Debt ceiling deal is a defeat -- what next?

Chris Lowe

The debt limit deal is a defeat: A defeat for the country, a defeat for the Democratic Party, a defeat for the economy, a defeat for Oregon. It poses fundamental strategic questions about the way forward. We can only address those questions by recognizing the defeat for what it is. That means giving up any inclination to support the spin by the DC Democrats, who were forced into the deal by blackmailing deadbeat extortionist extremists, that it was somehow a victory. We dodged a bullet to the head by taking a gut shot. A gut shot is not a victory.

The strategic questions affect what we do in Oregon, and need to be discussed here in Oregon, as well as in more nationally oriented venues.

The debt limit deal (full text pdf here) is a defeat for the country because it represents the victory of Republican extremists in defining the terms of debate away from the American people's real and accurate priorities. It is also puts into place an anti-democratic "SuperCongress" procedure, to either force cuts in core values social insurance programs (Medicare, Medicaid and Social Security) that the people want protected, or put in place "automatic" cuts to infrastructure and education if the SuperCongress bipartisan, bicameral committee of 12 doesn't make recommendations or if their recommendations fail on a fast track vote, no amendments or filibusters permitted. Negotiated cuts would be made on the backs of working people, the poor, elders and the most vulnerable, automatic ones at the expense of jobs and the economy, again hitting working people and the poor hardest.

The deal is a defeat for the Democratic Party in a narrow sense because it represents the Republicans getting at least 70% of what they wanted, and the Republican Ultras getting at least 50% of what they wanted. The first round of deficit reduction is all cuts, no new revenues. The only form of revenues that might come out of the SuperCongress would come from "tax reform" in which rates for the wealthy would be lowered in exchange for loophole closure -- no rate increases allowed. Medicare, Medicaid and Social Security are all on the table. If they are protected, the process will almost certainly go to automatic cuts. There are limited (ca. $35 billion / year) military spending cuts envisioned, but no change in wars, occupations, or other elements of U.S. imperial posture and structures. Republicans will get a symbolic Balanced Budget Amendment to the constitution vote, though it requires an unattainable 2/3 majority of each house. Daily Kos has an interesting analysis of how the Republicans can likely game this definition of issues to their advantage (h/t to Kari for this link).

And the debt ceiling deal is a defeat for the Democratic Party in more profound ways. It represent a Republican victory in defining the ground and controlling the terms of debate. As long as the Democrats continue to try to fight on those grounds in those terms, they lose. Poll after poll shows that 50% or more of the public sees the jobs crisis as the most important issue and priority, while only 10% see the long term debt that way. Poll after poll shows that about 60% favor Medicare and Medicaid and don't want the deficit to be reduced by cutting them, with even larger support for Social Security. The deal will leave the Democratic base (voters, not ideological activists) confused, uncertain, insecure and disappointed if not feeling outright betrayed. It will do nothing to ease the jobs crisis. The base will stay home in droves. Apparently President Obama's advisers have persuaded him that he can gain enough independents on the right in a shrunken electorate to compensate for loss of Democratic base voters. Apart from the question of whether that's any way to run a party, the president's loss of 10% of his support including among independents since he started strongly putting long term debt over jobs as a priority suggest they are wrong. Regardless of whether he ekes out an individual victory, the path laid out by the debt deal means Democratic disaster in the Congressional elections. If Obama loses, the country gets a Republican president and a Republican Congress with the Ultras champing at the bit. If Obama wins, the country gets him negotiating and compromising with the same kind of Congress.

Finally the debt limit deal is a defeat for the economy. Long term debt is a side issue to the continuing economic crisis faced by the country apart from the financial markets. Fixing the economy would help the deficit problem, while cutting pubic spending in the name of long term debt reduction will keep slow growth or throw us back into recession, leading to a spiraling demand for more cuts under the current terms of debate. Growth last quarter slowed to 1.3%, and it turns out that first quarter growth was originally much exaggerated. Unemployment has increased again due to public sector cuts in state and local budgets, driven by exactly the kind of economic reasoning behind the deal.

The strategic question for progressives, then, ought to be how to change grounds and the terms of debate. Ideally this would be an idea taken up by the national Democratic Party, because on the current grounds and terms the Democrats lose and lose and lose again, and will get hammered in the elections. The Ds could run in 2012 on a platform that made it a referendum on "Republican extremism": help us take back the Congress to protect the core value safety net programs that the American people support, raise the revenue needed to do so, focus on jobs, wind down the wars and excessive military spending, and deal with long term debt issues in a solid way when the jobs crisis has ended, not driven by blackmail and extreme rhetoric.

Getting there would be tough, though I would urge party activists to try, because it would require a big change in direction from President Obama. But the course he is setting is the wrong one, and he needs to be persuaded of that. Should it prove impossible to change the national party's course for the elections, I think progressives should still be working for such change in the aftermath of likely defeat in 2012, and as the grounds for fightback against probable Republican dominance if the Democrats embrace the course set out in the deal rather than using it as a foil to run against Republican blackmail tactics.

That's my take, anyway. What do you think? And if I'm even partly right, how do get the DP to focus on changing the grounds and terms of debate?

By Chris Lowe Aug. 01, 2011