The Fiscal Cliff: It’s About Dealmaking, Not Debt Reduction

One of the most important things to remember about the fiscal cliff negotiations is that no one on either side of the table really wants to go over the cliff. Both Boehner and Obama would prefer to come to a deal — just not quite yet. 

President Obama wants to avoid any risk of a severe hit to the economy and focus on his second term agenda, not an extended budget standoff over a collection of policies that, tax rates on the wealthy aside, aren’t high on his priority list. Republican House Majority Leader John Boehner would prefer to avoid the sequester’s reductions in defense spending, keep tax rates from rising on anyone, and generally not make a big fuss about the rest of it; he’s also understandably worried that Republicans will take the blame, at least in the short term, if there’s no deal and subsequently the economy suffers. 

Yes, there are more committed partisans on both sides who think that their side should refuse to sign on to any deal that concedes anything to the other party. Which is why the incentive is to make a deal, some deal, but not until the last possible minute. Neither side wants to look like they gave in too early, or too easily.

And so far, that’s the track we’re on: The two sides come closer together. Things look hopeful for a moment. But then tensions rise again as the two sides employ new tactics intended to push the opposition. 

The primary considerations here are, as much as anything, about political posturing and positioning. In order to come to an agreement, both sides need to preserve an image and walk away with concessions. President Obama needs to look strong in the wake of an electoral victory, mostly by getting Republicans to agree to some sort of tax increase on the wealthy. Boehner has a somewhat more delicate job: In order to sell any potential deal to his own party, he needs to look reasonable in his willingness to negotiate, but also firm enough that he doesn’t simply give away Obama’s entire wishlist. He needs to extract symbolically meaningful concessions.

Neither side, though, can be completely honest about these sorts of political considerations. They need a policy framework through which to communicate — with each other, and with the public. And so they talk about debt and deficits.


Obama, for example, has repeatedly pitched his desire to see tax hikes on the wealthy as a deficit-reduction plan. As he put it during his first post-election news conference, “When it comes to how we reduce our deficit, I argued for a balanced, responsible approach, and part of that included making sure that the wealthiest Americans pay a little bit more.”

Boehner’s office puts out press releases that start with lines like this: “In the debate over avoiding the ‘fiscal cliff,’ an important point has been forgotten: when it comes to solving our debt, government spending is the problem that must be addressed.” That’s why Republicans are now pushing for a few hundred billion in additional spending cuts to be included in the deal.

But here’s the thing: The fiscal cliff negotiations really aren’t about reducing the debt. At best they're about maintaining it. This year, total public debt is equal to about 73 percent of the economy. Yet according to the Center for a Responsible Federal Budget, all of the offers made so far, by both parties, would result in debt equal to somewhere between 71 and 74 percent of the economy a decade from now.

True, that’s an improvement over how things could go: CRFB’s realistic baseline assumes that debt increases to 81 percent of economy in 10 years; other projections suggest it could be closer. But at best it means holding steady in the medium term. And that’s only if Congress actually sticks to whatever spending cuts the deal actually calls for. That’s a pretty big if. Most of the reductions in entitlements and other spending that have been outlined so far, especially in the White House proposals, aren’t real cuts, because they aren’t actually specified. At best they’re potential cuts, details TBD. When legislators promise cuts but don’t provide specifics, it’s hard to trust that the cuts will ever be made. More to the point, nothing that's currently on the table would substantially address the biggest long-term problem: growth of spending on Medicare. 

If spending cuts and debt control were the real focus, they'd be hashing out these details, which are important to ensuring that any plan they agree on actually works. But they're not. Because this isn’t about cuts. And it’s not really about the debt . It’s about making a deal, polishing a post-election image, and getting past the fiscal cliff to focus on other things — just not too soon.

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  • Spoonman.||

    Parimary?

  • Hugh Akston||

    I'm so sick of all the tension they're trying to build up this season. I wish Obama and Boehner would just kiss already and be done with it.

  • Hyperion||

    It's more like Boehner is kissing Obama's ass. Sickening. You cannot deal with the left, at all. You just tell them fuck no, period.

