11/15/2012 09:43 am ET Updated Jan 15, 2013

Ensuring That the 'Grand Bargain' Is Genuinely a Bargain

It is lobbying week in Washington D.C. Tuesday was labor's day at the White House. Wednesday it was the turn of the business community. Friday it will be the usual politicians -- Boehner, Cantor, McConnell, Pelosi, Reid -- in other words, the usual political gridlock masquerading as democracy in action. Compromises packaged as grand bargains, plus the usual brinkmanship on federal spending and the debt ceiling. It will be as though the election had never happened.

But the election has happened: and because it has, we are in very different political territory now. This time, Washington is gridlocked in the wake of an election in which it was the Republicans who were shellacked, not the Democrats. Not like the 2010 midterm, when it was the Republicans who were doing the shellacking. Which is why, when the dust settles, the compromise to be struck has to be anchored in entirely new territory. It has to be anchored in territory framed by the Democratic Party's programs and concerns rather than by those of the Tea Party.

There are already signs that this indeed might be happening; and it should, for at least the following reasons.

The legitimacy of the Republicans in the House is now highly compromised. The House of Representatives remained in Republican hands in the general election in the wake of extensive gerrymandering by Republican-dominated state legislatures. We have just been through an election in which Republicans in power at the state level practiced extensive voter-suppression, in which Republican Super PACS flooded the airwaves with misleading and often completely inaccurate information and in which Republican redistricting guaranteed reelection for many otherwise discredited members of Congress. Where that redistricting was impossible -- in all the Senate races and in the race for the White House -- the Republican case largely floundered; and even in the House of Representatives, Democrats ultimately won the overall popular vote. Without politically-motivated redistricting, the House, too, might well have reverted to Democratic control. If you doubt that, or think the Democrats equally guilty of gerrymandering, consider Pennsylvania, won by Obama by more than 5 percentage points on November 6th, but poised now to return only 5 Democrats from 18 House seats: or Ohio (4 out of 16 seats) or Virginia (3 out of 11). The vote for Obama was not balanced by the vote for a Republican House -- as people like Paul Ryan now claim. Any "balance" was a gerrymandered one, and Republicans in the House lack full democratic legitimacy for that reason above all others.

The "fiscal cliff" now looming before us is one entirely of the Republicans' making. The United States has a long-term deficit problem which a sane politics would steadily address; but it does not have an immediate 'fiscal cliff' problem unless Republicans continue to give it one. For this immediate crisis is entirely of the Republican Party's own making: the culmination of an ideologically-driven determination to cut welfare programs that manifested itself in Republican brinkmanship on economic issues right through the 112th Congress. Remember the tax-deal House Republicans imposed on a politically-weakened president immediately after the 2010 mid-term victory? Remember the Republican threat (April 2011) to entirely close down the government unless further cuts were made? Remember how (in July 2011) they broke with the bipartisan tradition of automatically raising the debt ceiling -- a break with tradition that cost the United States its triple-A credit rating, and forced the automatic sequestration that now stands at the core of the impending fiscal crisis? And remember too that House Republicans did not do any of this in order to get rid of the deficit . They did it primarily to prune welfare programs to which they are ideologically opposed. The very Tea Party Republicans who resisted so ferociously the raising of the debt ceiling were also the Republicans who supported both of the Ryan budgets: each of which left the federal deficit intact for 30 years, and each of which indeed increased the size of the immediate deficit by giving generous tax cuts to the top 1 percent of American income earners.

The austerity demands of Tea Party Republicans are rooted in the same set of delusions that led right-wing pundits to forecast a sweeping Romney victory on November 6. We have been regularly fed a doomsday scenario by leading Republicans throughout this newly-finished election cycle -- an often-repeated mantra that without big cuts in government programs the economy will inevitably slide into deep recession. The paradox here is that the only thing likely to slide the economy into deep recession right now is the very cut in government spending to which the Republican Party remains so ideologically wedded. Large U.S. corporations are currently replete with cash and profits.

What they lack is a secure and growing home market. What they lack is solid aggregate demand of the kind that well-targeted government spending programs can enhance, and of the kind that cut-backs in public spending (laying off teachers and the like) can only weaken. We have seen the Republican base and leadership living month-by-month in their own media bubble -- telling themselves the same things over and over again, to the point at which things become believed simply because they are heard so often -- only to have that bubble popped by the reality of a genuine election. Right now, leading Republicans seem to be aware that their "closed media bubble" is a long-term political problem with which they have to deal. But they still seem entirely unaware of the degree to which they remain sealed off, too, in an economic bubble that requires public sector austerity as the trigger to private sector growth. Staying in that economic bubble will also hurt them politically. Slashing entitlement programs for the middle class will be political suicide. They will suffer; but so also will the rest of us, to the degree that their economic intransigence and illiteracy pulls the administration towards a settlement in which cutbacks in entitlement programs are traded for modest tax hikes on the super-rich.

There are saner voices out there in the public square, to which the president now needs carefully to listen. Saner voices across the industrial world are arguing for slower reductions in debt/GDP ratios than the Tea Party demand, because they recognize the immediate recession-inducing effects of drastic cuts in public programs. Saner voices across the industrialized world are arguing, too, that the best way of lowering debt/GDP ratios is by growing GDP rather than by simply cutting debt -- in fact, growing GDP rapidly, not least by the strategic injection of more public funds. Saner voices know that much of this "immediate debt reduction" panic in conservative circles is simply cover for achieving draconian cuts in basic welfare programs -- cuts that then place the full burden of any recovery strategy onto the shoulders of those least able to bear it: namely the poor. And saner voices recognize too, that far from needing to compromise further with a Tea Party which is now electorally discredited, the president has already compromised with Tea Party Republicanism more than he should. The 2:1 ratio of cuts to revenue enshrined in his September 2011 "Plan for Economic Growth and Deficit Reduction" ("nearly $2 of spending cuts for every $1 raised through tax reform") was a ratio reflecting the president's political weakness after the debt-ceiling fiasco. That political weakness has gone, and with it any need for a 2:1 ratio.

This is no time for a newly-reelected Democratic President to compromise with Republican politicians of a ultra-conservative hue, many of whom (including Mitch McConnell, again) have a personal political interest in continued economic stagnation through the Obama second term. It is time instead for the president to stand full-square with the interests of the people who just returned him to office. It is time for him to point out the gerrymandered nature of the Republican majority in the House of Representatives, and to call the Republicans to task for their gerrymandering. It is time for him to reassert the case for greater public spending as a trigger to economic growth, and to stress the greater multiplier effects of tax cuts for the poor and middle class as against tax cuts for the rich. And it is time for him to craft a grand bargain that brings back center-stage, not just tax hikes for the rich, but the full panoply of The American Jobs Act and the full implementation of the Affordable Care Act. More than anything else, it is not time for the president to blink. It is time, rather, to say "No" to any grand bargain framed in the Republican Party way, or even to a grand bargain framed in the way that Bowles and Simpson would have it.

It is time, that is, for President Obama not simply to plant his flag firmly on liberal terrain but also to stand resolutely by that flag, and to pull moderate Republicans towards it. Tea Party Republicans have called the shots in Washington for far too long. Now it is our turn. Elections do have consequences.

First posted with full academic citations at