[UPDATED BELOW: 4/15/11; Originally Posted 4/9/11]
So who won the budget shutdown standoff – Obama or Boehner? Interestingly, it seems the more partisan the pundit, right or left, the more they think their own side lost. This probably is a reflection of how the more partisan you are, the more you value what your side conceded, and therefore the angrier you are over the budget deal.
As a card carrying member of the left side of the aisle, I’m not buying the arguments from the pundits on the left that insist Obama “lost” this battle with Boehner.
In any negotiation, it's all about leverage. If you don't have it, you need to manufacture it to level the playing field. If you do have it, you have to be wary of over-paying. The inequality of bargaining positions, and the absence of perfect information about what the other side’s price is to reach agreement, creates opportunities for either side to significantly miscalculate.
A key driver is whether either party is willing to walk away from the deal. In the transactional context, there are some who live by the edict of never doing a deal that you are not prepared to walk away from. It can be fatal if the other side detects, from your negotiating behavior, that you must do the deal. But in the litigation context, sometimes you don't have the luxury of walking away. You must strike a settlement. The trick is striking the best deal possible under the circumstances. Political negotiations share dynamics of both transactional and litigation negotiations.
If one side must do the deal and the other side doesn't need to, then the metrics for measuring the deal's success will be 1) did the side who had to do the deal pay less than the other side’s original, undisclosed price, and conversely, 2) did the side who didn't have to do the deal pay more than the other’s side’s original, undisclosed price)?
For purposes of the budget dynamics, I'll frame the this issue in terms of “Obama versus Boehner” as each side’s negotiators, even though that obviously wasn’t literally the case.
So who had to do a deal? I say Obama for these reasons:
* His campaign-defined identity demanded it. Obama ran for office as an antidote to the perceived imperial presidency of Bush/Cheney. His broad theme of changing this dynamic in Washington, which had its roots in his 2004 DNC speech, required that he find a way to bring a polarizing debate to resolution. It's one of the reasons he won independents handily and many disaffected, moderate Republicans in 2008. He lost these voters in the 2010 midterms. Fairly or not, many rational, smart voters around the country believe Obama was far more partisan than they expected in his first two years. Liberals can blame this on the GOP's constant filibustering and obstructionism during that time, but that won't change the 2010 election results. Indeed, you don't even have to look at issues like Healthcare Reform, the Dodd-Frank Act and the energy bill, Obama’s 2011 budget is Exhibit A. That bill was passed by the House, but was successfully filibustered by Republican Senators. Despite the Republican obstructionism, the GOP ran on cutting spending in 2010 and won in a landslide. By the time this new Congress revisited the 2011 budget, the issue was not whether the budget would be cut, but by how much it would be. So while the political environment shifted for Obama, he remained obligated to bridge the partisan divide and find a solution.
* The dynamic of short CRs with cuts had to stop. Boehner was quite happy with the status quo of repeatedly enacting continuing resolutions for short periods in return for spending cuts. He could do it indefinitely. Although short term CRs hurt business by creating uncertainty, to Boehner, that cost is outweighed by the disruption to the Obama agenda.
* Voters needed to see the ideology behind the GOP cuts more starkly. CRs rolling out in the form of relatively harmless cuts of $1B-2B at a time are not enough to win back independents and awaken the Democratic base. CRs allowed the GOP to get what it wanted without paying any serious political cost. The only way for that dynamic to shift was for voters to see the GOP's broader ideological plans in plain sight. Boehner’s proposals to defund EPA clean water regulation and Planned Parenthood did exactly that. Indeed, the dynamic didn't really begin to shift Obama's way until the focus shifted from CRs to the broader plans in Ryan’s 2012 budget to cut these programs. Senate Republicans and even some GOP House members began to publicly back away from the House Republican policy riders. In other words, Boehner was finally forced to pay the political price of his policies that he didn't have to under the CR scenario.
* Democrats expected Obama to compromise. Pundits focused on polling showing that, in stark contrast to Republicans' view of Boehner, most Democrats expected Obama to compromise on the budget. They cited this polling to argue that Boehner was at a disadvantage, hemmed in by the Tea Party segment of his base. But what this view missed is that the Democrats’ base had a correspondingly restrictive effect on Obama's ability to walk away. Short of the GOP demanding devastating cuts on cherished programs, most Democrats would not have accepted Obama walking away and letting the government shut down.
By contrast, Boehner could have walked away:
* As noted, the status quo was working for Boehner.
* Boehner’s Tea Party base wanted him to walk away. Boehner actually would have been cheered as a hero by the Tea Party elements of his base. It would have been entirely consistent with their campaign promise of blocking Obama’s agenda.
With the dynamic established among the two negotiators, who came out ahead? I say Obama.
· The deal breaches Boehner’s pledges to midterm voters. The reason why pundits on the right are angry at Boehner is because he breached the GOP’s midterm campaign Pledge. Boehner promised to return spending to 2008 levels pre-TARP and Stimulus, which they said would amount to at least $100 billion in spending savings in the first year alone (2010). They also promised to add hard caps on discretionary spending, and put an immediate stop to any unspent Stimulus spending (presumably excluding the healthy one-third of that law’s total cost that was composed of tax cuts). That’s not imaginary cuts from Obama’s proposed 2011 budget that was filibustered – it’s $100B cut in actual spending from 2010. None of these things happened in last night’s budget deal. Not even close. I think Boehner saw this coming, which is why they tried adding the policy riders – to make the much more modest reductions more palatable to the base. But Boehner blinked on the policy riders, too. So the deal, by falling so short of his Pledge, comes at a high political price – obviously much higher than his original price disclosed in the Pledge. And remember, he was free to walk away.
