What’s the point of President Obama’s new proposal to end the “fiscal cliff” financial crisis? This question arises because Republicans seem genuinely startled and annoyed by the details of the plan. In their view, it’s a Democratic wish list instead of a starting line for serious negotiations.
Senate minority leader Mitch McConnell of Kentucky told The Weekly Standard he “burst into laughter” after hearing Treasury Secretary Timothy Geithner outline the plan. “Nothing good is happening” in the fiscal cliff talks, Senator McConnell said.
Let’s back up and examine Mr. Obama’s offer. As expected, it calls for $1.6 trillion in tax increases over 10 years. The president has long said that’s his dollar goal for new revenue and that raising rates on the top 2 percent of taxpayers is the only way to raise enough cash to get there.
But the proposal also calls for $50 billion in immediate stimulus spending, according to the GOP. This would pay for some new national infrastructure, the continuation of extended unemployment benefits, and a deferral of looming reductions in Medicare physician reimbursements.
(We’ll note that this last detail, the “doc fix,” is something that both parties have agreed to for years. Whether it counts as new stimulus spending is thus open to interpretation.)
Obama’s plan also calls for eliminating congressional votes to raise the debt ceiling – a shift in institutional balance of power that lawmakers of both parties might resist.
But what really appears to peeve Republicans is the lack of specificity on spending cuts. The White House proposal identifies some upfront reductions in some programs, but only in vague terms, they say. It does propose $400 billion in long-term savings from Medicare and other entitlement programs, but only as a goal. Specifics are deferred for later negotiations.
“Unfortunately, many Democrats continue to rule out sensible spending cuts that must be part of any significant agreement that will reduce our deficit,” said House Speaker John Boehner after Thursday’s meeting with Secretary Geithner.
Democrats say the other party is just acting the diva. Obama has talked publicly about pretty much all this stuff, they say, so nobody should pretend to be surprised.
But even some liberals say the list is loaded up with most of their favorite proposals. In this sense, it’s a compendium of many things the administration has been pushing. This could mean the White House is not trying to woo the GOP with upfront concessions. Instead, Obama appears to believe he’s entering these talks in a position of strength.
“This opening bid will cheer liberals – it strongly suggests the White House is willing to push Republicans very hard, in the belief that it has all the leverage,” writes left-leaning Greg Sargent in his Plum Line blog at the Washington Post.
Some on the right say all this means Obama has also decided he’s not that worried about actually reaching a deal. Instead, he’s decided that allowing automatic spending cuts and tax increases to kick in on Jan. 1 will only increase his leverage. The logic of this view runs this way: Polls show a majority of voters will blame the GOP if the United States dives over the cliff. The administration can then say any resultant weakness in the economy is Republicans’ fault, and Democrats would do better in the 2014 midterms than they would have otherwise.
Obama is “either indifferent about going over the cliff or now actively wants it to happen, and since he knows he can count on the press to scapegoat Republicans when it does, he’s decided to shoot for the stars with his ‘offer’ and see how desperate Boehner is,” writes conservative blogger Allahpundit on the Hot Air website.
However, our favorite guess here stems from game theory, which focuses on strategic decisionmaking. Perhaps the administration is trying to enter fiscal cliff talks in a position to both reach a deal and get most of what it wants.
One way to do this might be to lard up opening positions with lots of stuff you’d be willing to discard. This way, the other side gets “victories” when you agree to strike them, allowing it to save face in the final deal.
Opening positions are just that – openings. In that sense, the administration’s proposal could be both unrealistic and the opening to a solution.