Jonathan Chait argues that, given the President’s earlier blunder of failing to condition his willingness to extend the Bush tax cuts on raising the debt ceiling, the deal that emerged was “about as non-bad as it could have gotten.” Perhaps so. But this paragraph is the one that sticks out:
Furthermore, unlike many other liberals, I agree with a key element of the administration’s political calculation. The thinking is that Obama lost the support of a key centrist element of his coalition due to the perception that he’s an out-of-control spender who created big deficits. The perception is wrong, but that doesn’t really matter. Signing onto a major deficit reduction deal helps rebuild Obama’s image. That the deal consists entirely of spending cuts probably only helps. What’s more, recognizing that Democrats will never obtain a fiscal readjustment entirely on their own terms, I’m willing to swallow some cuts to Medicare and Social Security in the pursuit of deficit control.
Two things: First, Chait is saying that the President’s bargaining position (seeking huge spending cuts, but little additional revenue) was an intentional political calculation designed to tack right. More evidence for this has been highlighted in prior posts. Second, from a policy standpoint, Chait’s piece (as well as the President’s position) is economically clueless. Does Chait not understand that government spending always increases dramatically in economic downturns, that the longer and deeper the downturn, the more red ink flows, and that this is due largely to “automatic stablizers” like unemployment insurance, Medicaid, “welfare,” etc.? Does he not get that these programs shorten recessions, such that, over the longer run government coffers will have more net revenue in them if such programs are protected? Does he not understand that, in the current climate — where aggressive stimulus is not being seriously considered by anyone in power — these programs are what is keeping our economy from falling into the sea?