The definition of a good deal used to be that both sides in a negotiation were unhappy. In this case, there are considerable elements on both sides who are furious. That is not a recipe for success. Arms will surely be twisted hard to get it done but further compromises are probable. However, it is the longer term damage that must be assessed.
The problem for the US is that elements the rest of the world considers misguided at best and deranged at worst are framing the economic debate. The question that raises is whether placing investments or faith in the currency of such a place makes sense. For Speaker of the House Boehner, there is a concern that he has surrendered to the least stable elements of his caucus and is following rather than leading. For President Obama, the belief grows that he is less engaged than he should be -but perhaps as much as he is able - and that he is being dictated to rather than taking charge.
Perhaps this reflects America's changed circumstances: a rentier society living off the riches accumulated by the hard work of previous generations, no longer willing or able to work as much as necessary to maintain dominance. The central role of cuts in the deal suggests a diminished future in which growth is not assured. So the questions the deal raises are less about the leaders strengths or weaknesses, but those of the society they represent. JL
Susan Page and Fredreka Schouten report in USA Today:
The last-minute deal that is taking shape to avoid a first-ever default by the U.S. government is a little like the Fire Department trucks arriving after a home's roof has been engulfed in flames. It's good they made it, but some real damage already has been done. In the debate over raising the government's debt ceiling, President Obama has seen his approval rating fall to a new low, his political adeptness questioned and his liberal base enraged over compromises he made on line-in-the-sand issues such as protecting Medicare from cuts.
House Speaker John Boehner, R-Ohio, has been weakened, too. He not only was forced to retreat from a legacy-making grand bargain, but he also had to pull his own plan from the House floor for revisions demanded by conservative Tea Party members.
Washington itself has looked to many American voters and international investors like a bickering, dysfunctional family, unable to address the nation's considerable and looming problems in a timely way.
Is this any way to run a country?
"There's no doubt in my mind there will be lasting political consequences, and I think it's going to be fairly wide-ranging," says Larry Jacobs, director of the Center for the Study of Politics and Governance at the University of Minnesota. "The Republican brand name has taken a hit," Obama has "cascading problems" and the belief among many Americans that the nation is on the wrong track has been reinforced.
Jacobs sees the ingredients for "a political hurricane" in the 2012 elections.
"It appears dysfunctional because it is dysfunctional," former Virginia congressman Tom Davis, who twice chaired the National Republican Congressional Committee, says of the government. Even worse, raising the debt ceiling does little to address Americans' biggest concerns over stubbornly high unemployment and stagnant wages.
"Until you get the economy under control, voters are going to continue to be in an ugly mood," Davis says. "Lifting up the hood on how government works only exacerbates it."
The debate over dollars isn't over.
First, the debt deal negotiated by the White House and congressional leaders has to be passed by the House and Senate. Boehner almost certainly will lose the support of some of the Tea Party members who were the last to sign on to his proposal, which squeaked through the House on Friday without a single Democratic vote.
Then, after the first set of $1 trillion in spending cuts, the pending agreement calls for a second round of larger deficit savings negotiated by a new joint congressional committee that is tasked to report back by Thanksgiving.
Meanwhile, there's the regular process of funding the government, which largely has been set aside as the Capitol focused on averting a debt disaster. By the time the new fiscal year begins Oct. 1, Congress has to pass appropriation bills or negotiate a continuing resolution to fund government operations. Disputes over the last such spending bill in April brought the government to the brink of a shutdown.
So Washington faces a continuing series of cliffhanger debates from now to Christmas, all playing out in the most polarized political climate of modern times.
The Tea Party's playing field
There are some political winners in the debt debate.
The Tea Party revolt that helped Republicans gain control of the House in last fall's elections succeeded in defining the debate and dictating key provisions of the proposed deal.
Among them: The debt ceiling will be raised only by the amount that the deficit is reduced. The initial round of savings relies only on spending cuts, not on the higher taxes for top earners that Obama initially demanded.
Cuts in Medicare and other entitlement programs are on the table. And, depending on how events unfold, both houses of Congress may be required to vote on a constitutional amendment requiring a balanced budget.
"I do believe the Tea Party and the issues that the Tea Party has brought to the table since 2009 — these are the issues that are driving this debate," says Matt Kibbe of FreedomWorks, an advocacy group affiliated with the Tea Party. "Democrats and Republicans are essentially negotiating within the framework that the activists and the Tea Party freshman have laid out."
Tea Party activists haven't won the war over government spending, "but some battles have been won by us," says Judson Phillips of Nashville, founder of a group called Tea Party Nation. Even so, he blasts Boehner for crafting plans that Phillips says do too little to curb spending and suggests the speaker should face a Tea Party-backed challenger in his re-election campaign next year.
