The Grand Bargain

President Obama likes Grand Bargains with Republicans. Just prior to the election, he made these comments to the Des Moines Register:

I am absolutely confident that we can get what is the equivalent of the grand bargain that essentially I’ve been offering to the Republicans for a very long time, which is $2.50 worth of cuts for every dollar in spending…

And, he is eager to point out to the chorus of ankle-biting snakes that make up the Republican leadership, cuts to Medicare, Social Security, and education are on the table as his part of the bargain.

Now, I like grand bargains as much as the next person,  at least when they involve something like “buy one, get one free” on cinnamon buns (and they’re not stale). And “bargain” sounds so fair. Each side gives up something it wants in order to reach agreement.  So what’s wrong with that? Well, how about this “grand bargain.” Dad wants a 2 week vacation in the Cayman islands and Mom says they should spend the money on school clothes and supplies for the kids. Dad suggests they strike a bargain. They take only a 10 day vacation and buy clothes for only the child who grew the most. Fair enough, right? A little pain from each side. What could be more equitable?

Well, “equitable” means that each side is giving away something of equal value. And in monetary terms, that’s correct—$1000 is $1000, whether it’s spent on a vacation or kids’ clothing. But do you really think that mom should be bargaining with dad at all? Or should she say “What are you talking about? We’re not spending on any vacation at all until the kids are taken care of.” What would happen in your house? Right, I figured.

So why are we not saying, “No, we’re not cutting care for old people, sick people and kids’ education just so you can have lower taxes on the well-to-do and more military spending than the rest of the world combined. We’re not bargaining those things away.” Oh, that’s right, we want to appear reasonable. But it’s not reasonable to trade jewels for junk just because they weigh the same. We should cut our wars and war spending (including the war on drugs) and restore taxes to Clintonian levels. That’s reasonable. Bargain that.

2 comments on “The Grand Bargain

  1. Gerald Falkenstein says:

    He said he was willing to make some concessions as long as the final fiscal bargain was properly balanced between new tax revenue and spending cuts.

    “I’m not wedded to every detail of my plan,” Mr. Obama said. “I’m open to compromise.”

    When I heard him say that I knew he was going to compromise the hell out of social security and medicare, just where the people don’t want him to cut.
    He is such a hippocrite.

    Sounds like he is ready to start cutting, taking the easy way out.

  2. Peter Jesson says:

    Or, to put it another way:

    Let’s Not Make a Deal
    By PAUL KRUGMAN
    Published: November 8, 2012 848 Comments
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    To say the obvious: Democrats won an amazing victory. Not only did they hold the White House despite a still-troubled economy, in a year when their Senate majority was supposed to be doomed, they actually added seats.

    Fred R. Conrad/The New York Times
    Paul Krugman
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    Back to Work, Obama Is Greeted by Looming Crisis (November 8, 2012)
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    Nor was that all: They scored major gains in the states. Most notably, California — long a poster child for the political dysfunction that comes when nothing can get done without a legislative supermajority — not only voted for much-needed tax increases, but elected, you guessed it, a Democratic supermajority.

    But one goal eluded the victors. Even though preliminary estimates suggest that Democrats received somewhat more votes than Republicans in Congressional elections, the G.O.P. retains solid control of the House thanks to extreme gerrymandering by courts and Republican-controlled state governments. And Representative John Boehner, the speaker of the House, wasted no time in declaring that his party remains as intransigent as ever, utterly opposed to any rise in tax rates even as it whines about the size of the deficit.

    So President Obama has to make a decision, almost immediately, about how to deal with continuing Republican obstruction. How far should he go in accommodating the G.O.P.’s demands?

    My answer is, not far at all. Mr. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a “grand bargain” on the budget that snatches defeat from the jaws of victory.

    In saying this, I don’t mean to minimize the very real economic dangers posed by the so-called fiscal cliff that is looming at the end of this year if the two parties can’t reach a deal. Both the Bush-era tax cuts and the Obama administration’s payroll tax cut are set to expire, even as automatic spending cuts in defense and elsewhere kick in thanks to the deal struck after the 2011 confrontation over the debt ceiling. And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.

    Nobody wants to see that happen. Yet it may happen all the same, and Mr. Obama has to be willing to let it happen if necessary.

    Why? Because Republicans are trying, for the third time since he took office, to use economic blackmail to achieve a goal they lack the votes to achieve through the normal legislative process. In particular, they want to extend the Bush tax cuts for the wealthy, even though the nation can’t afford to make those tax cuts permanent and the public believes that taxes on the rich should go up — and they’re threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.

