04/10/2011 05:16 pm ET | Updated Jun 10, 2011

Why Last Week's Deal Reduces Republican Leverage in 2012 Budget Battle

Speaking on Fox News Sunday, Republican Leader Eric Cantor claimed that last week's budget deal will enhance the Republican's ability to use the looming vote to increase the federal debt ceiling to leverage massive changes in Medicare and Medicaid. The opposite is true.

Friday night -- literally at the eleventh hour -- Congressman John Boehner's Republican caucus finally agreed to drop their threat to shut down the government over the continued funding of women's health clinics, family planning -- and specifically, Planned Parenthood.

The agreement to avoid a government shutdown came as particularly good news to 800,000 federal employees who would not have been paid and the millions of recipients of federal services whose needs will be met. It is also good news to anyone who cares about the creation of jobs in our economy. A shutdown would have done major damage to the fragile economic recovery.

The fact that the shutdown was avoided owed a great deal to the work of the many organizations who highlighted the real-life damage of Republican proposed cuts to things like Head Start slots for kids, enforcement of the clean air act, college loans and of course the health services provided by organizations like Planned Parenthood. These stories were particularly effective when combined with the fact that the Republicans insisted at the same time on continuing to provide subsidies to big oil and tax breaks for millionaires.

The tenacity of the president and Senator Reid -- the fact that they refused to allow the Republicans to legislate about most major policy questions like the power of the EPA, and funding for women's health in the guise of a budget bill -- were also crucial. So was the bargaining skill of Reid's Chief of Staff David Krone and Obama Legislative Liaison, Rob Nabors.

But what is particularly important about the events of the last week is how it informs future progressive attempts to limit the horrific damage that Republicans hope to inflict on Medicare, Medicaid, food assistance programs -- and the role of the public sector in our society.

Three separate factors were particularly important to Boehner's decision to throw in the towel on the Republican caucus demand that any deal eliminate government support for women's health clinics -- including Planned Parenthood.

1). First and foremost, their threat to shut the government in pursuit of the right wing social agenda would have been a political disaster. The Tea Party Republican caucus was elected to office by swing voters who wanted something done about jobs -- not "runaway" family planning. Let's remember that this was not about funding abortion. Federal law has banned taxpayer funding for abortion for decades. This was about funding family planning and women's clinics that do cancer screenings.

Had the Republicans "laid off" 800,000 federal workers and hundreds of thousand of additional contractors, delayed paycheck delivery to the troops, and stopped services to millions of Americans to pursue their fringe social agenda, swing voters would have stood open-mouthed in horror.

For Progressives, it would have been like shooting fish in a barrel -- and the Republican political class knew it.

Friday, Democratic pollster Geoff Garin reported that a poll completed Thursday showed two-to-one opposition to cutting funding for Planned Parenthood. Only strong "Tea Party" adherents favored such a proposal.

2). By agreeing to a deal -- even one that was not entirely satisfactory to many of its "Tea Party" faction -- the Republicans were able to put on the appearance they were willing to negotiate and compromise. Had they decided to allow the shutdown and go to war -- especially about Planned Parenthood, which has, at one time or another, served one out of five women in America -- they would have bet they could win a "shootout at OK Corral."

A shutdown scenario would not have ended in a "kumbaya" moment -- or with any semblance of "win-win" imagery. It would have been someone's Waterloo. The odds were good that the gun-slinger who lay dead in the street after such a confrontation would have been Republican credibility with swing voters. Republicans would have been blamed not only for being intransigent, but also for being willing to risk our fragile economy to advance their ideological social agenda. That would have been the last thing swing voters wanted to hear- particularly independent suburban women.

3). Most important for the future is the role of the real base of the Republican Party -- Wall Street and Big Business. The Republican CEO caucus -- and the Chamber of Commerce -- are hell bent on destroying unions, shrinking the public sector, lowering tax rates for millionaires, etc.

Frankly, they could care less about the right wing social agenda. In fact, they view social conservatives as cannon fodder to win elections. And once they had gotten all that they could on the economic side, they were not the least bit interested in jeopardizing their political fortunes or the economy simply to advance the Tea Party agenda.

Apparently the Chamber and the CEO class's chief operative, Karl Rove, weighed in heavily against a Republican shutdown.

Now that the funding bill for this year is about to be completed, the focus of Congress will turn to the much more fundamental issues surrounding the 2012 budget.