    It's about deal making, not debt reduction

    Translation: It's about the spineless GOP giving yet more ground to the left, as always, for the last 100 years.

  • Libertymike||

    Weren't there some republicans who opposed Jimmy carter's baby step deregulation of the airlines and the trucking industry?

  • califernian||

    Without question. GOP politicians wants regulation and federal power and high taxation as much as the DEM party.

  • ||

    It's more like Boehner is kissing Obama's ass.

    Are you saying black men can't pucker the "lips" of their assholes?

    RACIST!!!

  • $park¥||

    They can't possibly keep the show going without the sexual tension. If they kiss now people will stop watching.

  • ||

    But that means their ratings will tank and they'll get cancelled next season, right? Right?

  • ||

    It's Ross & Rachel all over again!!

  • ||

    Moonlighting is the example you should have used.

  • ||

    I'm absolutely pleased to say that I am too young to reference Moonlighting.

  • Brett L||

    Castle? Because I quit watching, tension or no.

  • Hugh Akston||

    Yeah, Moonlighting is for old people. I also would have accepted an X-Files reference.

  • ||

    You fucking idiots, the perfect reference is Remington Steele. God you people disappoint me.

  • ||

    Perry Mason was not getting it on with his secretary long before Steele wasn't fucking Holt, or Mulder wasn't banging Scully, or Hardcastle wasn't riding McCormick.

  • ||

    DON'T TALK SHIT ABOUT STEPHANIE ZIMBALIST...OR BRIAN KEITH

  • Fist of Etiquette||

    Everyone forgets about Worf and Troi. It was a huge build up from the very first part of the series finale all the way to the end of the series finale.

  • ||

    You are all wrong. Moonlighting is the quintessential example because the show was ruined after the two hooked up.

    It is "THE" example of why you never let the tension resolve.

  • ||

    President Obama wants to avoid any risk of a severe hit to the economy

    What on earth are you basing this assertion on?

  • GILMORE||

    Obama, for example, has repeatedly pitched his desire to see tax hikes on the wealthy as a deficit-reduction plan

    ... all while continuing to claim he's not increasing taxes for "the 99%".

    Except where he is:

    http://finance.yahoo.com/news/.....25z;_ylv=3

    2% hike to payroll tax
    2% hike to medicare
    by chaining the CPI it will push people into higher tax brackets over time despite no change in real income, while simultaneously cutting benefits for seniors

    ....on Aug. 14, Vice President Joe Biden told voters, "I guarantee you, flat guarantee you, there will be no changes in Social Security. I flat guarantee you."

    The GOP isn't really making any sincere effort to change directions in any case; 90% of the discussions I've heard are simply theatre to appease their partisan base; not any practical ideas regarding preventing an increased tax burden. It reminds me of their perennial desire for 'Defunding the NEA'; as though that piddling amount of money would be a 'victory' for fiscal-prudence, versus, say = *not* funding giant military projects no one except congress people want

  • GILMORE||

    Speaking of the perpetual political kabuki = I have become convinced that both parties really do *encourage* this kind of faux-brinksmanship, 'heavy drama' news-generation, where these otherwise-useless and ineffectual political leaders who are perpetually shirking their real responsibilities can get TONS of TV time and make speeches and pretend that their 'negotiations' are actually leading to some material change in the status quo... when in fact, it's all just sound and fury, and there's no great and powerful oz behind the curtain. If they sat on their ass and watched daytime TV all day, drinking beer, the end result of all this bullshit would be the same.

  • Rasilio||

    Oh this is exactly what happens, the only thing is I think that the majority of the politicians have convinced themselves that what they are fighting over REALLY matters

  • dunlap||

    "polishing a post-election image"

    Yeah, like Obama really needs to do that. Polishing his mirror, maybe, or his Johnson.

    The Democrats are like a group of kids who inherited the candy store. Not content with just owning the candy, they want to f*** with the less fortunate kids who want what they've got. Why else would they turn down Boehner's offers that they previously endorsed.

  • waaminn||

    Sounds like a plan dud. Wow.

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