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Obama’s Negotiation Strategy, Such As It Is

In the few hours since Boehner walked out of the negotiations (which my colleague Doug Mataconis covered here), I’ve been thinking about how I might have approached it if I were in Obama’s position. I’ve reached a conclusion: I never would have negotiated in the first place.

Let me start by saying that I don’t think now is a good time to be either raising taxes or cutting spending. Having said that, the Republicans entered these negotiations saying there would be no tax increases or cuts to defense spending. President Obama should have made it equally clear that there would be no cuts to entitlements and that, if there was to be any deal, it would have to include new revenue. He didn’t do that. He should have stated to the American people that there was no basis for negotiations, that the debt ceiling is merely a housekeeping procedure and that any increase had to originate with Congress and that they were not doing their jobs. He didn’t do that either.

For the life of me I can’t understand why he won’t get tough with these guys. He has to have known how unhinged they are and that, if it met their ideological agenda, they would create a new financial crisis. Knowing all of this, what could possibly be gained from talking to them? I realize Obama wants to be seen as reasonable, but his reasonableness has contributed to us getting to this point. He needs to get mad and explain, loudly, to the American people exactly what the consequences of a default are. To borrow a phrase from Sarah Palin, he needs to quit pussyfooting around with these guys.

So, aside from refusing to negotiate, what else would I have done? There are two options that I’m aware of: the 14th amendment option and another option where the Supreme Court ruled back in the 60s that the executive branch was obligated to spend money appropriated by Congress (I can’t remember the case, but perhaps a commenter can help me out).

On the 14th amendment option, I would have asked the Office of Legal Council (OLC) to start looking at the constitutionality of the debt ceiling and have them determine whether it was, in fact, constitutional. There’s a fairly good chance that it’s not. Also, from what I’ve read elsewhere, no one would actually have standing to sue so it’s unlikely that the courts would even get involved.

Failing that, I would look into the notion that by appropriating the money and failing to raise taxes enough to cover the appropriation, Congress has implicitly raised the debt ceiling. There are only three variables here: taxes, spending and borrowing. If I’m the president, I know I can’t raise taxes on my own and probably wouldn’t even begin to know how to go about it. As for spending, Congress has already ordered me to spend that money and has failed to provide the revenue to fund it. This leaves me with one option, to issue new debt, and I know how to do that. Treasury auctions off bonds all the time; it’s routine and easily accomplished.

If the courts did get involved and shot down either of the above options, I would make it clear that creditors get paid first and I would make it equally clear that when deciding which contractors and the like get paid, I would make it a point not to pay the ones in the congressional districts of the guys who were stopping the debt ceiling from getting raised.

There are risks from this approach. If the 14th amendment argument held up, or the courts chose not to get involved, I would expect the House Republicans to double down on stupid. In other words, they will try to impeach him. It would probably pass the House, but there’s no way the Senate would vote to convict.

Is this a risky strategy? To use another Palinism, you betcha. But, it beats being conciliatory with a bunch of thuggish idiots who are intent on destroying the economy.

Update: Apparently the case I was thinking of is Train v. City of New York. Thanks to Sam for the pointer.

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About Robert Prather
Robert Prather formerly blogged at the now defunct Insults Unpunished and, unlike his co-blogger Dodd, can not kill a mime using only his thumb. Follow him on Twitter.

Comments

  1. michael reynolds says:

    I think the explanation is quite simple: Obama knows that entitlements have to be cut. So he didn’t play Dr. No, he did what he thought was right for the country.

    His mistake was believing that Republicans care about the country.

    Hot debate. What do you think? Thumb up 15 Thumb down 5

  2. @michael reynolds: I can only think of one cut — I would call it an adjustment — that I would support in entitlement reform: changing the index that is used to calculate COLAs. Raising the retirement age might be fine for you or I, but it’s no good for people who labor for a living. An extra couple of years of labor isn’t a good option for people in their mid-60s.

    As for Medicare, if we truly want to control costs, we need to extend it to everybody and implement a VAT or a carbon tax, or both to fund it. Only then can we control costs.

