You Don't Think The Democrats Would "Compromise" With The Big Bad GOP And Balance The Budget On The Backs Of Working People... Do You?

Clinton was the hero of the 2012 election for the Democratic Party, the MVP, don't you think? He fought tirelessly, strenuously and persuasively and there can be no doubt he helped Obama win reelection. He worked hard for a diverse array of Democrats running for offices up and down the ticket, from Pennsylvania's new Attorney General Kathleen Kane, reelected U.S. Senator Bob Casey, brand new congressman-elect progressive reformer Matt Cartwright and defeated corporate whore and arch-reactionary Mark Critz to progressive superstars Sherrod Brown (OH), Annie Kuster (NH), Carol Shea-Porter (NH), Raul Ruiz (CA), Alan Lowenthal (CA) and Mark Takano (CA) and rotgut right-wing Blue Dogs like Joe Donnelly (IN), Brendan Mullen (IN) and David Crooks (IN). Clinton showed up for the good, the bad and the ugly. For a partisan warrior he is certain much loved by Americans across the board and no one can deny he helped the Democrat cause immensely.

When it comes to policy, Clinton continues, as always, to be essentially a right-of-center corporatist, pushing horrible job-killing Republican trade policies, horrible Republican deregulation policies and horrible Republican financial policies. Remember that surreptitiously-shot video of he and Paul Ryan up top? He wasn't just being polite. He's certainly not as ruthless and heartless as a Paul Ryan or any Randian (Republican) but his vision of a Grand Bargain-- like Obama's-- emphasizes just "a little bit more" when it comes to what the rich need to chip in the bring down the deficits they ran up. A little bit more isn't enough and it's a terrible negotiating tactic in any case. The Democrats should be trying to bring back the Eisenhower income tax rates for multimillionaires and billionaires-- and not a nickel less.

Clinton's former Secretary of Labor, Robert Reich, may not have the clout with the electorate Clinton has, but he has a much clearer vision of how working families are being railroaded by the Democratic Establishment in the game of Shock Doctrine footsie they're playing with the Paul Ryans, Miss McConnells, Eric Cantors and John Boehners. Reich writes on his blog that before we even get started we have to determine if the Shock Doctrine bullshit (the ominous "fiscal cliff" the insiders are using to scare the peasants into agreeing to their own serfdom) is a real threat. He calls it a game of chicken.

The non-partisan Congressional Budget Office on Thursday warned that the automatic tax increases and spending cuts scheduled to start in January amount to too much deficit reduction, too soon. They’d put the economy back into recession, and push unemployment to about 9 percent. But the CBO also warned of an economic crisis ahead if the United States doesn’t stem the growth of the nation’s exploding deficit.

Get it? Reduce the budget deficit too quickly, and we’re in trouble. But fail to address the deficit, and we’re also in trouble. It’s really a matter of timing. That’s why I think any deal should include a trigger mechanism that begins to cut spending and raise taxes when the economy has two consecutive quarters of 6 percent unemployment or less, and 3 percent annualized growth or more.

In reality, though, the upcoming game of chicken isn’t about any of this. It’s over the clearest issue President Obama and Mitt Romney fought over: whether taxes should be raised on the rich.

Democrats and Republicans are now maneuvering to maximize their bargaining leverage when they sit down next year to decide this.

On Friday the President called on Congress to immediately make permanent the tax cuts for Americans who make less than $250,000 a year, while at the same time allowing tax rates to rise for wealthy Americans-- and then making those rates part of a broader deal next year.

The President knows congressional Republicans won’t agree, but he needed to set out his central demand because it’s the one thing that can fairly be interpreted as a mandate from the election.

So what’s going to happen? Bear with me, because this gets interesting.

Some Democrats (and some White House strategists) figure they’ll have most bargaining leverage in next year’s deal if they do nothing now-- allowing tax rates to rise automatically on everyone after the first of the year. Then they plan to offer Republicans a deal that reduces taxes on people earning less than $250,000-- which would be retroactive to January 1st.

Republicans would have to choose between a tax cut on the middle class or no tax cut at all. Democrats believe Republicans would have to take the deal. Even Grover Norquist would be hard-pressed to come up with an argument against it.

