OK. Plan A didn’t quite work as advertised.
Texas Senator Ted Cruz said that if the House Republican majority attached a “defunding” of Obamacare to the continuing resolution (CR) budget, he and his allies would force the Democratic majority in the Senate to pass same and coerce President Obama into signing the repeal of his signature legislation. The Democrats failed to co-operate in this effort.
So now what?
President Obama is insisting that Republicans pass the “clean” continuing resolution – an agreement to keep the present budget going without changes – and the upcoming debt ceiling increase without attaching any budget reforms or changes to Obamacare.
Republicans in the House walked away from Cruz’s “everything or nothing” non-negotiable demand and have offered a series of compromise deals: a one-year delay in Obamacare, a one-year delay in the mandate to buy health insurance, the repeal of the tax on medical devices, and a law overturning Obama’s Office of Personnel Management ruling that congressional staff would not have to live under Obamacare.
With no agreement, the previous continuing resolution lapsed. The government shutdown, which means that President Obama largely chooses what to fund and what to not fund – subject to rules established (and therefore changeable) by the executive branch: read, the president’s appointees.
What does each party want? What do they fear? What is their leverage against the other?
Cruz believed the president feared a shutdown. Obama did fear a shutdown in August 2011 because he was running for re-election in 2012. He gave Republicans a $2.5tn cut in future spending to get past the debt ceiling.
But now, Obama is not running for re-election. It might not be fruitful to assume he is focused on the electoral success of endangered Senate Democrats. He did not overly care about the House Democratic majority he lost in 2010.
Senate Democrats do fear 2014. They do not like the votes they have already cast against repealing the medical devices tax that most Democrats publicly claim to oppose; and their votes opposed to providing funding for furloughed workers, opening the National Park Service and National Institutes of Health, as well as others the GOP will think up and throw at them from the House.
Obama thought the GOP would suffer if the government shut down. But he has gotten caught spending money hiring park police to barricade the World War II Memorial against the “honor flights” that bring 90-year-old vets in wheelchairs to the open-air memorial. This reminds voters of how he lost the earlier sequester fight by saying the budget law would preclude the traditional Easter Egg hunts at the White House.
Then, Obama also closed the White House to tours. The Congress, to highlight his ploy, kept the Capitol open to tours.
Each team was wrong that the shutdown gave them all the leverage.
There is leverage in the sequester, the 2011 law that caps the growth of domestic discretionary and military spending. Many Democrats find those caps smothering. They want them lifted. Republicans fear the unfunded liabilities of the pay-as-you-go entitlement spending that, unchanged, will bring federal spending to 40% of GDP (from 20%) by 2050.
Here, there is a possible trade: a temporary and limited lifting of the sequester to allow some more spending now, in return for reducing some of the $64tn (in present value) of the unfunded liabilities in the future. That future overspending is not sustainable. It will have to be culled back someday. Why not get something here and now in exchange?
The sequester, like Obamacare, is the law of the land. Republicans might trade some more spending today for much less far into the future. Entitlement laws can be changed – as Reagan and the Democrats did to delay the retirement age for social security from 65 to 67, over 24 years. The traditional, and wholly rational, fear that promised spending cuts would evaporate is reduced or even eliminated when cuts are gained through such changes in entitlement law.