GOP Fiscal Maneuvers

So there are two pieces of news out today about the Republican response to the president’s so-far-very-successful maneuvers on the big fiscal issues. The first is a formal counter-offer from the House GOP leadership (with, significantly, Eric Cantor’s and Paul Ryan’s names joining that of John Boehner). It specifically calls for $800 billion in new revenues (close to what Boehner put on the table in his repudiated 2011 debt limit deal), but without rate increases. And it bites the bullet somewhat on spending by calling for a 2-year increase in the Medicare eligibiity age and a government-wide adjustment in how cost of living adjustments are calculated.

You could read this as Republicans deciding to get more specific on “entitlement reform” than on taxes (it’s extremely unlikely that you can come up with $800 billion in “loopholes” to close without hitting the middle class), or simply choosing the least inflammatory ways to reduce entitlement spending. Or–and this is my personal take at the moment–it could just be an offer meant to be refused that just gets the GOP out of the immediate problem it had with appearing unwilling to put anything on the table.

Arriving just before the “counter-offer” were a host of less formal reports that Republicans have a fallback strategy of letting an extension of the Bush tax cuts for taxable income under 250k pass without their votes, and then fighting Democrats tooth and nail after the beginning of the new year on the debt limit increase or indeed, anything else Obama wants.

I share Jonathan Chait’s puzzlement over this supposed strategy:

[Y]eah, Republicans would still have things to fight over. Obama is going to want measures to reduce unemployment. Republicans can dangle those. Obama is also going to want to not destroy the credit rating of the U.S. government for no good reason, and Republicans will threaten to do that, though it’s not clear that Obama is going to submit to another blackmailing on this.

But Republicans will also need Obama to sign a law canceling out the huge defense spending cuts scheduled for next year. If Obama is starting out with a trillion in higher revenue in his pocket (through expiration of the Bush tax cuts on the rich), and the extension of the middle-class tax cuts have largely taken the threat of a recession off the table, then he’ll still be negotiating from a position of strength. He’ll be able to offer Republicans cuts to entitlement programs plus defense spending increases in return for modest revenue increases, which don’t have to involve rate hikes, just to get to his own budget proposal.

Chait’s hunch is that Republicans are more preoccupied now with the optics of “not surrendering” on big fiscal votes than they are with actually imposing their priorities on Obama and the country. In other words, both maneuvers may be aimed at cutting losses without provoking an overt conservative backlash, and keeping–as Grover Norquist has suggested–their “fingerprints off the murder weapon” of any deal that can be described as betraying the sacrosanct “conservative principles.”

If that’s all true, it’s a strange way of exercising what Republicans claim is their co-responsibility for solving the nation’s fiscal problems after a “status quo election.” One might even reach the conclusion they lost.

Ed Kilgore

Ed Kilgore, a Monthly contributing editor, is a columnist for the Daily Intelligencer, New York magazine’s politics blog, and the managing editor for the Democratic Strategist.