October 11, 2013

Analysis: Obama’s hardline budget stance rooted in 2011 impasse

The resolution of the showdown with House Republicans will be critical to maintaining Obama’s capacity to wield his clout during the three years left in his presidency.

By Mike Dorning And Margaret Talev
Bloomberg News

WASHINGTON — Shortly before President Obama was re-elected, he confided to John Podesta, an informal adviser, a vow he was making for his second term: He would never again bargain with Republicans to extend the U.S. debt limit.

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A political breakdown that leads to a debt default carries greater risk over the long run for Obama than for the Republicans.

The Associated Press

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The precedent, set in the agreement that ended a 2011 budget standoff, “sent a signal that this was fair game to blackmail over whether the country would default,” said Podesta, a onetime chief of staff to President Bill Clinton and co-chairman of Obama’s 2008 presidential transition, in an interview. “He feels like he has to end it, and end it forever.”

The stand Obama has taken on the latest fight over the government shutdown and borrowing limit — refusing to tie policy conditions to raising the debt ceiling — is an attempt to repair some of the damage that he and his aides believe he sustained by making concessions to Republicans to avert a default two years ago, according to former top administration officials and advisers.

The resolution of the showdown with House Republicans will be critical to maintaining Obama’s capacity to wield his clout in Washington during the three years left in his presidency and protect the political initiatives of his first term, they say.

The outcome will probably help determine his leverage to press for new priorities such as a revamp of immigration law, expanded access to pre-kindergarten education and infrastructure funding. It may also stave off attacks on his health-care law and the Consumer Financial Protection Bureau.

If Obama makes concessions again to House Republicans over raising the $16.7 trillion debt limit, “he’ll be viewed as a guy who you can hold up,” said Podesta, chairman of the Center for American Progress, a Washington research group with close ties to the administration.

Obama is surrounded by a core group of aides who are mostly veterans of the 2011 debt negotiations, which were followed by the first downgrade of U.S. government debt.

They include senior advisers Dan Pfeiffer and Valerie Jarrett, National Economic Council Director Gene Sperling, Treasury Secretary Jack Lew and White House deputy chief of staff Rob Nabors. Denis McDonough, now White House chief of staff, also was a witness to the prior fiscal crisis as a National Security Council staff member.

Republicans have portrayed the administration’s refusal to negotiate as a rigid position that’s bringing the country closer to a crisis. House Majority Leader Eric Cantor of Virginia criticized Obama’s stance as “one party simply refusing to negotiate” in an essay published in The Washington Post.

“Mr. President, let’s sit down and talk,” Cantor wrote Wednesday. “Let’s reach consensus and end the ‘my way or the highway’ attitude once and for all.”

House Republican and Senate Democratic leaders are open to a short-term increase in the debt limit, according to congressional aides of both parties who spoke on condition of anonymity to discuss strategy.

The public places more of the blame for the government shutdown on Republicans. A Pew Research Center poll taken Oct. 3-6 found 38 percent of Americans say Republican leaders in Congress are more to blame compared with 30 percent who cite Obama.

An Oct. 3-6 Gallup Poll found that 28 percent of Americans have a favorable view of the Republican Party — the lowest for a major party since Gallup began asking in 1992 and down from 38 percent a month earlier. Forty-three percent held a favorable view of Democrats, compared with 47 percent a month earlier.

Still, a political breakdown that leads to a debt default carries greater risk over the long run for Obama than for the Republicans. An economic crisis that might tip the country back into recession would tarnish his presidency and the durability of his initiatives such as expanding health care to millions of uninsured Americans and pushing through the most sweeping changes in financial-market rules in seven decades.

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