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Jim Kessler Headshot

A Grand Throwdown?

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In an attempt to foil a grand bargain, two blogs on The Huffington Post accuse President Obama of betraying progressives and the nation. The authors, Robert Kuttner and William Black, not only misrepresent the president and his agenda but also mischaracterize the state of the economy.

Kuttner, a co-editor of The American Prospect, frames a grand bargain as a drag on the economic recovery. He writes, "If Obama strikes such a deal, it guarantees that a sluggish economy will continue." And Black, a University of Missouri professor, conflates a grand bargain with European-style austerity.

But the kind of grand bargain the president seeks is balanced, smart, and vital. It would make a significant down payment on the nation's long-term debt problem by asking the well-off to pay their fair share now. It would ask for responsible savings from health care programs like Medicare so that future generations are guaranteed the same safety net retirees are guaranteed today. And it could be legislated now but implemented gradually, as the economy recovers.

The alternative to a grand bargain is a grand throwdown, one like the debt ceiling debacle of 2011. Only this time, the threat of default would be joined by the double threat of sequestration and tax hikes on the middle class.

Even if the president were to emerge from the throwdown to kick all three cans down the road, as Kuttner and Black seem to advocate, the economy would suffer. Ratings agencies would honor their word and downgrade U.S. Treasuries again. Worse, we'd send the message that even at the most opportune moment -- the beginning of a second presidential term coinciding with a deep and treacherous fiscal cliff -- our political system cannot address the debt.

If that political failure continues, markets will eventually lose faith. When that happens, there will be no time to react. Rising interest rates would push down asset values, credit access, and job creation. Then we'll have a European-style debt crisis, with European-style austerity as our only option.

Compare that outcome to the boost in confidence a grand bargain would provide. Fiscal certainty would push up consumer confidence and with it consumer spending. Businesses would have the confidence to invest their cash and hire workers, boosting economic growth and future prosperity.

Most shocking is Black's election eve charge that Obama "intends to begin to unravel the safety net" in his next term. Mind you, this is the same president who risked his entire presidency to pass universal health care and complete progressives' century-long mission to construct and improve the safety net.

Let's set the record straight. The president proposes "modest adjustments to programs like Medicare to ensure that they're still around for future generations." And any changes to Social Security would be for the purpose of making this insolvent program solvent for generations to come.

Everyone with a calculator knows that absent a fix, neither of these programs generates the revenue to sustain itself. The only question is when we fix them. Do we do it under a president who cares deeply about the safety net, or kick the can to some future president who may be less committed to the elderly and vulnerable?

The fiscal cliff threatens the recovery, but it also presents Democrats an opportunity. Democrats can be the party that ensures economic recovery, maintains a strong safety net for generations to come, and protects the middle class from the economic consequences of Republican policies. Far from betrayal, the president's grand bargain would honor the progressive tradition and all it has achieved.