    Like or Dislike: Thumb up 4 Thumb down 1

  3. Ben Wolf says:

    I don’t think confrontation is in Obama’s nature. Remember when Republican opposition to the PPACA solidified after the televised negotiations at the White House; the president backed off and it seemed the bill was dead. Reid and Pelosi were primarily responsible for the bill being passed with the president largely taking a rain check on his own signature legislation, at least until it seemed Democrats had enough momentum to make it happen.

    I don’t think it’s that he just wants to be seen as reasonable. He may not be temperamentally capable of anything else.

    Like or Dislike: Thumb up 4 Thumb down 0

  4. Jib says:

    I dont think it is a court case that said the executive branch had to spend all money allocated by congress. I think it was an act of congress, the budget act of 1974.

    My position all along is that you have a 1917 law that says there is a limit to the total debt and you have a 1974 law that says the president has to spend all monies allocated by congress. Obama has to break a law either way and as I understand it the newer law takes precedent. So he should spend the money.

    If the republicans want to cut the budget then dont allocate the spending in the budget. It really is as simple as that.

    Like or Dislike: Thumb up 0 Thumb down 0

  5. @Ben Wolf:

    I don’t think it’s that he just wants to be seen as reasonable. He may not be temperamentally capable of anything else.

    You put it very well, and that’s a horrible weakness to have when dealing with these guys. They’re playing for keeps.

    Like or Dislike: Thumb up 3 Thumb down 0

  6. @Jib: Maybe my memory is failing me, but I thought there was a court case over the issue of the president impounding funds that SCOTUS ruled on. I may very well be wrong.

    Like or Dislike: Thumb up 0 Thumb down 0

  7. Ron Beasley says:

    We make a mistake when we think that anything that goes on in DC has anything to to with governing – it’s pure and simple tribal warfare. While this is not new it has intensified with the talk radio-FOX news poison.

    Like or Dislike: Thumb up 4 Thumb down 2

  8. Jib says:

    @Robert Prather:

    You may be right, I am working of what was said in the comments from the 14th amendment post (http://www.outsidethebeltway.com/the-14th-amendment-option-and-the-imperial-presidency/)

    In any case, rather because a court said he had to or there was as law passed that said he had to, I still think Obama has to break a law no matter what he does. Either spend all the money and break the debt ceiling or honor the debt ceiling and not spend all the money.

    I would chose the one that does the least damage, spend the money.

    Like or Dislike: Thumb up 0 Thumb down 0

  9. Herb says:

    Hindsight is 20/20. Obama’s in a damned if you do, damned if you don’t situation. If he hadn’t negotiated, “death panels” would have seemed like a little white lie. I don’t know what the right wing would have come up with, but I do know they would have come up with something.

    When you’re in one of these lose-lose situations, it’s best to just do the right thing and lose gracefully. And in this case, the right thing was negotiate. It’s just too bad the opposition can’t be bothered with any of this “right thing” stuff.

    Like or Dislike: Thumb up 1 Thumb down 0

  10. @Ron Beasley: You’ll get no argument from me. I don’t watch cable news at all now, but back when I did I switched away from Fox and back to CNN around 2005. Even then it was a propaganda machine.

    Like or Dislike: Thumb up 0 Thumb down 0

  11. @Jib: we agree; it’s just a technicality and he should spend the money.

    Like or Dislike: Thumb up 0 Thumb down 0

  12. @Herb: I think, if the Obama Administration were better at communication, he could have pulled it off. It would have meant telling the people at every turn that there is no basis for negotiations because the GOP is entering with poison pills in place.

    As you say, though, hindsight is 20/20.

    Like or Dislike: Thumb up 0 Thumb down 0

  13. PJ says:

    @Robert Prather: Question is how media would have reported it, factually, or would it just be more of “he says/she says” and “both sides are to blame”.
    I’m thinking the latter…

    Like or Dislike: Thumb up 1 Thumb down 0

  14. @PJ: You might very well be right, but it would be worth a try. I’m not saying Obama should pull a full Howard Beale, but he’s got to get emotionally involved in this and explain it directly to the American people. Maybe he could do an address from the Oval Office, like Reagan, and skip the media filter altogether.

