January 7, 2013--Leverage

The reason Barack Obama looked so piqued the other night when he announced that the House of Representatives had joined the Senate in voting to cut taxes for 98 percent of Americans was not because he was frustrated that he had to interrupt his Hawaiian vacation; or because he had to spend so much time with the congressional leadership who, even from his own party, he obviously can't  abide; instead of looking triumphant, he looked diminished. (Joe Biden, in contrast, at his side, looked radiant--the 70 year-old picture-perfect 2016 presidential candidate.)

Why, at this moment of triumph, when he seemingly got most of his way and the Republicans seemed so discombobulated and hapless did the president look so flat?

Simple--

He knew he lost, having traded away, for very little, pretty much all the leverage he had accrued by having been reelected and now, after fending off the fiscal cliff (at least the tax part of it), he faced an even more dreaded reality--the fiscal chasm--the looming battle to dramatically and dangerously slash the federal budget.

In this upcoming nightmare, what leverage does he retain? In an even minimally rational situation, the $1.0 trillion so-called sequester should be leverage enough to get the GOP to come to their senses and agree to some kind of grand or mini-bargain.

The reasoning about Obama's dwindling leverage goes this way--

If there is anything Republicans like less than seeing any taxes raised it is seeing any cuts in defense spending and the sequester calls for big cuts to kick in automatically in two month to defense spending. Half a trillion worth.

But what Obama knows, and it showed on his face the other evening, is that what he and we face is not a rational situation where old negotiating rules apply--to get a little you give a little--but rather an emotional, belief-driven clash of ideologies with Republicans with almost religious fervor wanting to end much of government as we have come to know it since the New Deal while Democrats, with almost equal passion, want to retain all of our social safety-net programs pretty much the way they have come to be.

Obama and the Democrats, who may be more negotiable than the Republicans (recall that 18 months ago, the last time we faced the cliff, Obama proposed to John Boehner a "grand bargain" that included raising the Medicare eligibility age to 67), now, having gotten a version of their way on taxes, going forward, hold few chips.

Republicans smarting from their largely public relations defeat last week and from being mocked for their bumbling by smart-alec pundits including even some on the right, are already saying they're OK with not yielding even if it means "It may be necessary to partially shut down the government," to quote the number-two Republican in the Senate, John Cornyn.

No matter that defaulting on our sovereign debt would be much more cataclysmic than shutting down our national parks and government offices for a few days (as we did back in the good-old Clinton-Gingrich days), this may be what those who are providing the driving force to the GOP these days are actually seeking--something cataclysmic or, worse, apocalyptic.

We're confronting true believers here and they do not play by conventional rules. Very much including within Congress.

Obama may not be schmoozy enough to be truly effective in working with Congress and once again proved he's not a very effective bargainer; but he is very smart when it come to understanding the nuance of situations, and the look on his face last week after his "triumph" was revealing.

Republicans willingness to risk everything for the sake of cutting domestic spending, especially what they see to be entitlements, is powerful leverage indeed. If I were Obama, I'd be fantasizing about staying in Hawaii and tossing the keys to Biden.