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Obstacles to a Grand Bargain

I’ve laid out the reasons why House Republicans and the President may be tempted to put together a grand bargain on the budget, with entitlement cuts included. Now let me lay out the reasons why they may not.

First of all, this Medicare thing is really working out well for Democrats up and down the board – just look to the results tonight in the special election in NY-26 for evidence of that. Republicans are starting to peel off their unpopular plan to phase out Medicare – Lisa Murkowski is the latest (Scott Brown and Susan Collins are already opposed, and Olympia Snowe may join them). And Democrats who save the Republicans’ bacon by approving a budget deal that includes anything that can be credibly described as Medicare cuts will be tarred by the electorate.

If Senator [NAME] voted to cut Medicare and Medicaid benefits, would that make you more or less likely to vote for him, or would it make no difference to you?

Ohio (Sen. Sherrod Brown): 15% more likely, 65% less likely, 20% no difference

Missouri (Sen. Claire McCaskill): 10% more likely, 64% less likely, 25% no difference

Montana (Sen. Jon Tester): 16% more likely, 60% less likely, 24% no difference

Minnesota (Sen. Amy Klobuchar): 17% more likely, 57% less likely, 26% no difference

I’m glad they slipped Medicaid in there, because that seems to be more under threat at the moment. You have to think there’s some self-preservation instinct at work here. And even if President Obama thinks he can gain personal credit on a grand bargain, if he has no allies in Congress he’s not going to have a Presidency worth wanting.

The way this works, where Democrats enact something that they don’t “want” to do, is that they get forced by some hostage-taking event. In this case, that would be the debt limit vote. But I agree to an extent with Ezra Klein on that.

But it’s important to make a distinction here: the debt ceiling doesn’t demand, and likely can’t support, a budget deal. It needs to be raised too quickly, and even though the ultimate bargain will dramatically affect the budget going forward, it doesn’t supplant the budget process: we still need a 2012 budget, or at least instructions for funding the government in 2012. Republicans and Democrats have both been clear about that. But if Republicans lose the special election in New York and, increasingly desperate, decide that the debt ceiling — which is to say, the country’s credit rating — is their only leverage to squeak out of this thing with a win, the endgame here could get very ugly. The debt-ceiling debate can hardly handle the pressure being put on it now. It would be dangerous indeed to add the pressure of the budget debate.

But I’d say the biggest obstacle is the “bargain” part of the grand bargain. Democrats have consistently demanded revenue increases as part of any deal, something they can sell to their partisans. But Republicans have resisted that from the start. The spectre of Grover Norquist looms large here.

There may be enough congressional Republicans enthralled with Norquist, a small-government advocate who has spent the last quarter-century pressing lawmakers to sign a pledge never to raise taxes, to kill any comprehensive, bipartisan deal to rein in the $14.3 trillion national debt, say current and former members of Congress.

“Until Republicans are more afraid of the deficit than they are of Grover Norquist, we’re going to have a problem,” said Representative Christopher Van Hollen of Maryland, the top Democrat on the Budget Committee.

Norquist, 54, president of Americans for Tax Reform, says he has secured written pledges from 40 of the 47 Republicans in the Senate and 233 of 240 party members in the House. More than 1,300 state-level legislators, governors and even auditors have also signed, Norquist said. That includes Wisconsin Governor Scott Walker, Texas Governor Rick Perry and Ohio Governor John Kasich, all Republicans, he said.

Those who sign gain from Norquist’s support. Those who break the promise risk his wrath.

Gridlock is a great ally at this point. If Republicans are scared enough by Norquist on the right to reject any balanced deal, and if Democrats are scared enough by the political blowback from cutting Medicare on the left, in the end nothing advances. The best case scenario here, in fact, is nothing, where the tax rates go back to the Clinton era and the medium-term deficit stabilizes by itself. Or rather, the best case is more stimulus. But gridlock to forestall a bad outcome would help.

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David Dayen

David Dayen