    Like or Dislike: Thumb up 0 Thumb down 0

  15. I wonder if part of Obama’s problem isn’t that this is an example of why you shouldn’t nominate a president who is less than four years removed from being a State Senator. He may simply not have been ready to play the game at this level.

    Like or Dislike: Thumb up 2 Thumb down 1

  16. @Stormy Dragon: Dear God, let’s hope not. I tend to think that any reasonably intelligent person can do the job as long as they have seasoned advisors. I think @Ben Wolf probably had it right when he said Obama might not have the temperament to do anything other than be reasonable.

    Which reminds me; I’ve seen a lot of talk on the rightosphere claiming that Obama is a tough (and crooked) Chicago-style politician. If only that were true…..

    Like or Dislike: Thumb up 3 Thumb down 0

  17. ponce says:

    You put it very well, and that’s a horrible weakness to have when dealing with these guys. They’re playing for keeps.

    Why is it a weakness?

    Obama has handled these negotiations perfectly.

    The confused Americans like James who continue to fund and vote for these..um…rigid Republicans need to see them as they truly are before they can take their first steps away from them.

    Like or Dislike: Thumb up 1 Thumb down 0

  18. anjin-san says:

    both sides are to blame

    I think Doug is selling tshirts with that slogan on them…

    Like or Dislike: Thumb up 3 Thumb down 1

  19. sfp says:

    I guess I’m not entirely sure how Obama “lost” by doing it the way he did. If the negotiations stay dead, then Obama has everything he wants (either through a clean debt ceiling raise or the 14th amendment maneuver), and given up nothing. Plus, he makes the tea party look like the petulant lunatics they are and gets the support of Wall Street for 2012.

    Like or Dislike: Thumb up 1 Thumb down 0

  20. @ponce: I would just prefer to have a knife fighter in there because, as I said in the earlier comment, they’re playing for keeps.

    Like or Dislike: Thumb up 0 Thumb down 0

  21. @sfp: I hope you’re right.

    Like or Dislike: Thumb up 0 Thumb down 0

  22. sfp says:

    @Robert Prather: I hope I am, too. It’s been a nerve-wracking couple of weeks, and it’s not going to get any less so between now and August 3.

    Like or Dislike: Thumb up 0 Thumb down 0

  23. Raoul says:

    Right now I think the net worth of all us will drop 50%- I will give a 50%- I told my son what’s money=leverage and trust – both which will take a hit- on a practical note- I think it is easiest to stop SSA payments.

    Like or Dislike: Thumb up 0 Thumb down 0

  24. ponce says:

    I would just prefer to have a knife fighter in there because, as I said in the earlier comment, they’re playing for keeps.

    Really?

    Will Wall Street ever fund another Republican candidate after this?

    Will people who want to be taken seriously in any profession ever admit to being a Republican again?

    Wingnuts always double down on the crazy when they’re cornered. Always.

    Obama knows this and he is playing them perfectly.

    Like or Dislike: Thumb up 1 Thumb down 0

  25. @ponce: As I said to sfp, I hope you’re right. If all of the things you said happen, my goal will be reached: the Republican Party will get much smaller and will hopefully stay that way long enough for them to become more moderate.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. superdestroyer says:

    Contracting officers and resource managers in the executive branch could end up being criminally liable if they spend money that the government does not have. Do you really think that the political appointees in the Obama Administration would want have career civil servants commit crimes for their own political gain.

    Like or Dislike: Thumb up 0 Thumb down 0

  27. @superdestroyer: They would have the money if the Treasury issues more debt.

    Like or Dislike: Thumb up 0 Thumb down 0

  28. Rick Almeida says:

    @ponce:

    Obama has handled these negotiations perfectly.

    Perfectly? Really?

    @Robert Prather

    For the life of me I can’t understand why he won’t get tough with these guys.

    My biggest disappointment with this president is his unwillingness to do this.

    Like or Dislike: Thumb up 0 Thumb down 0

  29. superdestroyer says:

    @Robert Prather:

    But could the civil servants in the Treasury Department legally issue the debt. The political appointees could become scofflaws with little down side impact but would the civil servants really go along with it. One of the restraints on the government is that the politicians do not actually have the authority to spend money. It remains with the civil servants.

