November 5, 2014

Jubilant Republicans took back the Senate in yesterday’s mid-term election, and appeared to have increased their majority in the House by about ten seats.

“Barack Obama is now the lamest of lame ducks,” said Sen. Mitch McConnell of Kentucky, now the Majority Leader, who held on to his own Kentucky seat by about three percentage points, the Senate Republicans only close call of the evening.

“The Senate numbers this year were against the Democrats,” said pollster Stan Greenberg, “but what really killed us with the voters was the economy.”

Going into the election, 11 Democrat-held senate seats were considered at risk, while the only endangered Republican seat was McConnell’s. In a quirk of bad luck and timing, almost every red-state Democrat was up, and several veterans had opted to retire. Republicans gained Democrat-held seats in Alaska, Arkansas, Iowa, Louisiana, North Carolina, South Dakota and West Virginia, while Democrats managed to narrowly hold jeopardized seats in Colorado, New Hampshire, Oregon, and Minnesota, leaving Republicans with swing of seven seats and a 52-48 margin.

Al Franken, who hung on to his Minnesota seat by just two points, concurred with Greenberg. “Voters were really unhappy that unemployment remained above 7 percent, and that Democrats seemed to be the party of austerity and of Wall Street,” he said. “The Democrats’ support for cuts in Social Security only made it worse.”

Read the entire piece at The Huffington Post.

President Obama has miscalculated both the tactical politics of the sequester and the depressive economic impact of budget cuts on the rest of his presidency. The sequester will cut economic growth in half this year. But it’s now clear, one way or another, that we will get cuts in the $85 billion range that the sequester mandates this fiscal year. All that remains are the details.

Obama’s miscalculation began in his fist term, with his embrace of the premise that substantial deficit cutting was both politically expected and economically necessary, and his appointment of the 2010 Bowles-Simpson Commission as the expression of that mistaken philosophy. Although the Commission’s plan was never carried out, its prestige and Obama’s parentage of it locked the president into a deflationary deficit reduction path.

This past week, we’ve seen how the Republicans took advantage of Obama’s self-inflicted wound. With the March 1 deadline looming, the White House assumed that if the president gave enough publicity to the harm of pending automatic cuts, the Republicans would just cave. But the Republican leadership calculated that the ensuing political and economic damage would be worse for Obama, so they hung tough.

Obama also assumed that military cuts would be enough to move Republicans to  compromise. But with two wars winding down, most Republicans decided that this year they were deficit hawks more than defense hawks.

The president also played the populist card, calling for tax increase on the wealthy to spare the rest of the country program cuts. But that didn’t move the Republicans either.

The Republican leadership also deftly evaded the risk of being blamed for shutting down the government. They offered the Democrats a continuing resolution to allow government to keep operating, but at $85 billion below current spending levels. That shifted the onus to Democrats if they refused to take the deal and Congressional leaders advised the president that they were not prepared to take that risk.

Finally, Republicans took some of the sting—and responsibility—out of the sequester by offering to give Obama new flexibility in how he implemented it, thus making it even more his problem.

Next to come is the long awaited grand bargain of the austerity lobby, in which Republicans agree to close some tax loopholes (which start out grotesquely swollen) and Democrats agree to breach the previously sacrosanct fortresses of Social Security and Medicare.

On all counts, advantage: Republicans.

Long term, colluding in the politics of budget austerity has left Obama with no real capacity to offer the public investment that the economy needs for a robust, broadly-based recovery, and leaves him with the prospect of a weak economy between now and the end of his term–unless he drastically shifts course and repudiates the entire view of the budget and the economy.

 Continue reading at The American Prospect »

President Barack Obama won a tactical victory on New Year’s weekend by forcing Republicans to raise taxes on the top 1 percent, but he has far bigger challenges to address—and so do progressives.

The economy is still at risk of several more years of hidden depression, with a high level of unemployment and no wage growth. The initial budget deal, thanks to Obama’s post-election toughness on tax increases on the rich and pressure by unions and progressive organizations not to cut Social Security and Medicare, was better than it might have been. But still to come are debates over budget cuts, with Republicans having the leverage of an automatic $120 billion “sequester” for this fiscal year now postponed to early March, if Congress fails to legislate its own additional deficit reduction.

In principle, Obama has committed to $4 trillion in budget cuts over a decade, a sum that would be a huge drag on the recovery, leaving too little for the public investment necessary to create jobs and for the scale of infrastructure spending needed to mitigate future superstorms like Sandy. Since the election, the president has walked back some of his earlier commitment to spending cuts. But even as he forced major concessions out of the Republicans, he has continued to embrace deficit reductions as a necessary path to recovery, a strategy that makes no economic sense and that only whets the appetites of the right-wing anti-government crusade and its close ally, the corporate-sponsored Fix the Debt campaign.

So where is Obama’s running room to pursue a more far-reaching agenda? And where is the running room for progressives to move him?

The president still faces a rigidly conservative Republican House. The Senate, despite a slightly larger Democratic margin of 55 to 45 and the retirement of prominent budget hawks Kent Conrad, Ben Nelson, and Joe Lieberman, has at least six centrist Democrats—enough to deny the president a reliable working majority on some key issues.

But Obama would be wise to pursue a more progressive agenda, for multiple reasons. First, he has his legacy to worry about. Once it sinks in that budget cuts will not produce a robust recovery, Obama will increasingly wish to avoid being remembered as the Democrat who presided over eight years of declining living standards. Second, he is somewhat liberated in that he will not be up for re-election. Third, coming out of his victory, Obama found that progressive stances are good politics. He drew a bright red line on raising taxes on the wealthiest rather than cutting aid to the middle class, and the voters agreed. Finally, progressives are pushing him hard—maybe harder than in his first term.

Both Obama and the progressive community can learn from the missteps of his early years. Soon after the 2008 campaign ended, the new president’s political team wound down Organizing for America as an independent grassroots army and rebranded it as Obama for America, under the thumb of the Democratic National Committee. It’s understandable why the White House did not want a semi-independent mass movement to the president’s left acting in Obama’s name, complicating strategy and message. But the move also deprived the president of the kind of popular fervor that might have helped him shift from a candidate of change to a president of change—and offset the voter frustration that was captured by the Tea Party.

In 2009, Obama kept extending olive branches to Republicans who were determined to destroy him. He appointed a centrist economic team. As the recession deepened, he declined to push for a second stimulus package even though congressional Democrats were eager to pass one. (They finally did so in December 2009 with no help from the White House, only to see it die in the Senate.) He did not push the Employee Free Choice Act, despite the prodding of a labor movement that had gone all out to elect him. Even though a massive liberal coalition on health-care reform helped Obama enact the Affordable Care Act, the one provision that progressives most dearly wanted—a Medicare-style “public option”—was watered down and then jettisoned.

In his State of the Union address in January 2010, Obama pivoted to deficit reduction, even though the economy was far from a strong recovery, and the labor-liberal wing of the party seethed. In short, in Obama’s first term, progressives found they had little leverage on a president who turned out to be more moderate and conciliatory than they expected. All concerned suffered in the 2010 midterm Democratic congressional defeat that followed.

Will this time be different?

Continue reading at The American Prospect »