Both sides have learned the fine art of asking for far more than they can reasonably hope to get at the outset — the better to wind up in a somewhat happy place when the inevitable compromise occurs. Liberals had complained for years that Obama would always lead with a compromise, whether it be a tax-cut-laden stimulus package or not proposing a single-payer health care plan. This time around, the White House started out further left and gave itself more room to maneuver. The president pushed for nearly unchecked authority to raise the debt ceiling on his own while starting the post-re-election revenue bidding at $1.6 trillion — double what he and Boehner had been discussing in the 2011 debt limit talks. Republicans, meanwhile, continued to push for Social Security cuts in the stopgap cliff deal — only to abandon them soon after Democrats began squawking that they were demanding cuts to seniors as their price for helping the unemployed and the middle class. Democrats said they weren’t about to give up Social Security — in the form of lowered cost-of-living increases through “chained CPI” — on the cheap with the debt ceiling unresolved.
Of course, stopping each side’s unrealistic proposals became useful trophies for the other side to help sell to their Members as they round up the votes for the deal.
It wouldn’t be a negotiation if each side weren’t holding hostages and threatening to shoot them. Republicans, bolstered by their tea party ranks, had Democrats backed up time and again, especially over the debt ceiling. And taxes are the biggest hostage of all, but not the only one. Each party gave up their tax hostages in this deal but are keeping their spending hostages for the next round — when the debt ceiling and the sequester will again be front-and-center.
And that brings us to this:
Past Is Prologue
Each kick of the can has boxed in one side or the other for the next round. Republicans extracted a series of spending cut promises and tax cut extensions from Obama in 2010 and 2011, but the president in turn built up his leverage for just this moment — when just after re-election a cliff largely targeting GOP priorities was set to hit. This time, the tables may be turned — Obama will get $600 billion in revenue up front — but the GOP is betting that it will have more leverage in the spending and debt fight to come, with the threat of trillions in automatic tax hikes off the table.
Obama vowed Monday that wouldn’t be the case and that he will insist on additional revenue in 2013’s looming fights over the deficit, but he’ll no longer have as big a cudgel to force the GOP to the table. Moreover, an upfront grand bargain almost certainly would have complied at least technically with Grover Norquist’s anti-tax pledge, because it would have scored as a tax cut relative to current law. That won’t be the case next year. With permanent tax cut extensions likely headed for Obama’s signature, any new revenue next year would be scored as a tax increase, and presumably a clear violation of the pledge.