    Like or Dislike: Thumb up 0 Thumb down 0

  30. sam says:

    @Robert Prather:

    @Jib: Maybe my memory is failing me, but I thought there was a court case over the issue of the president impounding funds that SCOTUS ruled on. I may very well be wrong.

    I think you mean Train v. City of New York, 420 U.S. 35 (1975). See also, Impoundment of appropriated funds.

    Like or Dislike: Thumb up 0 Thumb down 0

  31. Herb says:

    @superdestroyer: Maybe, but I wouldn’t want to be the prosecutor on that case. “What are you in for?” “I worked in accounts payable.”

    Gimme a break.

    Like or Dislike: Thumb up 0 Thumb down 0

  32. Argon says:

    I used to have the same exasperation with Obama’s willingness to negotiate rather than beating on his opponents. But he has a different style that seems to work for him and I’m starting to appreciate it more. I think an initial confrontation is exactly what the President planned to avoid. Let the opposition self-destruct. Let them be seen as being destructive. Show up as the adult. After all, these people want confrontation. If you answer with moderate responses and appear willing to listen then you have a chance to take back control by doing the unexpected. I can understand the visceral appeal of ‘standing fast and holding your ground’ – that’s part of the American mythos – but there are other ways that have better long-term outcomes. I don’t think his response has been perfect, particularly with regard to being to pre-empt and shape the debate in advance but that ability is often more a matter of luck. What you do with shifting fortune is skill.

    Like or Dislike: Thumb up 4 Thumb down 0

  33. Brutalfacts says:

    I think Obama has played this out about as flawlessly as possible. This process has allowed him to expose the following:

    Grover Norquist isn’t yet a household name, but he has been formerly introduced to the Americans that really don’t pay close attention. By the end of the 2012 campaign he will be a household name.

    The “govern by pledge” tactics used within the GOP

    That the Tea Party types really have no clue how government (and life) work. He allowed them to publicly expose their ignorance.

    Wall Street now knows that today’s GOP no longer cares about their interests.

    He can add the Cut, Cap and Balance legislation (and those that voted for it) to the Ryan Plan as weapons to be used to show the GOP for what it is. CCB is full of useful talking points and the Republicans signed off on it.

    Came off as the “adult in the room” knowing he could offer cuts he really did not want to be enacted as long as he insisted on tax increases. In the end he will give up very little or nothing, pivot and use the unreasonable anti-tax and proposed spending cuts against the Republicans.
    He did this all knowing that at the end of the day the GOP would have to raise the debt ceiling. And that he has the expiring Bush tax cuts in his back pocket.

    If the GOP continues to pay this out to default because the Tea Party continues to make it impossible to pass a raise in the debt ceiling next week he pulls the 14th amendment card. I am sure that he has some very heavy hitters ready to “ask” the President to use this tactic to avoid default as time grows short. He then goes on TV, states he is protecting the assets of “Hard Working Americans” (401Ks, etc.) and the if the Republicans feel the need to challenge this in court and force America into default or bring Impeachment proceedings they are welcome to do so.

    This is what 11 dimensional chess looks like.

    Like or Dislike: Thumb up 4 Thumb down 1

  34. Dave Schuler says:

    Failing that, I would look into the notion that by appropriating the money and failing to raise taxes enough to cover the appropriation, Congress has implicitly raised the debt ceiling.

    I made that argument when Sec. Geithner first raised the 14th Amendment issue, suggesting that we didn’t need to resort to the 14th Amendment, merely point to the Congress’s appropriations and assert that the borrowing was implicit in the appropriations. It was decried at the time largely on the grounds that the Constitution imposed no requirement for the Congress to be coherent or consistent.

    Like or Dislike: Thumb up 1 Thumb down 0

  35. @Argon: I see what you’re saying, but it makes me nervous. I hope he’s going to pull a 14th amendment rabbit out of his hat before the deadline. I genuinely believe a default would be, not catastrophic, but very close.

    Like or Dislike: Thumb up 0 Thumb down 0

  36. @Dave Schuler:

    It was decried at the time largely on the grounds that the Constitution imposed no requirement for the Congress to be coherent or consistent.

