The House and Senate are set to vote today and final debt ceiling agreement essentially combining elements of the Boehner plan which passed the House last week and the Reid plan that passed the Senate at 1 A.M. this morning. The two plans are named for House Speaker John Boehner, R-OH, and Senate Majority Leader Harry Reid, D-NV. The final bill includes no tax increases, the biggest spending cuts in a decade and a provision to establish a deficit “super-committee” in Congress, empowered to enact another trillion dollars in cuts next year. The White House is taking a victory lap while Tea Party representatives are calling the deal a disaster. Even given the type of political posturing typical in Washington this seems odd on the face, but it makes sense if one understands the real priorities of each side.
For his part Obama has only had one consideration and that was to get reelected in 2012. He knows the perennially sluggish economy is an albatross around his neck. He has also seen his polls numbers in freefall as voters, unimpressed with his leadership and increasingly hostile to his priorities, watched him shrink in stature and fail to regain his footing after the public rebuke he took in the 2010 elections. For all his talk, Obama had only two real goals in this fight. The first was to take the issue off the table until after the 2012 election because he recognizes this is a losing issue for him. The second was to attempt to rebrand himself as a centrist similar to Bill Clinton 1996. The difference is that Clinton actually did move to the center after the 1994 elections in significant ways. Obama has taken a different approach, talking about bipartisanship publicly, while digging in to protect his own agenda behind the scenes. Liberals are now howling that they have been betrayed but this too seems a manufactured tactic intended to assist Obama achieve his larger goals.
The Tea Party on other hand is quick to point out that the bottom line is that this deal increases government spending by another $2 trillion. In the view of the Tea Party and in line with their fundamental principles, the United States is on the way to becoming fiscally insolvent due tounsustainable levels of spending and simply slowing the rate at which spending increases is not enough. Ironically, I wrote over the weekend that Moody’s, and others, have warned that the cuts being discussed are not large enough to protect the nation’s AAA credit rating. Still, I maintain my position that this debate has been a huge victory for the Tea Party, even if they do not recognize it as such.
In truth the bill only reduces spending by a few hundred billion and then spreads the rest of the cuts out over ten years, which really means they may never happen because a current congress has no authority to bind the actions of a future congress. This is the norm in Washington when it comes to budgeting. That said, it should be noted that the debt committee established by the bill is empowered to find another trillion in deficit reductions. If they cannot agree on the specifics, the bill contains a trigger to make automatic cuts. While the committee could still accomplish deficit reduction by raising taxes, the fact that the bill is “weighted” towards spending reductions is a sign of just how much Tea Party Concerns have come to define conventional thinking in D.C.
The Tea Party thinks they lost because they were not able to “solve” the issue once and for all. I commend them for their principled stand for what, from their perspective, is in the best interest of the country, but they should step back and look at the bigger picture. This bill caps a year in which President Obama has been reduced to defending his agenda and using backdoor rule-making to attempt small advances by extra-constitutional means. The Tea Party, aided by fiscal reality, has made shrinking leviathan a legitimate and realistic goal in Washington for the first time in half a century. The Republican party only controls one half of one third of the government; yet the relatively small Tea Party faction has managed to control the narrative and define the debate over the size and scope of government and the nature of the social contract between the citizen and the state.