    Mr. Obama essentially surrendered in the face of similar tactics at the end of 2010, extending low taxes on the rich for two more years. He made significant concessions again in 2011, when Republicans threatened to create financial chaos by refusing to raise the debt ceiling. And the current potential crisis is the legacy of those past concessions.

    Well, this has to stop — unless we want hostage-taking, the threat of making the nation ungovernable, to become a standard part of our political process.

    So what should he do? Just say no, and go over the cliff if necessary.

    It’s worth pointing out that the fiscal cliff isn’t really a cliff. It’s not like the debt-ceiling confrontation, where terrible things might well have happened right away if the deadline had been missed. This time, nothing very bad will happen to the economy if agreement isn’t reached until a few weeks or even a few months into 2013. So there’s time to bargain.

    More important, however, is the point that a stalemate would hurt Republican backers, corporate donors in particular, every bit as much as it hurt the rest of the country. As the risk of severe economic damage grew, Republicans would face intense pressure to cut a deal after all.

    Meanwhile, the president is in a far stronger position than in previous confrontations. I don’t place much stock in talk of “mandates,” but Mr. Obama did win re-election with a populist campaign, so he can plausibly claim that Republicans are defying the will of the American people. And he just won his big election and is, therefore, far better placed than before to weather any political blowback from economic troubles — especially when it would be so obvious that these troubles were being deliberately inflicted by the G.O.P. in a last-ditch attempt to defend the privileges of the 1 percent.

    Most of all, standing up to hostage-taking is the right thing to do for the health of America’s political system.

    So stand your ground, Mr. President, and don’t give in to threats. No deal is better than a bad deal.

    A version of this op-ed appeared in print on November 9, 2012, on page A31 of the New York edition with the headline: Let’s Not Make A Deal.
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    Karen GarciaNew Paltz, NY
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    We can’t say we weren’t warned. The president did promise throughout the campaign that he would collaborate with the GOP on a deficit reduction program. Social Security and Medicare will be put on the table in exchange for a bit of token revenue from the plutocrats. The free market, which is laughably portrayed by the media as an actual living being with feelings, must be placated at all costs. Wall Street actually went all droopy the day after the election. Fetch the smelling salts, quick.

    But no worries. The confetti was still floating through the Chicago air when the president picked up the phone to reach out to Boehner and McConnell.Never mind the liberal mandate that was handed to him by an increasingly progressive nation. Never mind that only 10% of respondents in exit polls said their main concern is the deficit.

    The “fiscal cliff” is a contrived bit of disaster capitalism dreamed up by the corporate class that runs things in this country. Alan Simpson and Erskine Bowles are leading an astroturf movement of 80 CEOs, yammering hysterically for social spending cuts in the name of increased profits and lower taxes for themselves. Meanwhile, the complicit news media spews endless propaganda to keep the populace cowed. Economic collapse, we are told, can be averted only by tightening our own belts, funding the endless wars, and enriching the oligarchs.

    Grand Bargain? More like a Bargain for the Grandees, and a grand betrayal of everyone else.
    Nov. 8, 2012 at 10:08 p.m.RECOMMEND1999
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    Rima RegasMission Viejo, CA
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    From your mouth and into President Obama’s ear! We all need to show him our support in standing up to the bullies.

    I have no idea what the press is gushing about or why they think we’re about to start a new era of cooperation. Mitch McConnell told the president, as a way of congratulations, I guess, not to send down anything Congress won’t approve. I guess, coming from him, it’s almost a Mazel Tov. Then, a day later, Speaker Boehner told President Obama that he’ll consider more revenues, but only through the closure of tax loopholes. Today, Majority Whip Cantor used spending cuts as a condition for passage of the debt ceiling.

    The Congressional GOP, apparently, has no idea they lost the election and think they can, again, put the squeeze on middle America and the poor. Wall Street seems to be giving McConnell, Boehner, and Cantor support via dropping stocks.

    As Senator Bernie Sanders said today, President Obama needs to go on a 50-state tour and tell the people what is going on. This time, there is no pressure from a looming election. There is no reason to give in and every reason to push all the way back. If they won’t get it one way, they will have to get the message another.