The Republicans want to replace Medicare with a system of vouchers for private insurance. In other words, they want to replace Medicare's guaranteed health care benefits and put seniors and the disabled at the mercy of private insurance companies. The Center on Budget Priorities conducted a study that estimated this would increase out-of-pocket health care costs for seniors by $6,000. It would in effect mean a $6,000 tax increase for America's senior citizens. And recall that the average Medicare beneficiary makes only $19,000 per year.

Right now, Medicaid guarantees that if you are old or disabled you can afford nursing care that will help you stay independent -- or nursing home care if you can't. The Republicans want to end that guarantee and replace it with a block grant to the states that will allow them to do whatever they want.

Republicans want to end the guarantee that when you're out of work or down on your luck, you and your kids won't starve for lack of money to buy food. That's right, they want to end the food stamp program and replace that with a block grant of funds to the states as well.

The Republican House Budget Chairman, Paul Ryan has proposed all of these measures in his budget plan, along with about $4.2 trillion of tax cuts over the next decade for corporations and the wealthy. In other words, Ryan has proposed pulling the plug on Medicare, Medicaid and food support in order to give tax breaks to millionaires.

In fact, Ryan's plan really doesn't deal with the deficit. It cuts $4.3 trillion in spending over ten years. Most of that goes to give the $4.2 trillion in additional tax cuts to the wealthy and big corporations.

There are many solid proposals to eliminate the long term deficit without doing it on the backs of the middle class. The people who benefited from the policies that caused the deficit -- from the tax cuts for the rich, military contracts, and the out of control Wall Street speculation that sunk the economy -- should be called upon to pay to fix the deficit -- not seniors, students, the disabled and the poor.

Finally, and perhaps most insidious, the Republicans want to put a cap on how much the federal government can spend as a percentage of the gross domestic product. They want the cap pegged at spending levels of the last decade. Never mind that that percentage of government spending to GDP will inevitably go up over the next several years because of the retirement of the baby boom generation. That fact makes their cap the equivalent of a requirement that the government dramatically cut back on Medicare and Social Security benefits. Worse, such a cap would pretty much assure that the next time there is a major recession the government couldn't pass economic stimulus measures like the one that prevented the 2008 economic collapse from becoming another Great Depression.

The Tea Party caucus plans to demand that these provisions be agreed to as the price of their agreeing on an increase in the Federal debt limit.

Now, if the federal government defaulted on its debts, virtually every economist agrees that would lead to another worldwide financial meltdown, and another Great Recession that would cost millions more Americans their jobs.

Holding the debt ceiling increase hostage to their radical economic demands is pretty much equivalent to a radical suicide bomber threatening to blow himself and everyone else up, if they don't agree to his radical religious demands. If they actually exercised this threat, the economy would go up in cloud of smoke.

If you're the Democrats negotiating with such fanatics, you might be prone to agree to pretty much anything to prevent such a cataclysm. But that is where the lessons from last week's confrontation come into play:

While the Wall Street/CEO Republicans really want to wring as much as possible out of Democrats in the way of less regulation, a smaller public sector and lower taxes for them, they are not likely to knowingly allow the Tea Party extremists to blow up the credit markets and the economy.

And though the Republican political class would love for the economy to stagnate between now and 2012 -- they certainly don't want to be caught with their hands on the grenade pin if the economy blows sky high.

The bottom line is that both of these factions of the Republican establishment will do whatever is necessary to prevent the Tea Party crowd from blowing the place to smithereens. They didn't allow them to cause a simple government shutdown over their extremist social policy goals, and they certainly aren't going to allow them to default on the nation's debts and explode the economy right out where everyone can watch.

That means that the president and Democrats have much stronger hand than some believe. While they can agree to negotiate over next year's budget, they can refuse to negotiate over the debt ceiling at all. They can credibly say that the American economy and the full faith and credit of the United States are simply not negotiable.

The Republicans only control the House of Representatives. They do not control the Senate or the White House. The only real power they have to insist on outcomes is the credibility of their willingness to engage in radical, destructive behavior. Their power comes from the belief that when you negotiate with the House Republicans it's as if you're playing a game of chicken with someone who is suicidal.

The deal that was struck last week demonstrated clearly that the CEO/Wall Street faction of the Republican Party -- and its political elite -- are not yet prepared to allow the inmates to run the asylum.

Robert Creamer is a long-time political organizer and strategist, and author of the book: Stand Up Straight: How Progressives Can Win, available on Follow him on Twitter @rbcreamer.