The 11th hour budget deal may save the country from default but is unlikely to save either the president or the Republicans from continued political fallout for taking the country near the brink of financial calamity. While the 1996 budget deal made winners out of President Clinton and the Republicans, this deal offers a lot of frank lessons to be learned.
Lesson 1. President Obama should never have played the Republican game of letting the debt ceiling become a budget negotiation in the first place. Obama should have simply said that under no circumstances would he allow the GOP to turn a routine action by Congress into a high stakes negotiation on the scope of the federal government. Once he did, he was playing on the Republicans' best field and at a disadvantage: the topic of the day shifted from fixing the economy to cutting the budget, playing into Republican hands. Considering the fact that Congress has raised the debt limit without condition 74 times since 1962, President Obama should have made it clear from the start that doing otherwise was not only unwise, but absolutely unacceptable. He should have kept the political spotlight on the Republicans for upsetting the nation's credit rating and pushed the budget negotiations to budget time - without a threat of national default.
Lesson 2. The Republicans should not have started down the debt ceiling path without an organized position that had the support of a solid majority of their caucus. The GOP came across as disorganized, disjointed and under the control of the Tea Party and Grover Norquist. As a consequence of the division in their ranks, the GOP as a whole will be remembered as the party that was willing to risk our credit rating, our recovery efforts, and our image abroad for uncertain and rigid principles. Congressional Democrats may gain a lot by the contrast with ideologically inflexible Republicans.
Lesson 3. President Obama should never have mixed the need to trim spending with a call for higher taxes. While comprehensive tax reform may be a good idea or even necessary, he should keep the tax plan separate from the deficit cutting plan or he will push independents away from him by coming across like a tax and spender. For a while his message seemed like "I'll cut Medicare if you will raise taxes on the wealthy." This pleased no one from either party and he eventually caved on trying to raise taxes for now. But his poll numbers started sinking like a stone once he took this position and the most recent Gallup poll shows Obama's a weekly job approval at a low of just 42%.
Lesson 4. No budget deal can pass without bi-partisan support. Both parties made the mistake of trying to pass a deal on their own, a ridiculous waste of time considering the fact that that Congress is divided. For weeks, there was endless bickering by cable pundits, countless closed-door meetings, and press conference after pointless press conference--all so that both parties could finally learn what the American people already knew, that bi-partisan compromise was the only way to avoid financial calamity - there can be no one-party solutions in divided government.
Even though in the end the two parties came together, the process itself was so messy that it soured the public already sour on the economy and the political system. Had both parties acted responsibly and considered some of the proposals from Simpson-Bowles months earlier, the President and Congress could have gotten in front of this train rather than behind it. Instead Simpson-Bowles was orphaned even though it was the work product of the President's hand-picked commission.
The polls show that the ratings of Congress are far below that of the president, but that's not really the relevant comparison. Congressional ratings have been in the teens for years and the President won't be running against Congress in 2012, but against a Republican presidential nominee who may have much higher ratings because he or she has not been part of the Washington mess. Seeing his poll numbers plummet during this process, the President had little choice but to cave to the same proposals he has rejected just a week earlier.
These are important lessons for dealing with Phase II of the budget plan when the system will have an opportunity to show it can do better. In 1996, the budget negotiations were tough, but the result was heralded by almost all as a great step forward for the country and a return to the balanced budget. Those on the right are probably smiling more today than those on the left but both sides are unhappy with a process that produced more budget sinners than budget winners.