Democrats Are Ceding the Entire Traditional Democratic Economic Ideology

On Thursday, we got this news:

President Obama on Wednesday intervened in a partisan brawl that threatens to shut down the government, inviting congressional leaders of both parties to sit down with Vice President Biden and work out a compromise to fund federal programs through the end of the fiscal year.

The official statement called for a "bipartisan" approach. There seems to be a presumption that no one has been paying attention the past couple years, because the only people that still believe in bipartisanship are also likely the holdouts on Santa Claus and the Tooth Fairy. The way it actually works is that every time the word is mentioned, Democrats give ground on core principles while Republicans have to accept that they get only some, but not all, of what they want. The administration's framing of its role also is interesting. Republican administrations tend to think of themselves as partisan, representing the core values of their party. This administration seems to think of itself as a mediator between partisans. Triangulation you can believe in.

Back in December, at the press conference after he cut the bipartisan deal with Republicans to make the disastrously irresponsible Bush tax cuts his own, President Obama gave this stunning response:

Look, here's my expectation -- and I'll take John Boehner at his word -- that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen. And so I think that there will be significant discussions about the debt limit vote. That's something that nobody ever likes to vote on. But once John Boehner is sworn in as Speaker, then he's going to have responsibilities to govern. You can't just stand on the sidelines and be a bomb thrower.

And so my expectation is, is that we will have tough negotiations around the budget, but that ultimately we can arrive at a position that is keeping the government open, keeping Social Security checks going out, keeping veterans services being provided, but at the same time is prudent when it comes to taxpayer dollars.

At the same press conference, he described the Republicans as having held the middle-class tax cuts hostage to the upper-income tax cuts. But he somehow took the head hostage-taker at his word not to use a government shutdown as a further threat--the ransom being radical budget cuts during a tentative recovery from a deep recession. Which we all knew was high on the Republican agenda, which we all knew would be high on their agenda once they took control of the House, and which they now knew they had the means of getting: take the functioning government itself hostage, and threaten to shut it down when the spending cap comes due. It wasn't difficult to predict.

Look, here's my expectation -- and I'll take John Boehner at his word -- that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen.

Irresponsibility from the Republicans should be expected. Rapacious greed from the Republicans should be expected. Class warfare from the Republicans should be expected. So should lies. These are the people who took us into two staggeringly expensive wars without any mechanism to pay for them, indeed with concurrent policies that undermined the mechanism to pay for them. These are the people who long have been waging war against unions and working people, presumably because if only they and their patrons can treat American workers the way they treat their workers in overseas sweatshops, they won't have to outsource all their labor. These are the people questioning the president's citizenship, who claimed his health care plans included forced euthanasia, who claim Social Security will be insolvent, who tie it to the federal deficit, and who scream "Socialism!" and "Sharia Law!"

Look, here's my expectation -- and I'll take John Boehner at his word -- that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen.

Taking at his word a man whose very skin tone cannot be found in nature. It took Boehner just over two months to threaten that government shutdown. And while his colleagues negotiated a bipartisan stop-gap that will keep the government open while cutting the budget on a pro-rated basis pretty much as they wanted, Boehner himself had more important things on his agenda.

Look, here's my expectation -- and I'll take John Boehner at his word -- that nobody, Democrat or Republican, is willing to see the full faith and credit of the United States government collapse, that that would not be a good thing to happen.

The problem is that, on economic issues, DC Democrats have forgotten how to be Democrats. By making the Bush tax cuts their own, they have removed even from discussion the most obvious means of addressing any fiscal issues. And it isn't confined to the White House. Congressional Democrats are playing along by accepting those short-term budget cuts for a mere delay in the shutdown showdown, signaling as the White House already did with the tax cuts that the Republicans can get their way by playing hardball. But is it really only the Republicans' way? That's the question. And while some Democratic governors are attempting a more responsible approach, their efforts are being hampered by those Obama tax cuts:

Struggling states could lose as much as $5.3 billion in tax collections during the next few years in an unintended consequence of one of the lower-profile federal tax cuts that President Obama enacted in December, according to a report released Tuesday.

The tax-cut package the president signed in December is best known for extending the Bush-era tax rates for two years and giving a one-year payroll tax cut to most Americans. But it included a business tax cut that could blow a hole in state budgets: a provision allowing businesses to deduct the full value of new equipment purchases from their taxes through 2011.

Those Democratic governors deserve a lot of credit, because the politics of supporting responsible tax increases is not easy when a Democratic White House and its Congressional allies have removed tax increases from the federal conversation and are actually doing the exact opposite by promoting tax cuts at the same time they're ostensibly concerned about deficits. Tax cuts that are making the jobs of those Democratic governors even more difficult.

The post-war economic boom included vastly higher marginal tax rates than we have now. President Clinton increased taxes, erased the record Reagan-George H.W. Bush deficits, and enjoyed an economic spike that saw near full employment. Bush cut taxes and oversaw the disintegration of the Clinton surplus, the creation of the largest-ever federal deficits and an economic meltdown. The greatest economic mistake made by President Franklin Roosevelt was when he overestimated the recovery that had been sparked by the New Deal, and cut government spending in 1937, sending the economy into another downward spiral. This isn't complicated. The evidence is clear. This was part of the core of the Democratic Party's economic ideology. But with the economy in early 2011 still struggling to recover from the Friedman/Reagan/Bush economic disaster, and with unemployment and under-employment still devastating the lives of a sixth of the populace, which model is the White House and Congressional Democrats following?

Whatever the budget resolution ends up being, you can be certain that it will be sold as a compromise. But it won't be a compromise. As it so often does, the administration ceded the paradigm from the start. A real compromise would include what now isn't even being discussed. A real compromise would begin by asking what the American people need, and how we are going to pay for it. Instead, the only debate will be about the depth and specifics of the inevitable cuts. And we likely will hear much about shared sacrifice from people who themselves will be sacrificing nothing. The Democrats are now playing on the Republicans' field. They are compromising between what had been a Republican economic model and an even worse Republican economic model.

It's bad enough that on economic matters the Democrats won't stand up for the values and models that once defined the party and by which this nation thrived for more than half a century, but they're now actually doing the Republicans' work for them. This enables the Republicans to continue moving even more to the extreme right, with the once fringe Koch model of anarcho-libertarianism now going maintream. The Democrats still control the White House and the Senate, but they have abdicated economic leadership and ceded not just a few issues but what had been their economic ideology. Keynesianism is, at best, dormant. For all the good the Democrats are doing for it, it may as well be dead. Austerity is now the norm. For the Democrats. As the economy continues to stagger, tens of millions of well-meaning Americans continue to suffer, and neither help nor an end is in sight. Grover Norquist must be pleased. Democrats are starving the government of funding, and Democrats are trending toward cutting it down to the size where it can be drowned in a bathtub.