"I don't want him to be speaker again, and I don't even want to see him in the House again," Phillips says.
Rep. Steve King, R-Iowa, voted against the Boehner plan, which would have cut $2.6 trillion in spending over 10 years and required Congress to approve a balanced-budget amendment to the Constitution. But he denies that the speaker has been weakened significantly. "Members of the caucus know they put him in a tough position," he says. "But they want him to lead and they want him to succeed."
The hard line that Tea Party supporters took did come with some costs: pushing the country to the brink of default, exposing a divide in the Republican Party and alarming — even repelling — many independent-minded voters.
In a CNN/ORC Poll taken July 18-20, nearly two-thirds of those surveyed said congressional Republicans had not acted responsibly in the debt negotiations, while a majority credited Obama with acting responsibly.
Even The Wall Street Journal on its conservative editorial page warned Saturday that "the GOP fantasy caucus is empowering Nancy Pelosi," the House Democratic leader who symbolizes the opposition. On the Senate floor, Arizona Sen. John McCain, the GOP's 2008 presidential nominee, ridiculed "Tea-Party Hobbits."
"Clearly the Republican Party is now experiencing something akin to a political civil war within its own ranks," Jacobs says. "There's clearly a major split within the Republican Party between the Tea Party faction and the traditional Republican Party, and there's also a split between the Republican Party organization and their long-standing ties to the business community. There are people on Wall Street and the broader business community who are wondering if the Republican Party has their best interests at heart."
'Tinges of unease'
Steve Bartlett, a former Republican congressman from Texas who is CEO of the Financial Services Roundtable, representing 100 of the nation's largest financial institutions, says Wall Street firms and Main Street banks had "tinges of unease" over the debt-ceiling showdown but also felt "a sense of confidence that it would be resolved in a relatively satisfactory way."
Boehner would be weakened if a deal over the debt were not reached, he says, but now likely will be able to claim victory. And Bartlett praised Senate Republican Leader Mitch McConnell, who became a critical behind-the-scenes negotiator with Vice President Biden in recent days.
"Who's the big player who is not attached to any failed proposal?" Bartlett asks, then answers: "Mitch McConnell."
The system worked, the former congressman argues. "It works as it was designed to some 200-odd years ago, which is a grinding, messy compromise over the details."
The White House made similar arguments defending the role Obama has played.
"We have to live within our means, and I think the president has been clear that he is willing to do some tough things, because the only way to reduce the deficit is to get out of your comfort zone," White House adviser David Plouffe said on ABC's This Week, part of a procession of policymakers appearing on Sunday morning TV.
To progressives in revolt against the plan, Plouffe cautioned that "things like college loans, college scholarships, medical research, spending on things like roads and bridges that put construction workers to work, if we don't reduce the deficit in the not-too-distant future, we're not going to have room to do any of that."
That argument didn't convince liberal leaders who urged that the compromise deal be defeated.
"Today we, and everyone we have worked to speak for and fight for, were thrown under the bus," Rep. Raul Grijalva, D-Ariz., co-chair of the Congressional Progressive Caucus, said in a statement. "This deal is a cure as bad as the disease."
"Our members are wondering, 'What in God's name is going on in D.C.?'" says Justin Ruben, executive director of the liberal group MoveOn.org, which claims 5million members. "The country needs jobs, and Washington is debating what vital program needs to be cut."
The "hazard" for Obama is that those who supported him in 2008 won't turn out to vote or volunteer for him again, Ruben warns. Obama was elected by energizing a coalition that included millions of first-time voters — among them young people, African Americans and Hispanics — who even if they didn't vote for the Republican presidential candidate could chose to support a third party candidate or just stay home.
The Progressive Change Campaign Committee delivered petitions to Obama's re-election campaign headquarters in Chicago that had been signed online by 200,000 people who vowed not to donate or volunteer for him in 2012 if he agrees to cuts in Social Security, Medicare or Medicaid benefits. Those signing reported that they had volunteered a total of 2.5 million hours and donated more than $17 million to Obama in 2008.
The biggest risk for Obama, of course, is the economy itself — and whether the deal he has agreed to will make it better, or worse.
Republicans argue that a long-term deficit-reduction plan will help foster an economic climate that encourages businesses to hire and invest. Democrats generally caution, though, that spending cuts in the short-term while the economy is weak will further slow growth.
"Political activists are going to remember the details of the debt debate, but provided we avoid a default, average voters are pretty much going to forget it by summer's end," predicts Jack Pitney, a professor of government at Claremont McKenna College in California. "For most people, the big issue is, How much money do they have in their pockets? Are they employed? That's what really counts."
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