The Best Policy

Getting to No

How does the GOP keeping outfoxing President Obama in the negotiating room?

Timothy Geithner and President Obama with Elizabeth Warren

A small question has been bothering me for some time now. Back in December 2010, there was a brief “era of good feelings” after the rancorous midterm elections. During what was then viewed by many as a respite from hyperpartisanship, President Obama and the Republican congressional leadership reached accords on a whole series of issues. Many noisily criticized these deals—especially the extension of the Bush tax cuts for the wealthy —as cave-ins to the Republican agenda. And whatever one thought about the merits of the bargains struck back then, it was absolutely clear that we were heading into a debt-ceiling crisis by mid-2011. The math was simple. We were spending way more than revenue permitted, borrowing about 40 percent of all government spending, and by extending the Bush tax cuts, we were further denting revenues, accelerating the moment when we would hit the debt ceiling. Whether it was May or August of ‘11, the deadline was quickly approaching.

So why, as a condition for extending the Bush tax cuts, which President Obama repeatedly said he opposed, did he not require the Republicans to raise the debt ceiling then? Why didn’t he make raising the debt ceiling part of the transaction that extended the Bush tax cuts? Why did he give the Republicans a second bite at the apple, cutting the revenue first, and then a chance to hold the government hostage again in the summer. Recall, extension of the Bush tax cuts added about $2 trillion to the federal deficit over 10 years, about the same amount that many of the debt-ceiling agreements would save over the next 10 years.

The White House is in this predicament because this administration really doesn’t know how to negotiate. It is hard to believe that in December the White House, and Treasury Secretary Tim Geithner in particular, didn’t see the debt-ceiling moment coming. It was staring everybody in the face, was written about, speculated about. It was there on the calendar. It was as clear as day that the Republicans were going to use the debt ceiling as a cudgel. If Obama and his team simply ignored it, hoping it would go away, they committed malpractice.

If on the other hand, the White House did raise the issue of the debt ceiling, and told the Republicans that part of the price for extending the Bush tax cuts was raising it, and the Republicans refused, then the White House never should have done the deal in December. If that happened, they were willful partners in walking into the bear trap that we are now in. The Republican refusal to do a debt-ceiling-for-Bush-tax-cut deal in December, if that is what happened, would have been a sure signal to the president that he was negotiating with a bunch of ideologues on the other side. If, forewarned with this knowledge, the White House still did the December deal—which was bad on the merits anyway—then they were also trading a very short-term political win for the grave crisis we are now facing.

The White House has tried desperately to play the “grownup” throughout the ideological battles of the past several years. But trying to be the grownup and actually being the grownup are two different things. By its diffidence on ideological issues and its failure to negotiate effectively, the White House has failed to generate the support for the positions that brought many to the president’s side originally. If the administration is outfoxed in the negotiating room over and over and over again, it won’t matter how correct its economic policies are; it will eventually lose the American public.