    I like that sentence. Perhaps they need to have coherence and consistency imposed upon them. Right now they are taking shots from the cheap seats and expect no consequences for their perfidy. I hope Obama disabuses them of that notion.

    Like or Dislike: Thumb up 0 Thumb down 0

  37. @Brutalfacts: Given everything you said — nice comment by the way — I hope it plays out that way. I would like to think that Obama’s disposition is working for him and not the other way around. It appears we will find out in the next week or so.

    Like or Dislike: Thumb up 0 Thumb down 0

  38. Dean says:

    I know I’m going to get killed here, but the House passed a bill that the Dems chose to table in the Senate. Had the Senate agreed to the cut-cap-and balance plan, this would all be over. I don’t understand why the Republicans are expected to bend on their principles, but the Dems can continue to bring forth no solutions and get a pass.

    At some point, the Federal government has to get its spending under control. You can’t keep asking taxpayers to work longer and harder because Congress is unwilling to live within its means.

    Like or Dislike: Thumb up 0 Thumb down 3

  39. An Interested Party says:

    @Argon & Brutalfacts: In other words, the rope-a-dope strategy…if nothing else, this whole mess has done an excellent job of exposing the current GOP for exactly what it is…

    Like or Dislike: Thumb up 0 Thumb down 0

  40. An Interested Party says:

    I know I’m going to get killed here, but the House passed a bill that the Dems chose to table in the Senate. Had the Senate agreed to the cut-cap-and balance plan, this would all be over.

    Let’s take a closer look at that bill, shall we?

    Cuts spending too fast: The House bill would cut total spending by $111 billion for fiscal year 2012. While that represents less than 1% of the economy, the timing of the cuts might further weaken the recovery.

    Creates needless distraction: It could take years for Congress and the states to debate and approve a balanced budget amendment to the Constitution. That time would be better spent actually debating and approving entitlement and tax reform, said Robert Bixby, executive director of the Concord Coalition, a deficit watchdog group.

    “We should be spending our time doing that instead of taking our time to amend the Constitution to force us to do that,” he said.

    Too stringent on spending: The balanced budget proposals would cap spending at 18% of GDP — although they don’t define GDP consistently. Keeping spending at 18% is a very hard target to meet given the growing demand for Medicare and Social Security as the country’s population ages.

    How hard? Former CBO Director Rudolph Penner notes that by 2035, spending on Medicare, Social Security and interest on the debt is likely to account for 14% of GDP. Under an 18% spending cap, that would leave 4% to pay for everything else. Consider that the United States today spends 4.7% of its GDP on defense alone.

    And requiring spending and taxes to match up evenly would make it hard to respond to downturns, when demand for government spending rises and revenue falls. That would “dramatically impede” efforts to fund lifeline support like unemployment benefits and food aid, the House Budget Committee’s Democratic staff said in a memo.

    Too inflexible on taxes: The Cut, Cap and Balance bill would impose a very high barrier to approve any tax increase, requiring a two-thirds vote — or supermajority — in both the House and Senate.

    The reason why fiscal experts on the left and right have said a long-term, credible debt reduction plan must include both spending cuts and tax increases is because it’s simply too hard economically to do just one.

    If lawmakers want to permanently freeze the debt held by the public where it was earlier this year — around 62% of GDP — they would need to immediately cut spending by 35% or about $1.2 trillion, according to the Government Accountability Office. And those cuts would need to be permanent.

    That’s nearly as much as the country spent on all of its discretionary spending — including defense — in 2010.

    Thanks to the Senate for killing this thing…

    Like or Dislike: Thumb up 3 Thumb down 0

  41. Brutalfacts says:

    @Dean:
    Your kidding right? Have you read the bill? Or if it “cuts spending” that is good enough for you?

    CCB was purely political, everyone involved knew that it had no chance in the Senete (do you understand the rules in the senate?) and the President would veto in the very unlikely case that it somehow passed the senate. It was put in place so people like you can say “gee, the hard right passed a plan that butchered the economy so why can’t we use that and this would be over? ”

    Never a serious plan, pure posturing and red meat for the GOP base.