Some Republicans, meanwhile, figure they’ll have more bargaining leverage if they keep things as they are until late January or February.

What’s magical about late January and February? That’s when the debt ceiling has to be raised again, which means that’s when Republicans can once again threaten to vote against raising it. (In theory, we’ll hit the ceiling at the start of January, but the government can juggle payments and take various “extraordinary measures” for another month or two beyond that-- maybe even until March-- before it could no longer be able to borrow enough money to pay its bills.)

This is the thinking behind House Speaker John Boehner’s proposal earlier Friday that all the tax cuts-- including those for the rich-- should be extended until next year, until there’s a deal. “I’m proposing that we avert the fiscal cliff together in a manner that ensures that 2013 is finally the year that our government comes to grips with the major problems that are facing us," Boehner said.

So who blinks first? Democrats who don’t mind going over the cliff because they’ll get a better final deal-- and the deal will be retroactive to January 1st so it’s not really a cliff at all but more like a little hill? Or Republicans who want to extend the Bush tax cuts beyond January 1st, until we get sufficiently close to the debt ceiling that they can once again threaten the full faith and credit of America?

As I said before, I had naively assumed the election would put an end to these games, but obviously not. Yet Obama and the Democrats are holding most of the cards now. Let’s hope they use them.

Some people may get turned off to James Surowiecki's willingness to use the phase "fiscal cliff" without rolling his eyes, but he's clear in his New Yorker column that "there’s no reason to let the fiscal cliff force us into policies that Americans don’t actually want" but that insiders are pushing for their own various and sundry purposes-- the good of working families not being among them.

[F]or all the talk about how a grand bargain is in the works, it’s far from obvious that anyone, even the small bipartisan group of senators that’s supposedly working to come up with a plan, would be able to craft a long-term budget agreement that could pass a conservative-dominated House of Representatives and a Democratic Senate, much less do so in a matter of only weeks. The most obvious, and seemingly unbridgeable, chasm is between President Obama’s insistence that any agreement will have to include higher tax rates for the wealthiest Americans and Speaker Boehner’s insistence that raising rates on anyone is a non-starter. But there are similarly deep ideological divides over Social Security and Medicaid, and, to a lesser extent, over defense spending. It’s not that compromise on these issues is impossible. It’s just that it’s unlikely that Congress will be able to do in six weeks what it hasn’t been able to do in many years.

That’s not a bad thing, though. If Congress and the President were to come up with a grand bargain in such a short time, there’s a good chance that it would be largely a product of the inside-the-Beltway biases of deficit hawks (who tend to dominate the “serious” discussions of budget policy), rather than the long-term interests of the country. And at a time when long-term interest rates are at historic lows, with the U.S. able to borrow money for ten years at less than one per cent, we simply don’t need to rush to come up with a massive debt-reduction plan. Yes, in the long run we need to deal with the debt (which, above all, means dealing with the rising cost of health care). But there’s no reason to let the fiscal cliff force us into policies that Americans don’t actually want.

...Democrats can just let the tax cuts expire at the end of the year and then offer up a retroactive tax cut for ninety-eight per cent of Americans in January. Perhaps Republicans would be willing to vote against that, but it doesn’t seem likely.

Sometimes it makes sense to take yourself hostage in order to compel yourself to do something difficult. But that doesn’t mean that if you don’t actually do the difficult thing, it makes sense to shoot yourself in the head. Nor does it mean that hastily-arrived-at solutions, even ones that are labelled “grand bargain,” are necessarily preferable to the status quo. America may have a long-term debt problem. Throwing the economy back into recession isn’t the way to solve it.

This morning Digby published the original deal Obama made with Boehner last year, which shows "a willingness to cut all kinds of things, like TRICARE, which is the sacred health insurance program for the military, for military retirees; to cut Social Security; to cut Medicare. And there are some lines in there about, 'We want to get tax rates down, not only for individuals but for businesses.' So Obama and the White House were willing to go quite far." The also agreed to raise the Medicare eligibility age. The teabaggers saved us last time.  If this goes through in the lame duck, the greatest overall achievement of the Obama's presidency will be to have destroyed the Democratic brand. I didn't vote for him last week. Did you? Yeah, I know... he's better than Romney. USA! USA!