Pre Freak-Out

Every time there is some kind of talk about budgets, the progressive blogs seem to go into a pre freak-out mode. There are rumors about the debt ceiling/budget negotiations. Kevin Drum explains what might be happening.

The Wall Street Journal reports that means testing of Medicare is one proposal on the table, while the New York Times reports that Boehner might agree to $1 trillion in revenue increases in return for the bigger deal, possibly including an end to the Bush tax cuts for the wealthy. A few comments:

Unlike a lot of liberals, I’m open to deals on Medicare and Social Security. Obviously the details matter, but means testing of Medicare has always been a reasonable policy option, while small changes to Social Security’s inflation calculations have a lot of support from both liberal and conservative analysts. This isn’t necessarily a disaster.

I think it’s now finally time to stop pretending that Obama has miscalculated, or blundered, or been out-negotiated, or somehow forced into a bad position. Rather, everything he’s done for at least the past six months is consistent with the idea that he considers the long-term deficit a problem, he wants to address it, and he views the debt ceiling talks as an ideal opportunity to do so with bipartisan cover. Obama isn’t doing this because he has to. He’s doing it because he wants to.

Jon Chait argues that Obama would be a fool to allow the Bush tax cuts to be part of this deal. Instead, “If Obama wins election, he needs the ability to use the GOP’s opposition to any middle class tax cut extension without an extension for the rich as leverage to let Republicans kill the whole thing for him.” But this assumes that Obama secretly wants to kill the whole thing. I don’t think he does. He’s said all along that he wants to let the high-end tax cuts expire but keep the middle-class cuts, and it’s time to take him at his word. That’s what he wants to do.

Why don’t we wait to see the details before freaking out and threatening to vote for Romney. Obama and the Democrats have said all along they don’t want to cut benefits and that those are off the table. Let’s wait to see the proposal before reacting negatively.

I have to add if this is done the right way this is pretty smart politics. Independents and the media will love it. Obama will be seen as a president who can solve the big problems. It has to be tempting to John Boehner to be the one who solved the deficit (what Republicans pretend to care about). I told you before that Obama has two trump cards: the 14th amendment argument and the tax cut expiration. Boehner can basically get this deal or nothing. If no deal is reached, it will also box in the Republican party. They are already discussing impeachment, but that would bolster the Democratic argument that Republicans only care about tax cuts for the rich at the risk of everything else. I must add, the deal must be done the right way. Obama risks another trump card – Democrats protect Social Security and Medicare, Republicans want to cut it – if the deal is seen too much as taking from the middle class to help the rich.