Is Either Side Winning the Debt Ceiling Debate?

In late December of 2010, President Obama secured a deal with the lame duck Congress, and in particular with the 41 GOP senators who could filibuster any Democratic proposal, to extend all of the Bush tax cuts for two more years and provide some additional stimulus in the form of a 2% payroll tax cut for a year and some additional spending on unemployment insurance. The deal quickly lifted Obama’s approval ratings in the polls. He appeared to be a strong leader who got a deal done and achieved the necessary compromises from both sides.

In reality, the deal was easy -- neither side gave up anything other than its rhetoric. The GOP got the Bush tax cuts extended and some additional tax cuts, while the Democrats got some additional stimulus. This was business as usual in Washington -- Democrats got more spending, Republicans got more tax cuts. In total, the deal increased the projected government deficits by $700 billion for two years, almost as much as the 2009 stimulus package.

Of course, the extension of the Bush tax cuts was “scored” as adding to the deficit by over $400 billion, though rates did not change. This is similar to when federal spending on a program that is scheduled to increase by 7%  is instead “cut” back to only increase by 5%. That is scored as a spending “cut” and a reduction in the deficit since spending did not go up by as much as it was supposed to.

The current debate is over a “grand bargain” to cut future annual deficits by up to $4 trillion over the next ten years to accompany an increase in the debt ceiling to carry the government through early 2013. An alternative, in the absence of a “grand bargain,” is some shorter term smaller increase in the debt ceiling accompanied by a smaller cut in the deficit. The debate between the parties has been ugly, full of recriminations and political posturing. Both sides are dug in, because unlike in the lame duck compromise, they are being asked to give up something, which is a lot harder than getting your goodies while the other side gets theirs, too.

In addition, compromise on a “grand bargain” requires each side to give up some of their weapons for the 2012 election. Democrats lose some of the force of their “Mediscare” campaign, if they agree to sizable cuts in Medicare or adjustments to Social Security. Republicans risk the wrath of their Tea Party supporters, if they appear to agree to tax increases during a weak economic period, instead of more in spending cuts. Every poll suggests that the president, the Congress, and both Democrats and Republicans have suffered from the debate, and the lack of resolution to this point.

If Obama benefited from appearing to rise above partisanship in the lame duck debate, that has failed him now. His angry, highly charged remarks on Friday, castigating Republicans and threatening the risk of default or a cutoff of some of the 70 million federal checks mailed out each month, are not the way to remake oneself as the adult in the room, the non-partisan grownup. Sunday's Rasmussen Presidential Tracking Poll shows the highest strongly net negative compared to net positive approval score for the president (44% versus 23%) than at any point since last November. The president’s approval ratings have sunk in every other poll as well, particularly in recent days.

It is unlikely that if a deal is reached, as it almost surely will be in the next day or days, the president will be able to bask in his statesmanship and see his approval ratings rebound.

The president has tried his best to spin a largely compliant media with these themes:

1. He wants a balance between new “revenues” from those who can afford to pay them, and spending cuts (draconian of course), which will wind up hurting the poor , seniors, and the middle class.