How far should he go in accommodating the G.O.P.’s demands?That is the heart of Krugman's Friday New York Times column, Let’s Not Make a Deal
My answer is, not far at all. Mr. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a “grand bargain” on the budget that snatches defeat from the jaws of victory.
Krugman recognizes that the House remained in Republican hands largely due to gerrymandering. He further acknowledges that Speaker Boehner's remarks indicate that that body will therefore remain as intransigent as in the past term, with his continued insistence that there be no increase in tax rates, even for the wealthy.
Further, he recognizes that there is real economic risk in allowing the combination of events of the forthcoming "economic cliff" to occur, especially given the threats of the sequester.
And the looming combination of tax increases and spending cuts looks easily large enough to push America back into recession.Why does Krugman argue this?
Nobody wants to see that happen. Yet it may happen all the same, and Mr. Obama has to be willing to let it happen if necessary.
Kept reading to find out Krugman's argument, and if you are interested, what thoughts I have to add.
Because he should not give in to the economic blackmail that the Republicans are willing to apply in order to get what they otherwise cannot achieve through the normal legislative process, especially making permanent the Bush tax cuts for the very rich that the public wishes to see go away:
they’re threatening to block any deal on anything else unless they get their way. So they are, in effect, threatening to tank the economy unless their demands are met.Unless the President wants continued hostage taking to distort the legislative process, which is what has happened since the last time he gave in, he has to be willing to say no, to let the economy go over the cliff if necessary.
Krugman rightly points out this is not a real cliff, the process of economic pain would occur over months, not immediately. allowing for time to bargain. He believes it would would hurt the wealth corporate types as much as the rest of us, which would put pressure on the Republicans to cut a deal.
He also believes the President is in a far stronger position for this confrontation, in no small part due to the fact that he ran a populist campaign - he did run on allowing the taxes on the top 2% to expire. Obama won a big victory, and thus Krugman believes he can weather any subsequent storm. I agree with Krugman that he is positioned to portray the Republicans as inflicting this pain on behalf of "the privileges of the 1 percent." Obama has won that argument.
But there is something much more fundamental.
Most of all, standing up to hostage-taking is the right thing to do for the health of America’s political system.We do need to put our fiscal health in order.
The current outlines of the Grand Bargain, based on Simpson-Bowles, are not acceptable. We cannot fix our financial problems on the backs of the poor and the middle class.
It is certainly time for the wealthy and the corporations to pay a fairer share.
I know that Boehner has said increasing the rates off the table.
There is a political issue, which is a framing of the issues.
One thing that Krugman does not address is how one frames the Republican continued control of the House of Representatives, so they cannot justify their intransigence on taxes and other issues on the grounds that they ran against the President's economic policies. The key to this is two-fold
1. Many of the districts the Republicans won narrowly were very gerrymandered.
2. A majority of the American people voted for Democrats in the House.
The key is to delegitimize Republican instransigence.
I think that insisting on doing the "Grand Bargain" in the expiring Congress is a mistake. First, the Congress will be significantly more liberal in January. That provides some leverage on the current Congress - you can demand far more concessions and put the burden on some of those who will not again have to stand for reelection, because either they have retired - Snowe and Conrad in the House - or been defeated - a number of Republicans in the House.
I am bothered by the likes of Schumer negotiating in public, saying continuing with a 35% top rate might be acceptable. This is as bad as Obama taking the public option off the table before sitting down.
A significant majority of the American people think the wealthy should pay more.
Social Security is not at risk - any additional revenues can be obtained by simply raising the cap on the earnings subject to the tax.
Medicare does need to be addressed - but the issues driving the cost are neither benefits or revenues coming in, rather it is far more the case that the profit margins remain too high.
It is unfortunate that the President did not make the Medicaid argument that was needed - yes, it is taking care of poor people, which saves all of us in the long run, but it is also middle class families with elderly members who outlive their other resources, and need custodial care.
President Obama won a significant victory.
Not winning the House creates a stumbling block, but it should not be a total obstacle. After all, House members have to run again in two years, and while the President might not be on the ballot again, he can still use the threat of his formidable political machine to pressure - even threaten - those who remain obstructionist on the policies it is clear the American people want.
President Obama would do well to listen to what Krugman has been saying, including in this column.
Especially Krugman's final words:
So stand your ground, Mr. President, and don’t give in to threats. No deal is better than a bad deal.