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The Day Senate Democrats Got Angry

(photo: Pete Souza, The White House)

The aide who leaked that President Obama and John Boehner were close to finishing a deal with $3 trillion in defined cuts and $1 trillion in aspirational revenue worked for the Senate Democrats. Practically every media outlet in the nation is reporting on their anger. Harry Reid, who learned about the all-cuts deal in the press, reportedly told Budget Director Jack Lew in a closed-door caucus meeting “I’m the Senate majority leader — why don’t I know about this deal?” A senior Senate Democrat told The Hill, “There’s a basic lack of trust with the President.” Dianne Feinstein – DiFi! – discussed the tensions this way:

Sen. Dianne Feinstein (Calif.) pleaded to return to negotiations over a Reid-McConnell plan that contained no tax increases and no entitlement cuts.

“This is a very sensitive time,” she said, trying not to directly criticize the White House.

Did she think the White House was working off the same page as her?

“No,” she replied.

If DiFi thinks that, you can only imagine the rest of the caucus.

Senate Democrats are mad, not only because most of them had to hear about the all-cuts deal in the press, not only because they’re being cut out of the negotiations, but because they feel Obama walked past the endgame and forced a point-of-no-return big solution that cannot be delivered without an unbalanced deal. For a while, McConnell-Reid was the only game in town, and even with its $1.5 trillion in spending cuts, neither the safety net or taxes were touched. Now, that’s an unbalanced deal as well. But the focus on a bigger deal, first from the Gang of Six and now from Obama and Boehner’s talks, has put McConnell-Reid on life support.  [cont’d.] An unrealistic deal is being pursued, and it either includes revenue, in which case House Republicans won’t support it, or the revenue gets nixed in favor of some aspirational approach, in which case House and Senate Democrats are opposed. I’ve never seen Reid negotiate through the media the way he did yesterday on this deal, saying “This can’t be all cuts. There has to be a balance. There has to be some revenue and cuts. My Caucus agrees with that. I hope the president sticks with that. I am confident he will.” The way he said it, from the reports, showed pretty clearly that he has no confidence.

But it’s worse than that. With the insistence on a grand bargain to “get deficits off the table” for 10-20 years, the President has created expectations in the markets that they have now leveraged.

Earlier this summer, or perhaps even earlier this month, lawmakers could have soothed that anxiety by reaching a relatively small-scale agreement to raise the ceiling—such as proposals to pair a $2 trillion increase in the borrowing limit with commensurate spending cuts, or the proposal by Senate Minority Leader Mitch McConnell, R-Ky., to essentially foist the power to increase the limit onto President Obama.

Now, that might not be enough. The credit ratings agency Standard & Poor’s has indicated that it has so lost faith in Washington’s ability to tackle big problems—because of the difficulty in solving such a simple one as how to avoid default—that simply raising the debt limit by August 2 won’t be enough to spare the U.S. from what would be an earth-shaking downgrade of its credit rating.

Instead, the agency insists that lawmakers must agree to a $4 trillion package of deficit reduction, at least, either as part of the ceiling deal or soon thereafter. That puts major pressure on Obama and Congress to cut a big deficit deal, or at least agree to a framework that markets find to be credible, possibly on the order of what the Senate “Gang of Six” is proposing.

“Even if they were unconnected, S&P and the ratings agencies have taken this opportunity to tie (major deficit reduction and raising the debt limit) together,” said Adam Ozimek, an economist at Econsult in Philadelphia who co-writes the popular Modeled Behavior blog on economics. “Congress has allowed them to tie it together, and the reason is because you have these people who are willing to play this game of chicken, and they may be willing to drive the car over the cliff.”

S&P’s gambit is extraordinary and frankly offensive, trying to pick and choose policies instead of a detached analysis. But when you talk about deficits for 18 months, you create the expectations that lead to what S&P did. The President manufactured a crisis that now, only his solution can solve. And this includes a rollback of core principles of the Democratic Party.

Reid will file cloture on his plan with Mitch McConnell by Sunday, he said, without an agreement. Sen. Barbara Mikulski, who’s been in Washington almost as long as anyone, told reporters that Democrats “are volcanic at this point.”

