The wheels are turning down on Martha’s Vineyard, and as usual it isn’t about policy or fixing problems, it’s about keeping up appearances and setting up the President’s re-election bid. During his recent non-political, get-out-of-DC-connect-with-the-people (read: campaign) bus tour, President Obama repeatedly alluded to a plan he expects to unveil when Congress returns to the office in September, coupling it with the open threat that if Congress fails to act on it, he and the Democrats will make that failure a key part of their sales pitch in 2012.
But for all his talk about the desperate need for compromise, you can bet the house that this will be presented as a take-it-or-leave-it deal. And like a two-year-old throwing a temper tantrum in the sandbox because little Timmy won’t share his favorite toy, any resistance to Obama’s overture will surely be met with cries of “there you go again” directed at the recalcitrant and uncompromising Right. This has nothing to do with actual solutions, and everything to do with setting up the campaign straw man that conservatives are putting party before the country, and refusing to cooperate to “get something done for the American People.”
I expect that the President’s proposal will look something like this: Obama will accept reductions in entitlement spending on a 10-to-1 basis over ten years if Republicans will accept increasing taxes on the wealthy (those earning over $250,000 a year) and evil corporations. The danger in a proposal like this is its curb appeal; it puts Obama in a position of being able to say he has—over the objections of the Left—offered Republicans the entitlement cuts they so desperately desire, and even offered to do it at a rate 10 times greater than the tax hikes he’s asking for in return. What’s not to like about that?
To put some rough numbers on it, let’s assume he’s talking about cutting, say, 20% from Medicare and Social Security spending. He’ll be able to say that he’s offering $240 billion in entitlement spending cuts in exchange for $24 billion in increased taxes—yes, the real life deal will have to be much broader and larger to mean anything in the context of a $3.5 trillion budget, but stick with the illustration. Facially, that’s going to look like he’s made a great concession and stepped towards the middle in the interest of compromise; rejecting a proposal like that risks looking unreasonable.
Of course, the devil’s in the details, isn’t it?
While it looks all reasonable, and centrist, and can’t-we-just-sing-the-Coke-song-and-get-along, it’s that “over ten years” thing that’s going to get lost if we’re not careful, and it makes all the difference in the world. Offering cuts over ten years isn’t 10-to-1, it’s 1-to-1, because he’ll only be cutting $24 billion in any given year, while that tax increase applies every year going forward. But it’s even worse than that. He’ll be offering that cut against programs whose budgets are inherently expected to increase at a rate of some 7% a year—a figure much larger than the $24 billion being “cut.” When Obama offers to cut spending by $240 billion, you’d expect the total to drop from the current level of $1.2 trillion to $960 billion. But in reality, because the 7% growth rate means those programs are expanding at a rate higher than the amount of the cuts, over 10 years those budgets will in fact have increased $1.2 trillion to not quite $2.2 trillion. So what gets billed as “cutting” spending really translates as “reducing the growth” of spending. The real reduction (i.e. the difference between those programs’ spending growth with and without the cuts), is only about $160 billion. Yet over that same ten years, the tax increase will still total $240 billion. What looks like a 10-to-1 deal at first blush becomes more like 1-to-1.5 in actual practice. Meanwhile, the Beast gets bigger.
Same as it ever was.
Unfortunately, the offer will be even more illusory than just illustrated. To begin with, there’s the not insignificant matter that none of the cuts spread over ten years are binding on future Congresses. So in some sense, Obama will be playing with house money. He can promise just about anything, knowing that (a) he won’t be around for the entire period regardless of re-election, and (b) with a flip in the balance of power in Congress the cuts are easily un-done.
But further complicating the matter will be how, exactly, Obama proposes to implement the cuts. To sell this proposal to the Left, he’s going to have to convince them that there will be no actual reduction in benefits. The only way I can see for him to do that is to resort to the argument that the cuts are actually just trimming fat—by eliminating redundancies and waste/fraud/abuse, and by reducing costs. Query how he’s going to do that again, since he already allegedly used that trimming to pay for Obamacare.
The potentially bizarre part of this, as I discussed Wednesday, is Obama is undoubtedly going to couple all of this with a demand for renewed “stimulus” spending. I anticipate we’re going to see him try to sell this with some VEEERRRRRYYY interesting mathematical gymnastics that additional stimulus will—emphasis on the mandatory will, despite all present evidence indicating that it won’t—generate some X specific number of jobs, resulting in previously unemployed people being added to the tax rolls, equaling an additional Y dollars in additional revenue. And, magically, the net result will be that not only does the additional stimulus pay for itself, but it actually results in reducing the deficit and debt. Of course, there will be no hard evidence or data to back this up, just a vague reference to unnamed “top economists.”
Begin bracing for that “I coulda had a V-8” moment.
The numbers and specifics may vary, but an offer like this is coming. The trick is going to be putting the lie to this as publicly and as simply as possible. Both on the campaign trail and on the floor of both houses, several questions need to be put to the President directly:
· Why are the cuts spread over ten years, and with them spread over ten years, how do you figure that you’re offering a 10-to-1 compromise?
· How, exactly, are you going to implement these cuts?
· What mechanism ensures us that future Congresses won’t repeal the cuts?
· Where are the forecasted numbers coming from, how did you get the specifics, and what evidence or data is there to support them?
· (Perhaps most importantly) Where was this offer when you were lecturing us on the need for compromise and we were begging you to put a proposal on the table to avoid the debt ceiling “crisis”?
With this needs to be a simple and compelling explanation of why the proposal isn’t what the President says it is, and why it won’t work. It won’t be enough just to say he’s being misleading; the leaders on the Right have to be able to explain to the sponges in the Center (forget the Left, they can’t be taught) why that’s so, and why it matters.
From Muhammad Ali’s “rope-a-dope” to Sun Tzu’s Art of War, it’s the oldest trick in the book: never take what the enemy offers you.