Could Obama have avoided the debt ceiling fight?

The standard progressive narrative is that president Obama wanted a clean debt-ceiling hike but was forced, by extremists in the Republican Party, into making unwanted budget cuts—a deal Democratic Rep. Emanuel Cleaver of Missouri called “Satan’s sandwich.”

But, in a recent article titled “The Myth of Obama’s Blunders and Weakness,” Glenn Greenwald says:

The evidence—beginning with Obama’s own repeated statements—is that that’s just not true: he affirmatively wanted these cuts and more, as part of the debt ceiling hike.

Greenwald points to, among other things, Obama’s hand-picked, anti-entitlement deficit commission, and its dubious recommendations—recommendations that will be considered by the newly minted congressional panel of twelve who will decide our fates behind closed doors.

Another progressive narrative is that it was the Republicans who were calling for cuts in Social Security and Medicare. But, not so, according to Rep. John Conyers as reported in OpEd News:

“The Republicans, Speaker Boehner or Majority Leader Cantor did not call for Social Security cuts in the budget deal. The President of the United States called for that,” declared US Representative John Conyers in a press conference held by members of the House “Out of Poverty’ Caucus on 07/27/11.”

Robert Reich’s take on the debt deal:

By [The White House and Democrats] putting Medicare and Social Security on the block, they have made it more difficult . . . in the upcoming 2012 election cycle, to blame Republicans for doing so.

By embracing deficit reduction as their apparent goal—claiming only that they’d seek to do it differently than the GOP—Democrats and the White House now seemingly agree with the GOP that the budget deficit is the biggest obstacle to the nation’s future prosperity.

The budget deficit is not the biggest obstacle to our prosperity. Lack of jobs and growth is.

Matt Taibbi on the recent debt ceiling debates:

The Democrats aren’t failing to stand up to Republicans and failing to enact sensible reforms that benefit the middle class because they genuinely believe there’s political hay to be made moving to the right. They’re doing it because they do not represent any actual voters. I know I’ve said this before, but they are not a progressive political party, not even secretly, deep inside. They just play one on television. . . .

It’s a no-brainer that the debt deal will worsen an already bad economic situation for working families.  Senator Bernie Sanders, summed it up in three words: “immoral, grotesque, unfair.”

So, what could Obama have done differently?

David Dayen, writing in the American Prospect, cites five strategies President Obama and Democrats in Congress could have embraced to avoid the debt-ceiling debacle. The following are paraphrased and abbreviated versions of his five suggestions along with my comments. To read his entire, excellent article, click here.

1. Fixed the economy

The stimulus package helped to some extent but everyone now agrees it was too small. If president Obama had strongly pushed for, and a Democratic Congress had approved, a second stimulus plan in late 2009—when the Senate had 60 Democratic votes—the recovery would have been more robust, leaving Republicans without much leverage in the debt-ceiling negotiations.

A second stimulus may not have passed, but the point is Obama didn’t try.

2. Included the debt limit in the 2010 tax deal.

At the end of 2010, during the lame duck session, the Bush tax cuts were due to expire, and Republicans were desperate to see them extended—tax cuts being their signature issue. At that time, the president could have included the debt ceiling in that deal, but, although many experts recommended he do so, he chose not to. In a press conference during that time, when a reporter asked why he was not including the debt ceiling in the deal, the president said it wasn’t necessary, that he couldn’t imagine anyone in Congress threatening government default.

My feeling is that Obama needed the fight we just had to enact the cuts that he, his donors, and his political advisors wanted.

3. Argued against the premise that America has a debt crisis

The Republican narrative is that America has a massive debt crisis that requires slashing spending so as to provide confidence for the business community to invest and create jobs.

The GOP premise, of course, is false; but Democrats and the President never took that argument to the public. The truth is that a contraction in government spending in a weakened economy is a recipe for economic disaster—a view held by progressives Paul Krugmann, Robert Reich, Joseph Stiglitz, and others.

Instead, the president and conservative Democrats embraced the GOP’s false premise, and competed with them to offer even more fiscal austerity, which pushed the debate to the right. Not satisfied with Senator McConnell’s offer of a clean debt ceiling vote, Obama sought a $4 trillion “grand bargain” with Republicans to cut spending and “entitlements,” but with a corresponding tiny increase in revenue.

My feeling is that the president went after a “grand bargain” including “entitlement” cuts because his political advisors, i.e. Plouffe and Alexrod feel it will boost corporate donations and help him get reelected.

4. Made credible threats

Many legal scholars believe that the president could have threatened to use the 14th amendment, which gives the president a way to ignore the debt ceiling. But the president sought legal advice that advised him against using it.

Another threat the president could have used: The Treasury has the authority to mint platinum coins of any denomination without the input of Congress. Treasury could have legally minted two $1 trillion coins, deposited them in the Federal Reserve, which would then have been used to pay bills. This is way out there—the stuff of novels—but certainly indicates the president had super powers at his disposal.

A more realistic option, Obama could have made a good argument that the debt ceiling itself is unconstitutional.

Dayen’s point is that if Obama had made credible threats, the public would have gotten behind his strong leadership.

5. Involved the public earlier than July 25

On July 25, president Obama asked the public to call their congressmen, and they obliged enthusiastically, causing a temporary shutdown of congressional switchboards and email servers. Because the president still commands tremendous loyalty, he had an opportunity to involve the public much earlier in the debate, to organize for a better deal, to use them as a grassroots ally in the legislative process.

But for me the issue is larger than what Dayen describes. From the moment he took office, the public has been waiting for true progressive leadership from president Obama, and would have followed him over a cliff for policies that healed the economy, supported working families, and reigned in the predators on Wall Street.  If he had reached out to the public, and provided that leadership, the “shellacking” of 2010 would not have happened and the Tea Party would never have taken hold.

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