Making Choices on the Budget

Watching the Sunday blabbers, I was impressed with the facility with which the Republicans switched back and forth between two entirely different, and contradictory, rationales for their position on the budget and the debt ceiling. On one hand, they'd say, we simply have to cut the deficit, which is why we need to slash spending. OK, someone would say, why won't you accept some increase in taxes? You know, to cut the deficit? Absolutely not, they'd say -- you can't raise taxes when the economy is bad! That's the last thing you want to do!

Here's what I'd like to hear the president and the Democrats say: We have to choose. We can either attack the deficit, or we can try to improve the economy. But in the short run, we can't do both at the same time. The things that will bring down the deficit -- cutting spending, raising taxes -- will hold back economic recovery (different components of spending cuts and tax increases will do so to lesser or greater degrees, but the basic principle stands). The things that will help the economy -- increasing spending, cutting taxes (and again, different ways to do both will have lesser or greater effects), will, in the short run, raise the deficit. I happen to think that the choice is easy: we should concentrate on improving the economy. You can argue that in the long run that will be the best thing for the deficit, too, but in the short run you have to choose.

Republicans have quite successfully portrayed themselves as not choosing. They can do that as long as nobody forces them to choose. And no one is. Maybe that's because President Obama has already chosen, and he's chosen the deficit. Maybe you can argue that he had no choice, since the Republicans effectively took the American economy hostage. But this whole thing could have played out differently. Obama could have made this choice clear from the beginning, but he didn't. And perhaps most importantly, he underestimated his opponents and what they were capable of. Let's return to this tragic press conference from last December, after the White House and Republicans agreed to extend the Bush tax cuts, but before the new Congress had been sworn in. Read it and weep:

Q: Mr. President, thank you. How do these negotiations affect negotiations or talks with Republicans about raising the debt limit? Because it would seem that they have a significant amount of leverage over the White House now, going in. Was there ever any attempt by the White House to include raising the debt limit as a part of this package?

THE PRESIDENT: When you say it would seem they'll have a significant amount of leverage over the White House, what do you mean?

Q: Just in the sense that they'll say essentially we're not going to raise the -- we're not going to agree to it unless the White House is able to or willing to agree to significant spending cuts across the board that probably go deeper and further than what you're willing to do. I mean, what leverage would you have --

THE PRESIDENT: Look, here's my expectation -- and I’ll take John Boehner at his word -- that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That's something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb thrower.