Monday, March 04, 2013

State of the play

For every Bill Keller admonishing President Obama, we have Jonathan Chait ripping apart claims which blame Obama for not offering enough spending cuts. Truth is President Obama has achieved over $2.5 Trillion cuts during his years in White House (excluding sequester) while gaining little less than $0.7 Trillion in new revenues. (We have to keep aside Speaker Boehner's bogus claim about tax increase for ObamaCare since neither that was passed by Republicans nor it is expected to increase deficit if implemented properly.)

No matter how much 'very serious people' (Woodward, Simpson, Bowles, Brooks and now Keller joins that party) want to 'carry waters' for intransigent elements of Republican Party; 'low revenue high cuts' is not a trajectory for a sustained budget. On top of it, what all these so called Centrist and Republicans are offering as a solution - it is below even Speaker Boehner's earlier offer of $1.2 Trillion revenue! 

The real question to be asked is was it wrong then for President Obama to accept the year end deal of Biden-McConnell agreement? Was it right to forgo additional sure shot revenue of over $1.0 Trillion due to expiring Bush Tax Cuts? To be fair, that is what Bill Keller's grouse is. But he is not helping President Obama by not understanding reasons why President accepted the deal. Jonathan Chait at least has a sense to know 'who are the real culprits here - Republicans' and he is not turning on a president fighting for some sanity. Keller does not seem to have that discipline and that is the larger problem with all these 'very serious folks' - while they enjoy in pin pointing tactical mistakes of President Obama here and there; they let go the real evildoer free - Republicans and Tea Party who only see 'cuts' as the solution to our problems (as if travails of Conservative Cameroon pursuing austerity in UK are nothing!).

President Obama, knowing well Biden-McConnell Agreement short on revenue, still accepted the deal  because:
- first of all it establishes yet another time that when there is a 'reason', this White House would come forward for an agreement;
- while sacrificing some revenue (with the belief that the remaining revenue would eventually come through tax loophole closures), President got extended unemployment, scrapping of AMT permanently and avoiding a shock to the economy; and
- avoiding 'poisoning of the political well to a saturation point' on the eve of historic inauguration of second term of the first black president

It is a sane argumentation among supporters of President Obama - whether accepting Biden-McConnell agreement was a right call rather than simply letting elapse Bush Tax Cuts or again President left too much on the table. But from there to jump to blame all on Obama; that is a jump too far.

What should then President expect in coming days? For a starter, full readiness for Government Shutdown. True, Speaker Boehner is assuring that he would not shut down the government. But sane and experienced hands in this matter are well cautioning and heeding that caution is a prudent course. Even if House relents some and somehow President avoids government shutdown by not insisting on revenue increase; there comes 'debt ceiling increase' next, followed by next year's budget fights. What it means, there are enormous opportunities for Republican Party to screw Federal Fiscal situation and sabotage American Economy.

If for the reasons of sequester or not so well contained situation in Europe (Italy back to her form), American Economy falters; all these so called exaggerations from Obama White House about sequester would be regarded as 'smart advance warning'. If luckily Economy holds, sure GOP would pat itself for 'we told you - sequester did not matter'; but no one would bother much of a commander-in-chief who is very cautious. But Public accepts the 'balanced approach' (read revenue increase) now and it will accept so in future too. Meanwhile possibly the price of the sequester many not be so easy for GOP as well. All that means, President Obama needs to continue to insist for certain revenue increase. What can be done to facilitate a movement on that account is President Obama coming out and laying down his vision of additional cuts which GOP is clamoring for. Presentation of next budget is one such excellent opportunity. Whether GOP accepts that deal or not, Americans will know yet another time that Obama White House is not shy when it comes to entitlement reforms; it is GOP which would be reluctant for any additional revenue. Whether Media brings out that well or not, that Media's problem. As this White House can 'jump over the traditional Media' to reach Americans, it is less of a problem for President Obama.  And not all is lost, there are voices in GOP which are ready for revenue so long as these additional cuts are 'locked' in. Some budgetary mechanism to build the confidence for GOP to enter into an agreement with White House should not be that hard to smart minds of new Treasury Secretary Jack Lew and new OMB Chief.

After all if nothing else succeeds, strident advocacy to wreck the GOP coalition on Immigration and Minimum Wage Increase; those are for sure reserved political hands for Obama White House to play the ultimate ploy of winning the House and retaining the Senate to stream roll a 'balanced approach' in the last quarter of Obama Presidency, starting November 2014. 

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