Why The Lame Duck Session Matters So Much For Grand Bargaineers

WASHINGTON, DC - MAY 15: Pete Peterson, chairman of the Peter G. Peterson Foundation, speaks at the 2012 Fiscal Summit on May 15, 2012 in Washington, DC.

Photo by Brendan Hoffman/Getty Images

Michael Hiltzik* recently wrote a piece labeling Pete Peterson “the most influential billionaire business figure in national politics” (he didn’t mean it in a good way) lambasting his decades-long failed effort to get America to reduce entitlement spending. My view is that Peterson is probably the guy who’s wasted the most money to the least effect in American political advocacy, but this turns out to have a lot to do with how to measure influence. One way or another, he’s not giving up just yet and Ryan Grim reports that Maya MacGuinneas at the New America Foundation is ready to oversee a $30 million Peterson-backed advocacy campaign on behalf of a budget “grand bargain” during the lame duck session:

MacGuineas said she has raised close to $30 million for the Campaign to Fix the Debt, but the goal is “bigger than that.” The largest contribution so far has been $5 million from a single donor, she said. (HuffPost guessed that donor was Peterson, and MacGuineas said, “You could go out on that limb.”) The rest of the money is being raised from corporate CEOs and other wealthy donors.

The operation has hired 25 to 30 staffers, with plans to potentially double. Along with a paid-media campaign, it looks to influence press coverage in some 40 states with locally focused teams.

The project is growing so rapidly that when HuffPost asked why it wasn’t in all 50 states, MacGuineas thought and decided that maybe it should be. “Maybe you just changed policy. Maybe we’ll be in all 50 states,” she said.

I can hear the cash registers ringing, especially since Peterson generally isn’t too picky about how he throws his money around even giving the occasional dollar to groups like EPI that don’t share his outlook in an effort to at least control the agenda. The bulk of the Peterson-complaining you hear comes from liberals who don’t want to cut Social Security, but in practice the reason a Peterson-style deal didn’t pass in 2011 is that Republican members of congress wouldn’t agree to tax increases.

The joke may well be on them if Obama gets re-elected. In 2001 and 2003, the GOP enacted large tax cuts. In 2011, Barack Obama wanted to make a bipartisan deal in which he agreed to substantial cuts in spending in exchange for Republicans agreeing to partially reverse those tax cuts. But the tax cuts are scheduled to entirely vanish at the end of 2012, which would put the rates higher than even Obama says he wants. If that happens, the logical basis for a grand bargain really collapses. There’d be no reason for the Republicans to give Obama revenue in exchange for entitlement cuts, and no way for Obama to sell his base on entitlement cuts without revenue. This makes the lame duck session a crucial period for grand bargaineers. If Obama’s reelected, it would be totally irrational for Republicans to refuse to agree to his partial rescission of the Bush tax cuts at a time when the alternative is full expiration. If they can get Obama to agree to spending cuts in exchange for them agreeing to something that’s going to happen anyway, that’d be a huge win for them. And yet Obama has long seemed to have an Ahab-like obsession with grand bargaineering so might well agree to such a bargain—especially because it could avert the very short-term spending cuts involved in the budget sequester. 

But the window of opportunity for a deal like that is very narrow. Once the Bush tax cuts expire, there’s no more bargain to be made. In objective budget terms, that’s not a bad thing—there’s no actual problem that a grand bargain would solve. But the pursuit of the grand bargain for its own sake has become very important to a lot of people and Peterson’s succeeded in turning it into a mid-sized industry in DC. So the pursuit will continue.

* The original version of this post misspelled Michael Hiltzik’s name.