Harry Reid Throws Down the Gauntlet In Front of … Obama. Hurray. [UPDATED]
I’m happy with the ‘cliff’ deal. That’s because it’s only a start. Here’s what I mean:*
Although he’s been strongly criticized by many liberals for caving on the $250,000 floor for a raise in the income tax rates after saying repeatedly that that was a ‘must’ for him, Obama was, in my opinion, right to sign off on the ultimate deal, in which the rate for incomes above $450,000 will rise to 39.6%–not the earlier-discussed possible compromise of 37% for incomes above $250,000–and in which capital gains taxes also will rise, to 20% for that same group.
I suspect that a huge factor in Obama’s preference for this deal rather than going over the cliff and forcing an up-or-down House vote on the rate rise on incomes above $250,000 was the issue of the expiration of extended unemployment-compensation benefits for about two million people, the loss of which, whether for a few weeks or permanently, would have been devastating for the people affected and surely would not have helped the economy. Extension of those benefits may well have been a casualty even of a successful post-cliff bill lowering the floor for the rise in income tax rates. So might the Earned Income Tax Credit, which of course benefits members of the 47% who Mitt Romney and many other Republican politicians do not think it’s their job to worry about.
So I disagree, for once, with my beloved ideological alter ego, Paul Krugman that it might have been preferable to go over the cliff, even for a few weeks, since little economic damage would have resulted during that brief period. The damage would have been acute to quite a number of people, if not to the economy as a whole. That’s important.
Which is not to say that it was reason enough to give away the store. Which, if the Politico account is accurate, apparently was, as of Sunday, what Obama wanted to do–until Harry Reid reminded him that Senate Democrats would not rubber-stamp his proposal and that approval by the Senate Democrats was as important as approval by the House. Reid presumably told Obama that he (Reid) would not allow a giveaway bill to be brought to the Senate floor. Just as Boehner could deny a floor vote on the bill in the House, Reid could do the same in the Senate. And he would do exactly that on a giveaway of the type that Obama has a habit of offering.
Among all the commentary about winners and losers from the events and the outcome, there’s been little mention of Reid. I agree with the consensus about who, among those mentioned in the particular article, won and who lost. I certainly agree that Biden is a big winner. I think he’ll be playing a larger role in negotiations and communication with Congress, and that’s good thing. But I think the negotiations and communications will be with Reid as much as with McConnell and Boehner. And that’s a really good thing.
For that reason–Harry Reid’s and the other Senate Democrats’ increased importance in negotiations on major fiscal deals–but only for that reason, I don’t share the deep fear that Krugman and many other liberals have right now that Obama will largely hand the advantage to the Republicans. He may try, just as he did suddenly two weeks ago, when days after saying he wouldn’t budge from the $250,000 tax-rate-increase floor, he spontaneously offered a $400,000 floor and (apparently) a reduced cost of living adjustment for Social Security–which, given his propensity to negotiate with himself rather than requiring the Republicans to negotiate with him, was viewed, by the Republicans and everyone else, as maybe just his opening offer.
That is the fear: that he will try. But, slow as he is in picking up on political winds, whether it’s the commandeering by the right of the rhetoric and agenda on economic stimulus issues and national healthcare reform, or, now, anti-rightwing fiscal policy, and respectively responding to or employing those winds, this time he won’t have the luxury of not noticing that Reid and the other Senate Dems are, now, post-election, going to use their enhanced power.
Krugman ends his blog post today by saying:
I don’t think it matters whether that is enough. Because it is enough that the post-election power has shifted, to a meaningful extent, from the House Republicans to the Senate Democrats. They will not dictate the terms. But neither will the House Republicans, however willing Obama still is to let them. And the shots Obama calls will be as much with Harry Reid in mind as with John Boehner in mind. Reid, I trust, will insist. The Republicans do hold some of the cards in the upcoming debt ceiling game. Just not enough of the cards to run the table against Harry Reid.