    Like or Dislike: Thumb up 2 Thumb down 1

  42. @Dean: the problem is that none of this should be happening at all. The debt ceiling is a housekeeping procedure. If they want to propose cuts or new taxes, they can do that during the appropriations process, where they will be forced to specify which programs they will cut and which taxes will be raised. Using the 18% cap and other things is meaningless because the real decisions are what they will cut. That’s what they don’t want to do. It’s all BS. When it gets down to specifics, they won’t cut Medicare or SS without Democratic political cover. The Democrats would be just as insane as the TPs to provide it for them.

    Like or Dislike: Thumb up 2 Thumb down 0

  43. @Brutalfacts: +1

    Like or Dislike: Thumb up 0 Thumb down 0

  44. ken says:

    After more than two years I think I can safely say that Obama has been a total disaster for our nation as president.

    The only redeeming virtue being that the alternative would have been worse than you could ever imagine even after taking into account the fact that it would be worse than you could ever imagine.

    I did not support Obama because I saw him as inexperienced and unable to cope with the right wing lunatics who would come after any Democratic president no matter how reasonable he tried to be.

    I find it funny that people keep excusing his behavior as a clever ploy to get the upper hand on conservative nuts. Just how is that supposed work when Obama is flabbergasted by them not accepting his surrender?

    Like or Dislike: Thumb up 1 Thumb down 1

  45. Dean says:

    @Robert Prather:

    I get that it’s a housekeeping procedure. I would prefer they move forward with the McConnell plan so the two parties can go back to playing politics with something other than the global economy. However, if they do the McConnell plan, both parties have to live with the consequences down the road. The Dems don’t get to oppose raising it when a Republican is in the WH, like Obama did when Bush wanted to raise it previously.

    My issue right now is twofold: 1) there is only one plan that has been made into a bill and the Senate chose to table it, rather than vote on it. Have some guts to say we voted against the only plan anyone has brought forward. 2) While I think the McConnell plan works given the current situation, I have no confidence this president or the Senate has any willingness to make any substantial cuts. Nor do I believe they will ever be willing to live within the means of the American people’s pocketbook.

    Like or Dislike: Thumb up 0 Thumb down 1

  46. ratufa says:

    I think that Obama refusing to negotiate from the outset would have been a political disaster. The Republicans have spent the past couple of years beating the deficit drum, to the point where it has become a major public concern. At the time negotiations were in full swing, polls said that most members of the public either didn’t want the ceiling raised or didn’t know enough to have an opinion. If Obama hadn’t been willing to negotiate, the headlines would have been along the lines of, “Obama refuses to cut spending; wants more debt and taxes”. As it is, the conventional wisdom is increasingly swinging towards the Republicans being the unreasonable ones.

    Like or Dislike: Thumb up 2 Thumb down 0

  47. Dean says:

    @ratufa:

    Well put. On the part of both sides: politics comes before doing the people’s business.

    Like or Dislike: Thumb up 0 Thumb down 0

  48. Argon says:

    @An Interested Party: Well, rope-a-dope only works if the other side behaves like a dope. One bonus in this case is that if the other side doesn’t go dopey it makes for fruitful negotiations. Mind you, the Democrats haven’t gone around signing stupid pledges and so they haven’t necessarily backed themselves into a corner.

    But there was one other political play that Obama pulled in this instance. Instead of reacting negatively to the GOP aim of using the debt ceiling as leverage for cuts, I think he used reverse-psychology: i.e. “You say you want a big deal, well here’s an even better one!” Instead of pushing back, he pulled. That move cleanly separated the kids from the adults in the GOP. Too bad the kids seem to still be in charge. I really hope the voters learned a lesson from this (but then you’d have to be a kid yourself to think voting for another kid was a good idea).

    Like or Dislike: Thumb up 0 Thumb down 0

  49. An Interested Party says:

    My issue right now is twofold: 1) there is only one plan that has been made into a bill and the Senate chose to table it, rather than vote on it. Have some guts to say we voted against the only plan anyone has brought forward.

    If the only plan on the table would be disastrous and lead to an even worse situation, there is no reason to try to help it along and certainly no loss of guts to quash it in anyway possible…

    Like or Dislike: Thumb up 0 Thumb down 0