IF A DEAL GOES THROUGH, REPUBLICANS WILL WIN THE POLITICAL WAR, TOO
MSNBC's First Read says the revised Boehner plan appears likely to pass now, and adds that Democrats don't seem likely to be able to modify it much, so if it becomes law it'll be a massive defeat for Dems -- no tax increases, no debt increase till 2013, nothing Dems want.
Democrats ... argue that they could end up winning the longer-term war. They point to polls showing them winning the actual tax debate (that the public wants balance and is willing to pay higher taxes); they say they could still get their revenues through the commission the eventual legislation sets up, or with the expiration of the Bush tax cuts (if Obama wins in 2012); and they contend that the president likely comes out this messy debate looking better than anyone in Congress. In large part, Republicans have gained the upper hand in this game of chicken, because they've proved that their Tea Party is tying their hands to the steering wheel (and Republicans have proven adept at using the "we can't control these guys" negotiating strategy). But Democrats could wield this argument in 2012: No matter how much ground they gave up, they protected the country from the guys who were willing to crash both cars.
This is a complete misunderstanding of how low-information voters (i.e., most Americans) think.
If this thing goes through and there's never a debt default, those voters won't remember the specifics (if they ever knew them) -- they'll just remember that all those indistinguishable pols fought like bratty kids in a sandbox, and then the mass tantrum ended. What they'll pay attention to going forward is the condition of the economy. And we know what that's going to be like under Boehnernomics:
Remember that [the] spending cuts aren't alone. Unless future legislation changes this, they’re alongside the expiration of the $160 billion payroll tax cut and the $60 billion in expanded unemployment insurance that the administration negotiated in the 2010 tax deal. So that means the economy -- which is very weak right now -- is losing something in the neighborhood of $250 billion in federal support.
Earlier today, Suzy Khimm quoted the International Monetary Fund saying "a fiscal consolidation equal to 1 percent of GDP typically reduces GDP by about 0.5 percent within two years and raises the unemployment rate by about 0.3 percentage point." There's reason to believe that in a weak global economy, the effect will actually be worse than that. But let's say it isn't. Projected GDP in 2012 is about $15.8 trillion. So a $250 billion cut is about 1.5 percent of 2012's projected GDP. So ... we're looking at a drag on growth of more than 0.5 percent of GDP and a drag on employment of more than 0.3 percent.
This is not good for the recovery.
And that's all voters will think about in 2012.
Yeah, I suppose we'll have another food fight a few months down the road, when the debt ceiling has to be raised again. Yeah, we'll have more teabag hostage-taking. But if it's all over and done with late in 2011 (even if it's around Christmas), voters will forget that, too, by November 2012, except as a vague memory of generalized D.C. immaturity and incompetence.
And the next food fight is going to hamstring the recovery even more. And then low-information voters are going to exact their revenge at the polls at the incumbent they see on the TV most in the ensuing months, and on his party -- not on Mitt Romney or Rick Perry, who won't be associated at all with all the childishness they saw, or with Washington.
And if I'm wrong -- if, somehow, Obama ekes out a win in November 2012 -- don't even think about tax increases, or an expiration of any of the Bush tax cuts, in 2013. Republicans will just threaten to drive the car off the cliff again to prevent that.