Washington Standoff: Obama Exploits Early Christmas Present

Update: Thursday evening, the House Republicans agreed to a deal.

Like most economists, I tend to assume that people act in their own best interests: not in all cases?heavy smokers and chronic gamblers are obvious exceptions?but as a general rule. How then to explain the latest actions of the House Republicans?

In voting down a Senate bill to extend payroll-tax cuts, as well as unemployment benefits for those who have been out of work for more than six months, Speaker Boehner and his colleagues have presented President Obama with an early Christmas present. No wonder he was looking so fired up (by his standards, anyway) in the White House briefing room Thursday, where, surrounded by a dozen or so ordinary Americans, he pointed out that many Republicans in the Senate had agreed to the compromise proposal, and snapped, ?Has this place become so dysfunctional that even when people agree we can?t get things done? Enough is enough.?

Having delayed his Christmas vacation in Hawaii until the stalemate is resolved, the President, for once, is in the catbird seat. If an agreement can?t be reached before the New Year, the typical American family will face a tax increase of about a thousand dollars a year, which is roughly forty dollars for each bi-weekly paycheck. A couple of days ago, somebody in the Administration had the smart idea of asking Americans, via Twitter and Facebook, what forty dollars means to them. According to the White House, more than thirty thousand people responded?you can see some of their comments here?and some of them were standing on the press-room dais with Obama.

It wasn?t immediately clear whether they included ?Joseph from New Jersey,? who said he would have to sacrifice a pizza night with his daughters, or ?Pete from Wisconsin? who said he would have to cancel a car trip to visit his father in a nursing home, but the President, in what was one of the most cleverly orchestrated and blatantly political events of his Presidency, told their stories anyway. For Republicans with any nous at all, it must have made for painful viewing.

Even before Obama?s appearance, some senior Republicans who can spot a disaster in the making were calling on their colleagues in the House to relent. Speaking on the Thursday edition of ?The Early Show,? on CBS, Senator John McCain said the standoff was hurting the Party and its hopes of winning the Presidential election?a point that echoed something Newt Gingrich said on Wednesday: ?Incumbent presidents have enormous advantages. And I think what Republicans ought to do is what?s right for America. They ought to do it calmly and pleasantly and happily.?

Also on Wednesday, the Wall Street Journal?s editorial page, hardly a haven of moderate views, published a despairing comment, which began:

GOP Senate leader Mitch McConnell famously said a year ago that his main task in the 112th Congress was to make sure that President Obama would not be re-elected. Given how he and House Speaker John Boehner have handled the payroll tax debate, we wonder if they might end up re-electing the President before the 2012 campaign even begins in earnest.

The headline on the Journal editorial was ?The GOP?s payroll tax fiasco: How did Republicans manage to lose the tax issue to Obama?? But the answer the article provided?political incompetence on the part of McConnell and Boehner?was woefully inadequate. Wary of the dangers they were facing, the two Republican leaders had reportedly agreed on the compromise deal that passed the Senate. This would have extended the tax cuts and unemployment benefits for two months. In return, the White House had provisionally agreed to bring forward its decision on the controversial Keystone XL pipeline.

It wasn?t McConnell and Boehner who formed what the Journal editorial aptly referred to as a ?circular firing squad.? It was the enrag?s in the House who rebelled against the deal, just as they rebelled, during the summer, against Boehner?s efforts to reach a compromise deal on the debt ceiling and the deficit. The stalemate that ensued helped bring Congress?s approval rating down to thirteen per cent in the August Gallup poll. Today, Congress?s approval rating is even lower: eleven per cent?the lowest figure recorded since Gallup started asking the question in 1974.

Sticking with the self-interest theory for a moment, one possible explanation for the Republicans? actions is that most congressional districts are now so uncompetitive, due to gerrymandering or whatever, that incumbents have no fear of losing office. I don?t find this argument persuasive. Many of the Tea Party supporters swept to victory in a midterm election. Such contests almost always see the Party that holds the White House losing seats. Presidential elections are very different. In what is shaping up to be a close race, many members of the Class of 2010 could be voted out.

A more compelling argument is that the Republican Party is no longer a mean electoral machine, but an uneasy alliance of potentially competing groups. As long as they are attacking President Obama, these groups get along fine. But when they have to actually govern and make decisions, big problems arise.

Despite all that has happened, the Republican establishment in Washington is still, fundamentally, the agent of corporate America and its most privileged denizens. Folks like McConnell and Boehner, but also strategists like Karl Rove and Stuart Stevens (Mitt Romney?s svengali figure), believe in occupying power, both to keep out the Democrats and to protect the interests of their wealthy supporters. Arrayed beneath this traditional structure is a seething populist movement that contains elements of everything from Know Nothing nativism to Poujadism to Christian fundamentalism to economic Libertarianism.

The representatives of this movement didn?t come to Washington to boost demand in the economy, to preserve tax breaks for the local gentry, or even, necessarily, to preserve their own seats. They came to put the country on a new path, downsize the federal government, and generally make a racket. After a year in the capital, they have succeeded in the third aim but not the first two?hence their frustration.

To Republican congressmen of this ilk, the Senate payroll-tax bill was a typically shoddy Washington compromise, which didn?t resolve any outstanding disputes but merely shooed them away for a bit. As it happens, the insurgents were right about that. Extending important tax and spending legislation for a period of two months is no way to run the world?s largest economy. But given the political realities of the moment, it was all the leaders of the two parties could cobble together.

In registering their protest vote, Eric Cantor and his crew have put themselves in an untenable position, from which, at some point in the next few days, they will surely try to extricate themselves. But don?t expect President Obama to do them any favors. So far the dispute has cost him a few days on the beach. The political benefits he has reaped are incalculable.

Photograph: Mandel Ngan/AFP/Getty Images.

Source: http://www.newyorker.com/online/blogs/johncassidy/2011/12/obama-payroll-tax-cuts.html

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