CommunityThe Bullpen

The Day Senate Democrats Got Angry

The aide who leaked that President Obama and John Boehner were close to finishing a deal with $3 trillion in defined cuts and $1 trillion in aspirational revenue worked for the Senate Democrats. Practically every media outlet in the nation is reporting on their anger. Harry Reid, who learned about the all-cuts deal in the press, reportedly told Budget Director Jack Lew in a closed-door caucus meeting “I’m the Senate majority leader — why don’t I know about this deal?” A senior Senate Democrat told The Hill, “There’s a basic lack of trust with the President.” Dianne Feinstein – DiFi! – discussed the tensions this way:

Sen. Dianne Feinstein (Calif.) pleaded to return to negotiations over a Reid-McConnell plan that contained no tax increases and no entitlement cuts.

“This is a very sensitive time,” she said, trying not to directly criticize the White House.

Did she think the White House was working off the same page as her?

“No,” she replied.

If DiFi thinks that, you can only imagine the rest of the caucus.

Senate Democrats are mad, not only because most of them had to hear about the all-cuts deal in the press, not only because they’re being cut out of the negotiations, but because they feel Obama walked past the endgame and forced a point-of-no-return big solution that cannot be delivered without an unbalanced deal. For a while, McConnell-Reid was the only game in town, and even with its $1.5 trillion in spending cuts, neither the safety net or taxes were touched. Now, that’s an unbalanced deal as well. But the focus on a bigger deal, first from the Gang of Six and now from Obama and Boehner’s talks, has put McConnell-Reid on life support. An unrealistic deal is being pursued, and it either includes revenue, in which case House Republicans won’t support it, or the revenue gets nixed in favor of some aspirational approach, in which case House and Senate Democrats are opposed. I’ve never seen Reid negotiate through the media the way he did yesterday on this deal, saying “This can’t be all cuts. There has to be a balance. There has to be some revenue and cuts. My Caucus agrees with that. I hope the president sticks with that. I am confident he will.” The way he said it, from the reports, showed pretty clearly that he has no confidence.

But it’s worse than that. With the insistence on a grand bargain to “get deficits off the table” for 10-20 years, the President has created expectations in the markets that they have now leveraged.

Earlier this summer, or perhaps even earlier this month, lawmakers could have soothed that anxiety by reaching a relatively small-scale agreement to raise the ceiling—such as proposals to pair a $2 trillion increase in the borrowing limit with commensurate spending cuts, or the proposal by Senate Minority Leader Mitch McConnell, R-Ky., to essentially foist the power to increase the limit onto President Obama.

Now, that might not be enough. The credit ratings agency Standard & Poor’s has indicated that it has so lost faith in Washington’s ability to tackle big problems—because of the difficulty in solving such a simple one as how to avoid default—that simply raising the debt limit by August 2 won’t be enough to spare the U.S. from what would be an earth-shaking downgrade of its credit rating.

Instead, the agency insists that lawmakers must agree to a $4 trillion package of deficit reduction, at least, either as part of the ceiling deal or soon thereafter. That puts major pressure on Obama and Congress to cut a big deficit deal, or at least agree to a framework that markets find to be credible, possibly on the order of what the Senate “Gang of Six” is proposing.

“Even if they were unconnected, S&P and the ratings agencies have taken this opportunity to tie (major deficit reduction and raising the debt limit) together,” said Adam Ozimek, an economist at Econsult in Philadelphia who co-writes the popular Modeled Behavior blog on economics. “Congress has allowed them to tie it together, and the reason is because you have these people who are willing to play this game of chicken, and they may be willing to drive the car over the cliff.”

S&P’s gambit is extraordinary and frankly offensive, trying to pick and choose policies instead of a detached analysis. But when you talk about deficits for 18 months, you create the expectations that lead to what S&P did. The President manufactured a crisis that now, only his solution can solve. And this includes a rollback of core principles of the Democratic Party.

Reid will file cloture on his plan with Mitch McConnell by Sunday, he said, without an agreement. Sen. Barbara Mikulski, who’s been in Washington almost as long as anyone, told reporters that Democrats “are volcanic at this point.”

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David Dayen

David Dayen