Monday, November 21, 2011

The Supercommittee's Failure and the President's Responsibility

On this Monday, essentially all of the political and economic commentators in the land appear to have concluded that the supercommittee has failed in it's assigned task of finding agreement as to some combination of $1.2 trillion in increased revenues and/or spending cuts.  In fact, some of our earlier posts had contemplated precisely this outcome.

As has also been noted in earlier posts, the incentives needed to convince the parties to reach a deal were simply not present here, so the result is not surprising.

That said, and putting to one side the forthcoming political theater in which each side will blame the other (you may want to help your blood pressure by tuning out for the next 72 hours!), a few comments regarding the President's role, or non-role, in this process bear noting.

In real life in politics, serious budget deals get done when Presidents get directly involved, and use the leverage of their office to cajole, threaten and put pressure (especially of public ridicule) on both sides.  As another writer noted today, "A few phone calls and tepid public statements do not count. It is the executive, not the legislature, that gives the budget process energy and direction."

In fact, that's exactly what happened in the budget/tax deals which took place under Reagan, Bush 1 and Clinton.

I'm told that the Vice President's deficit talks earlier this year found about $400 billion in relatively easily identified budget cuts, while the Republicans recently put forward a relatively modest $300 billion in additional revenues.  Clearly, the ingredients were there for at least a mini-deal (say, $700 billion?), if not the hoped-for $1.2 trillion in revenues and/or cuts.

My experience, as a trained mediator and with 40+ years as a business attorney, is that when parties are more than half way to a deal, it's not unusual for them to be pushed all the way to a complete deal.

But it does take a push, and usually from someone other than the parties themselves.

But what happened was, once again, that the President absented himself from the rough work necessary to bang heads and seize the moment.  

Is it conflict aversion or something else?

I cannot but help be reminded of his earlier failures to push for fiscal balance when the Bush tax cuts were extended (which gave the Republicans what they wanted and caused the President to lose valuable leverage in the Summer debt ceiling debacle), which was in turn resolved by "kicking the can down the road" to the super committee.  Recall that in that case, what the President did achieve was to put off further debt ceiling discussions until after Election Day in 2013.  

Note also the decision in Afghanistan to begin withdrawals in advance of the election, perhaps also motivated by political considerations rather than military advice.  I may be self-delusional, but I do see a pattern here.

It seems clear that when the nation needs strong leadership from the President,at least in the fiscal arena, he has been found wanting.  Even from a non-partisan standpoint, and I hear this from my Democratic friends as well, we do not have a strong President.

Perhaps the President's campaign slogan in 2008 will be revived, but this time for use by the other side:  "Change we can believe in."

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