Joe Manchin’s Dumb Budget Idea Already Failed Before

President Biden finds himself in a similar situation to what President Obama faced in 2011, with Republicans controlling the House but not the Senate, and a high-stakes showdown over federal borrowing and spending. Then, as now, Republicans took the debt ceiling—and therefore the global economy—hostage, to try to extort concessions from Democrats in the form of massive cuts to Social Security and Medicare. Then, as now, self-appointed guardians of responsible policymaking are urging big cuts to these vital programs, while hiding the true nature of their intentions. Sen. Joe Manchin (D-WV) is proposing a repeat of one of the central mechanisms of that grim period: a bipartisan deficit reduction committee that would propose changes to Social Security, Medicare, and Medicaid in return for raising the debt ceiling. Earlier this month, he suggested that the new Speaker of the House would appreciate the opportunity: “Kevin McCarthy, it’s a wonderful opportunity for him to say ‘Listen, let’s act like the adults. We’ve got a debt—who’s at fault, we’re all at fault. How do we fix it together and move forward?’” Now, it’s a terrible idea to negotiate over the debt ceiling, which would only encourage Republican extortion tactics. In fact, Biden has said that his experience of him in 2011 informs his desire for him to not negotiate today. But while some in Washington may see a bipartisan committee as a sensible compromise, it’s simply not going to work either. We know this because it was tried 12 years ago with a considerably less crazy GOP, and it failed completely. More from Ryan Cooper Let me review the history. When Republicans took control of the House in 2011, they immediately put a gun to the head of the economy and demanded either vast cuts to welfare programs, or the country would get it. In arguably the worst decision of his entire presidency (a high bar indeed), Obama decided to indulge this Republican hosting-taking, putting hundreds of billions in cuts to Social Security and Medicare over ten years on the table, and asking only for modest tax increases on the rich that would bring in considerably less revenue in return. This “bargain” was thankfully only avoided because the Freedom Caucus refused to accept any tax increase or compromise whatever. Instead, with the Treasury Department nearly down to its last dollar, disaster was averted that August with the Budget Control Act of 2011. This raised the debt ceiling by $2.1 trillion and made $917 billion in cuts to discretionary spending (while leaving Social Security and Medicare untouched), but did not increase taxes at all. The law created a special bipartisan committee to figure out at least another $1.5 trillion in future deficit reduction ideas. Whatever the committee came up with would get a fast-track up-or-down vote in Congress, with no possibility for amendment or filibuster. The whole deal was incentivized with a provision that would trigger $1.2 trillion in cuts to domestic and military spending in 2013—at the same time the Bush tax cuts for the rich would expire—should the committee fail to come to an agreement. Effectively, Congress tried to chain itself to the mast of austerity. To the extent Republicans care about spending cuts, they’ve created no consensus about exactly what they want. This 2013 deadline came to be known as the “fiscal cliff,” and the bipartisan deficit reduction panel known as the “super committee,” with six Republicans and six Democrats from both houses of Congress. The super committee, unsurprisingly, was a complete flop. Once again, Democrats offered big cuts but demanded tax hikes on the rich—a strong position given that those tax hikes would happen automatically anyway. Sen. Pat Toomey (R-PA) countered with an offer that would increase revenue by $300 billion over ten years but cut the top marginal tax rate from 35 percent to 28 percent. By November, the committee gave up entirely without even holding a vote. Incidentally, this also happened with the Bowles-Simpson Commission, which was set up by Obama to come up with a deficit reduction plan. Its conservative members instead proposed a plan centering around huge tax cuts for the rich, with supposed spending reductions to be found by another future commission that would determine how to reduce health care spending. That proposal could not get the necessary votes to be recommended. The prosecutor cliff was avoided through a bargain in which then-Vice President Biden gave away the store, as Ryan Grim writes at The Intercept. Then-Senate Majority Leader Harry Reid had wanted to go over the cliff to strengthen Democrats’ negotiating position, but Biden gave Mitch McConnell the ability to lock in nearly all of the Bush tax cuts, in return for almost nothing. It’s worth taking a moment to emphasize how totally deranged this episode was. In August 2011, the damage from the Great Recession was not even close to fixed. The unemployment rate was 9 percent, inflation-adjusted GDP per person was still about 2.5 percent below its previous peak four years earlier, and inflation itself was dead flat. The economy was simply crying out for more stimulus, like a man who has trekked across the Sahara crying out for water. But the leadership of both political parties, as well as the entire Washington establishment, were utterly fixed on cutting spending (which would weaken the economy) and raising taxes (which would weaken it more). At any rate, the basic political problem with the super committee strategy was Republican intransigence and insanity. They made maximalist, lunatic demands and tried to get them with threats and extortion instead of anything remotely resembling fair negotiation. That problem has gotten dramatically worse in the intervening decade. The Republican caucus today is completely in thrall to bottom-feeding scammers and QAnon conspiracy nuts who think Democrats are blood-drinking pedophiles who worship Satan. To the extent they care about spending cuts, they’ve created no consensus about exactly what they want; half the caucus is demanding the slashing of Social Security and Medicare, while Speaker Kevin McCarthy has vowed not to touch them. When Rep. Greg Pence (R-IN), brother of the former vice president, was asked whether he would vote for the debt limit if a deal included every one of his priorities, he repeatedly said “No!” There’s simply no reasoning with people who just want to trash the country. The economy of 2023 is far stronger than that of 2011, though with inflation cooling markedly I see no reason for austerity. But as far as the politics, if Manchin thinks he can get a good ol’ bipartisan agreement out of this opposition party, he’s got another thing coming.

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