to cut spending as much as possible as fast as possible: fiscally speaking, a self-defeating agenda.

So on the substance, Obama has the better plan–but his talk failed to make this clear. Presumably he thinks the argument for gradualism is already lost. Even if it is, though, his comments were odd. Almost in the same breath as “corporate jets” and “millionaires and billionaires”, he endorsed (admittedly without much enthusiasm) the Reid proposal, which includes no extra revenues. It was as though his remarks were written a week ago. Looking at where Congress stands at the moment, Obama’s main theme—we must have revenues as well as spending cuts–was simply beside the point. Congress is no longer even talking about this.

The truth is, the Reid plan and the Boehner plan are not that different. Downpayment of spending cuts; process for further deficit reduction later. Neither plan is what I would propose, but either would raise the debt ceiling and avoid default–which after many wasted months is what matters most. Contrary to Obama’s pitch, there is no real ideological distance between the two schemes.

The question is whether Boehner and Cantor (who now appear to be on the same side) can get their plan through the House, and then (presumably with modifications) the Senate. If they can, Obama would surely have to sign it, despite his earlier threats (conspicuously absent last night) to veto a short-term deal. How could Obama possibly justify such a veto? “I am plunging the economy into instant turmoil because this bill creates too much uncertainty.” That doesn’t work very well, does it? “I am plunging the economy into instant turmoil because this deal does not give me political cover on the budget all the way through next November.” I don’t think so.

If the House Republicans support the Boehner plan, Obama and the Democrats will have to give way–again. The only consolation for Democrats is that many Republicans will be as dismayed by this outcome as they are. If the GOP says no, and the US government then defaults, the economy gets kicked in the teeth and the GOP will get the blame.

Update: So much for Boehner’s plan aiming “to cut spending as much as possible as fast as possible: fiscally speaking, a self-defeating agenda”. I misspoke. The CBO’s score shows not just that the plan cuts less than Boehner’s staff expected, but also that the plan’s first instalment  is very back-end loaded (scroll down to Table 3). It cuts essentially nothing from the deficit in 2012. The plan will have to be changed to raise the total back to the originally estimated $1 trillion over ten years, but the profile of cuts looks very gradual.

Update: The White House in effect announced today that it would not veto the Boehner plan. At least, that is how I read the statement that if the bill were “presented to the President, the President’s senior advisors would recommend that he veto this bill.” The evasion is comically transparent. What is the point, really, of making a statement like that?

Clive Crook’s blog

This blog is no longer updated but it remains open as an archive.

I have been the FT's Washington columnist since April 2007. I moved from Britain to the US in 2005 to write for the Atlantic Monthly and the National Journal after 20 years working at the Economist, most recently as deputy editor. I write mainly about the intersection of politics and economics.

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