    I urge Speaker Pelosi to get a grassroots campaign for 2014 going right now. I also urge her to use her considerable powers of persuasion and bring over to the Democratic side as many GOP members from moderate districts as she can. The GOP leaders think blackmail will work again. Lets foil them!
    Nov. 8, 2012 at 10:23 p.m.RECOMMEND1624

    KenSt. Louis, MONYT Pick
    This time, we the people who voted for Obama have to stand up and fight. We have to pressure the President, and our legislators, to save Social Security, Medicare, education, our environment, and everything else that matters, and demand that the rich and powerful start paying their fair share.

    We need to get out and protest, sign petitions, do whatever it takes.

    Who is going to organize us? Who is going to lead?
    Nov. 8, 2012 at 10:23 p.m.RECOMMEND1057

    William FairmanColumbia, MONYT Pick
    I called Speaker Boehner’s office late this afternoon (Thursday), and was told in no uncertain terms that tax rates are not going up.

    The Republicans just lost the Presidency, lost the Senate, lost some seats in the House, but King Boehner still wants to dictate how things must go.

    We cannot let him get away with this. I suggest every concerned citizen call the House switch board 202.224.3121 and ask to speak to Boehner’s office. Let him know how you feel. Remind the Republicans that they lost the Presidency and the Senate. We need cooperation, not more intransigence. We need a balanced approach, not ultimatums from the most reviled branch of government (House approval rating of 13%).

    Remember, during Reagan’s eight years in office (1981 through 1988) the top income tax rates were 50%, 50%, 50%, 50%, 50%, 50%, 38.5%, 33% (up to $149,250, then 28%). And starting in 1986 Capital gains were taxed at the same rate as income!

    And when Clinton followed a balanced approach with higher taxes, we had a balanced budget! great job creation!
    Nov. 8, 2012 at 11:22 p.m.RECOMMEND966

    guilloneScottsdale, AZNYT Pick
    Re-read Matthew 14:30 The Parable of Talents.
    There is nothing righteous or moral about the rich hording their wealth
    and keeping it buried. Jesus actually condemned it.
    He praised those who put their money back in circulation.
    It is good economics AND morally responsible.
    Look it up….
    In reply to bob tichellNov. 9, 2012 at 12:14 p.m.RECOMMEND235

    michael kittlevaison la romaine, franceNYT Pick
    Obama’s inability to stand up to the Republican bully is his greatest character flaw and his greatest failure in leadership.

    He has an immediate opportunity to confront and back down the bully over the fiscal cliff issue. If he does not do this now, than he will lead America in it’s continued decline into mediocrity.
    Nov. 9, 2012 at 2:07 p.m.RECOMMEND264

    NileshPhoenixNYT Pick
    As a supporter of the President and his policies, I am somewhat dismayed both at Prof. Krugman’s suggestion as well as the majority of the responses here. Letting the country “fall of the cliff” just to teach Republican’s a lesson is as bad as Senator McConnell willing to jeopardize the economy just to ensure the “Obama is a one-term President”
    Nov. 9, 2012 at 2:09 p.m.RECOMMEND43

    JPEMaineNYT Pick
    I absolutely agree w/Professor Krugman. No deals at all. Let the government slide down the so-called “fiscal cliff” and let’s see what happens. It may turn out to be no more of a cliff than the typical water-park’s adventure slide.
    Nov. 9, 2012 at 2:09 p.m.RECOMMEND204

    RIck LaBonteOrlandoNYT Pick
    Obama wanted the cliff, give him his cliff. If the GOP is going to die, it should die acting on a principle they always talk about but never do anything about. The country is broke, it can’t pay for the entitlements, it can’t pay for its perpetual wars. The cuts have to be made. Go ahead and tax the rich, they can move.
    Nov. 9, 2012 at 2:18 p.m.RECOMMEND76

    WMClaremont, CANYT Pick
    I have never heard of anyone being defeated and getting away with setting the terms of surrender and the new order of things–except our Republicans.
    Nov. 9, 2012 at 2:27 p.m.RECOMMEND324

    DanMissouriNYT Pick
    Paul,

    Your way of thinking is why America is a mess. It is not yours and mine, it is ours and we need to get serious about serious problems. If President Obama sees only his, as he did in the first term, he will have a failed record. His only opportunity and the best thing for America is to think in terms of Ours…
    Nov. 9, 2012 at 2:39 p.m.RECOMMEND28

    Jim DemersNYCNYT Pick
    “Nice little economic recovery you got there. Be a shame if anything happened to it.”
    Nov. 9, 2012 at 2:55 p.m.RECOMMEND172

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