I agree with your analysis of Reid’s importance in this kabuki dance we call the American Congress. The Senate and House votes to pass the compromise bill is more importantly a sign that at least some significant portion of the Republican caucus is beginning to awaken to the idiotic behavior of their colleagues. The focus has to be on those who did support the passage, 85 in the House and 42 in the Senate. It is a change, if only a small step.
Taken together with the angry reactions of state level Republicans, especially in New York, to the refusal of the House to take up emergency storm relief legislation we may see more serious in fighting within that camp. People like Chris Cristy and Peter King now have to go back to their consituents empty handed for the moment. That can’t be good for partisan loyalty.
The Biden Administration shivved Reid this weekend. Why would you ever fool yourself into thinking they won’t do it again?
Given the margins by which it passed, it seems clear to me that we gave away too much.
Ken, it looks like Reid put his foot down and drew an absolute line. That was what the ultimate terms were: Reid’s bottom line. McConnell, I think, was demanding a $550,000 tax-rate-increase floor. Reid wouldn’t allow it; it was $450,000 max, or no deal. Also, Reid would not allow the Social Security chained cost-of-living thing, or a Medicare age increase, to be a part of the deal. I don’t think it’s the Biden administration at all; Obama, not Biden, is the one who wants to cave, and McConnell and Boehner know it’s Obama who is the caver.
Look, I think the Dems came out well in the deal, because what they gave up–mainly the difference between a $250,000 floor and the $450,000 floor, and the very high estate tax floor (which is appalling), are things that can be used in the debt ceiling negotiations and during the 2014 campaign. (Reportedly, there were some Dem senators, e.g., Baucus, who were against changing estate tax rates, so they might not even have had a majority of Dem senators on that.) When the Repubs start complaining that we need more debt reduction, the Dems can say that we would have more debt reduction if the Repubs had agreed to restore Clinton-era tax rates for incomes above $250,000 and for large estates. The Repubs now will have to actually identify what spending cuts they want. And the Dems can say, well, we wouldn’t need to cut so much from education (for example), or from FEMA, or whatever, if we could raise the tax rates on incomes above $250,00 and tax large estates that we don’t tax now.
And the extension of unemployment compensation–an important issue–is now out of the way.
This is another step toward tea party (Koch/Peterson…) dystopia.
2% tax increase for everyone making $120K or less, 2.2% for 400K plus earners!!
Temporary tax cuts are only temporary for poor folk.
And the war machine is taking 50% too much, while the insurance cabal is skimming a couple of percent off 15% of GDP.
I just read a post by digby that the new revenues are marked for debt reduction and nothing more. The post was talking about Obama’s claim to be boosting US investment in it’s self when the budget shows a steep decline.
If this is true, then we’re screwed even more than we think.
Steve, Boehner put the thing up for an up-or-down vote mainly because the Senate vote was so lopsided. Reportedly, some really rightwing House members were stunned that so many Far-right senators voted for it; they hadn’t expected that. But that’s what boxed Boehner in and allowed him to bring the thing to a full-House vote, without–horrors!–risking losing his speakership.
I just think the pols and pundits who think the Repubs will be in a stronger position in the debt ceiling thing are wrong. I think the Senate Dems are the ones who’ve gained strength.
The senate dems will have the strength only if the fix the filibuster rules. They also have to recognize that the real power has always been with the Senate in order to be able to use it.
I’m not as confident in Reid as you are, though if I recall properly every dem senator that lost was a blue dog replaced by a more progressive one.
Poor Obama, his blue dog frat is not the one to be in on campus so much now.
I certainly hope you are right. Even as I voted for Obama I knew that everything was gonna hit the fan during the upcoming debt ceiling debate. Obama has promised not to negotiate over the debt ceiling but we all know he has no backbone for a fight with the crazy folks in the House. If he was going to fight back wouldn’t he be setting up a series of “events” that the Repubs would hate, i.e. end the war, downsize the military, end war toy production on a massive scale? Since he isn’t I expect he will cave. If Reid does act as a stop to Obama giving away the show then he will have preformed a huge public service.