2008 Redux

The failure of the Super Committee has been cause for much weeping and gnashing of teeth among Beltway pundits, but the important thing to remember about the current budgetary baseline is that absent any further action from Congress, we can expect around $7.1 trillion in deficit reduction over the next decade. The Center for Budget and Policy Priorities has the numbers: $3.3 trillion from allowing the Bush tax cuts to expire, $0.8 trillion from allowing other tax cuts to expire, $0.3 trillion from allowing Medicare provider cuts to happen on schedule, $0.7 trillion from allowing relief from the alternative minimum tax to expire, $1.2 trillion from the Super Committee “trigger,” and $0.9 trillion from lower interest payments are a result of the above. Of course, now is a terrible moment for deficit reduction—austerity is useless when the economy is sputtering along with low consumer demand. But for those Democrats concerned with the deficit, there’s nothing the GOP could offer—short of a strong public option—that would make a deal sweeter than the “do nothing” option.

What’s more, as The Washington Post points out, the failure of the Super Committee means that the Bush tax cuts become an issue for both sides in the 2012 elections:

The imminent failure of the congressional deficit “supercommittee,” which had a chance to settle the nation’s tax policy for the next decade, would thrust the much-contested Bush tax cuts into the forefront of next year’s presidential campaign.

Those tax changes have repeatedly provoked fiery partisan debate since they were enacted during President George W. Bush’s first term. Now, with the cuts due to expire at the end of 2012 and their fate left unresolved by the supercommittee, both parties are already positioning themselves to exploit the issue for maximum electoral advantage.

Whether Democrats realize it, this is a good thing. For starters, the public has long held the liberal line on President Bush’s tax cuts for high earners—let them end. According to the most recent poll from the Pew Research Center, two-thirds of Americans support raising taxes on high earners to reduce the deficit. In pressing for the Bush tax cuts to continue, Republicans will be in the position of defending an incredibly unpopular set of policies. What’s more, given the extent to which the likely standard-bearer is multimillionaire Mitt Romney, the optics of this are terrible for Republicans.

During the debt-ceiling fight, there was some fear that President Obama would give up this advantage in an attempt to forge a “grand bargain” on deficit reduction. Democrats can thank the extremism of Tea Party Republicans for scuttling that deal and keeping this strategic advantage on the table. Of course, as politically advantageous as it is for the Bush tax cuts to expire on schedule, it’s not a trump card. But, if Obama sticks to his call for tax increases on the wealthy—and wins re-election—this might be another instance where Republican intransigence backfired to give Democrats the win (see: the Affordable Care Act).