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As Some GOP Scale Back Deficit Reduction Demands, Dems Still Giving Up Main Argument

Rep. John Shimkus (R-IL) did little for the Republican negotiating position on the continuing resolution for FY 2011 Monday when he suggested that the endgame would fall only halfway to the GOP’s bid for $61 billion in cuts:

Congress will continue to pass bills funding the government for only a few weeks at a time until Democrats meet the GOP halfway on cuts, a House Republican said.

Rep. John Shimkus (R-Ill.) said Democrats need to back $30 billion in cuts for the rest of the fiscal year if any headway is going to be made in the negotiations over a spending bill.

“I think if [Democrats] aren’t going to get closer to the $30 billion halfway mark, we’re going to continue to do the … [short term] continuing resolution,” Shimkus told Illinois radio affiliate WLS.890.

Republicans and Democrats are caught up in numbers games over what constitutes the halfway mark. Republicans initially said they wanted $100 billion in cuts from Obama’s FY 2011 request (that’s about $61 billion). Democrats countered with $50 billion in cuts from that 2011 request, or about $10 billion. Now Republicans want to redefine “halfway” as halfway to their $61 billion figure, meaning $30 billion in cuts. It’s all a bit confusing.

But Shimkus is one of the first Republicans to propose any compromise off that $61 billion number. Which means that we’re arguing about, and could go into a government shutdown over, a grand total of $20 billion in cuts in a $3.7 trillion budget. That’s the difference between the $10 billion proposed by Democrats and the White House, and the $30 billion that Shimkus puts out there.

This doesn’t mean that Republicans as a whole would accept a $30 billion cut, but it’s really one of the first cracks in the armor here, so it’s notable.

The problem is that Democrats have been the party bending in these negotiations for so long. In the process, they have given up on their entire economic argument. . . . [cont’d.], as Laurence Lewis lays out expertly:

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 […]

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.

There are a scattered few people in Washington left to argue for what the economy really needs – Demos just released a $382 billion stimulus plan to get people to work – but they have basically been steamrolled by this dominant narrative. The only stimulus can come in the form of tax cuts, mostly for businesses. And the only fiscal policy can come in the form of shrinking the deficit, which is largely irrelevant to the near-term challenge in the economy, namely getting jobs for the unemployed.

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David Dayen

David Dayen