· Many Beltway pundits give Boehner a pass for breaking his Pledge because they never took it seriously in the first place. I get that the seen-it-all-before veteran Beltway pundits viewed Boehner’s Pledge cynically, but you can’t have your cynicism distort your evaluation of the facts. Doing so only allows Boehner to escape accountability for his own promise to voters, and tilts the scales in his favor. Boehner set his own bar high. The passionate Tea Party conservatives and libertarians that shouted at town halls and rallied at state capitols took the Pledge seriously, and voted with an expectation that Boehner would, too.
· Some Beltway pundits ignore the Pledge and instead measure the $38.5B cut against what Obama proposed in his budget for 2011, which then magically becomes a cut of $78B, which then appears much closer to $100B. But that’s moving the goal posts for Boehner. The Pledge didn’t use Obama’s 2011 budget as the baseline for its savings of at least $100B in 2011. Obama’s budget never passed in the last Congress, and the Pledge promised “saving us at least $100 billion in the first year [2011] alone.” Pledge at 21. That suggests real savings of $100B against 2010’s actual spending, not theoretical reductions against a prior year’s proposed-but-never-passed budget. I say “suggests” because the Pledge never says it any more clearly – any interpretation that the Pledge’s language meant at least $100B in cuts from Obama’s 2011 budget requires a leap.
· Obama deflected harmful cuts. Boehner blinked on the red meat cuts (with the exception to the restrictions on abortion funding in DC’s budget, although these restrictions are consistent with the Hyde Amendment and not new). Some liberal pundits have argued that Boehner’s proposal to defund Planned Parenthood was probably just a bargaining chip to obtain more cuts, which Boehner ultimately got. Yes, the funding at issue for Planned Parenthood was apparently in the neighborhood of $335M, and the deal terms did seem to go up a billion or two in the end after this policy rider was dropped. But who gave up more here? The policy rider was designed to make Boehner’s base happy. There were protestors staging sit-ins in the Capitol yesterday demanding the Planned Parenthood policy rider remain in the bill. The anti-choice component of the GOP base is a hugely important part of its coalition, and they viewed it as far more important than the $335M price tag. Defeating this policy rider was far more important to Obama than the amount as well. The total budget is in the neighborhood of $3.8 Trillion. In a budget that size, finding a billion or two more to cut to protect Planned Parenthood is an easy call for Obama, and Boehner is the one who sold out for cheap. The extra billion or two tossed in (that is, if it was tossed in) was a face-saving gesture.
So now we move on to the next round. Obama, as he spoke from the Blue Room last night, spoke in calm, reasonable and bipartisan tones. He was the adult, speaking last, and even speaking favorably of the deal and Boehner. In the next round, if Boehner sticks with Ryan’s 2012 budget, then we will see a far greater escalation of the partisan fight of what we just witnessed last night over Planned Parenthood. The GOP's effort failed yesterday, and I can’t see how plans to destroy coveted social programs will go any better. But by reaching a deal last night, and agreeing to “significant” cuts as framed by his team (although, again, not compared to a $3.8T budget and not seriously affecting cherished programs), Obama is actually in a better position to walk away in the next round. He has gained more flexibility. And if the GOP stubbornly overreaches, it can be framed as their second attempt at inserting partisan ideology into budget negotiations. Boehner’s team already poisoned that well, and have little to show for it.
[Editorially cleaned up on 4/15]
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UDPATE 4/15: More facts about how the deal unfolded and what it actually contained dribbled out since I posted this last Saturday. The new facts add more support to this conclusion that the President pwned Boehner (he says modestly).
First, while some Beltway pundits like Chuck Todd speculated that the Planned Parenthood was just a ruse to extract concessions from the Democrats, the new facts undermined this theory. One was a NY Times report that there was an 11th hour confrontation between Boehner and President Obama in the Oval Office late on Friday night over the issue of Planned Parenthood defunding. Boehner tried repeatedly to argue his case, but was met with a firm "No" each time by the President. I don't see how you can infer from those dramatic circumstances that it was just a ruse. Nor was there any great treasure to show for Boehner's alleged ploy. Over the course of the week, we learned that budget deal was mainly composed of accounting gimmicks rather than serious cuts to coveted programs. Later, the Congressional Budget Office scored the Budget Deal as cutting $335M in actual spending from 2010 levels (an amount the federal government probably just spent while you were reading this post), and if emergency spending is included, it actually INCREASES spending by $3.3B. These late revelations caused defections in the House Republican caucus, which in turn caused Boehner to breach another promise: to pass the Budget Deal without a single Democratic vote. Ultimately, only 179 House Republicans voted for the Budget Deal, far short of the promised 218.
So the President gave up nothing and got credit for keeping the government open for business, while Boehner damaged his party by alienating independent voters and moderate Republicans with his overreach on Planned Parenthood and betraying the most passionate segment of his base -- the Tea Party voters. This was his first big test, and he failed. Suddenly those political gaffes by Boehner during the House Republicans' first week in office look like a pretty accurate sneak preview of his competency as Speaker.