For a smart guy, President Barack Obama has surprisingly poor bargaining skills. Putting lots of tax cuts in the too-small stimulus without insisting on Republican concessions made the Recovery Act less stimulative but failed to win bipartisan support for it. Expanding off-shore oil drilling without gaining anything concrete from Republicans did nothing to advance a comprehensive energy bill.
Despite those failures, Obama still seems unable to start negotiations from a position of strength. To set the tone for his first post-election meeting with Congressional Republican leaders, the president announced a new policy designed to appeal to conservatives, with no strings attached. During yesterday’s meeting, he even apologized to top Republicans for not reaching out to them more.
Naturally, Republicans haven’t made any policy gestures toward the president this week, nor have they apologized for not working constructively with him.
Millions of Americans will pay the price for Obama’s inability to grasp basic negotiating tactics.
Monday morning, Obama announced a salary freeze for some federal workers. The idea was to show Republicans he’s committed to reining in spending: “The hard truth is that getting this deficit under control is going to require some broad sacrifice, and that sacrifice must be shared by employees of the federal government.”
Obama should know that the deficit can’t be controlled with unemployment above 9 percent nationally. But no, he has to validate Republican frames about so-called overspending and overpaid federal workers. The fact is that federal workers are paid less than their private-sector counterparts. And even if deficit reduction were this country’s most pressing need, Obama’s latest proposal would accomplish little:
The pay freeze Mr. Obama announced wiped out plans for a 1.4 percent across-the-board raise in 2011 for 2.1 million federal civilian employees, including those working at the Defense Department, and it would mean no raise in 2012. The freeze would not affect the nation’s uniformed military personnel, and civilian workers who are promoted would still receive the higher pay that comes with the higher grade or position.
The move would save $2 billion in the 2011 fiscal year that ends Sept. 30 and $5 billion by the end of two fiscal years. Over 10 years, it would save $60 billion, according to Jeffrey Zients, deputy director of the Office of Management and Budget and the government’s chief performance officer.
In other words, “chump change” when this year’s deficit exceeded $1 trillion.
But wait, there’s more. Saving that chump change is “bad economics” as well as bad politics:
Federal workers buy things and stimulate the economy like anyone else. Giving them less money at a time when we need to be doing more stimulus is counterproductive. But worse than that is the downstream affects on Obama’s other policies: Health-care reform and financial regulation — not to mention the continued operations of the federal government — will need new, talented regulators. Making federal jobs less attractive in an extremely high-profile way will complicate both efforts, and make success less likely.
For the sake of argument, let’s assume that a salary freeze (in real terms, a pay cut) for 2 million federal employees is a reasonable trade for something else Obama wants out of Congress. If that’s the case, he should have announced the proposal conditionally on Monday. He could have said he is willing to take that step after Republicans allow a one-year extension of unemployment benefits, or pass a child nutrition bill, or give some ground on the Bush tax cuts for the highest earners.
Instead, Obama has accepted the premise of the austerity movement, which could undermine the weak economic recovery. Paul Krugman summed up Monday’s announcement well: “a transparently cynical policy gesture, trivial in scale but misguided in direction, and in effect conceding that your bitter political opponents have the right idea.”
Meanwhile, Republicans seem confident that they will get their way on extending all the Bush tax cuts, and Democrats worry they will end up extending those cuts for at least two years. Obama could put a stop to this by making clear that he will veto any bill to extend tax cuts for people making more than $250,000 per year. Every national poll that’s asked this question in recent months has found solid majorities opposed to extending tax cuts for the top 2 percent of earners. If Obama drew that line in the sand, a few Republicans might agree to let the president’s preferred approach to the tax cuts pass during the lame-duck session.
Or, Republicans might call Obama’s bluff. If Congress reaches no deal during the lame-duck session, the tax cuts will expire on December 31, and Republicans will retroactively extend them all in January or February. In that case, Obama should veto the bill. The president could win that public-relations battle, the way Bill Clinton benefited from the Republican shutdown of the federal government. The alternative, Obama grudgingly signing a bill to extend all the tax cuts, would demoralize the Democratic base and show the whole world he has no core values. There must be a thousand clips of him bashing the Bush tax cuts during the 2008 presidential campaign. Wealthy Americans already gain more from the “middle-class” tax cuts than middle-income Americans. There’s no excuse for giving them a $700 billion windfall, especially when Obama is forcing 2 million federal workers to tighten their belts in the name of deficit reduction.
I didn’t support the welfare reform act Clinton signed in 1996, but by vetoing the first two versions of the bill, he got a few concessions and more money for child care out of Congress. George W. Bush was one of the worst presidents ever, but he did know when to say, “Congress needs to send me a bill I can sign.”
During yesterday’s meeting, Obama did the opposite. He told Republican leaders he “needed to do better” in trying to reach consensus with them. Ask anyone who’s ever negotiated a deal if it’s wise to start the process by apologizing for not giving up more to the other side. Obama may think he’s setting Republicans up to take the blame for being too partisan, but in reality he’s giving them the power to make him a failure. All they have to do is keep saying no to every offer.
Ten months ago, Obama made a big gesture toward austerity policies by proposing a three-year freeze of some non-security discretionary government spending. At that time, he told Diane Sawyer, “I’d rather be a really good one-term president than a mediocre two-term president.” Right now he’s on course to be neither, unless Republicans nominate a horrendous candidate.
Obama’s defenders view anything that emerges from Congress as the best deal the president could have gotten under the circumstances. They should stop kidding themselves.
UPDATE: Gee, no one could have predicted that all 42 GOP senators would decide to block all legislative action during the lame-duck session until they get their way on extending the Bush tax cuts. Good thing the president has promised to reach out to them more!
SECOND UPDATE: Now the Branstad administration is using Obama’s federal worker salary freeze as an argument against the small pay raise for state employees that Governor Chet Culver agreed to.
THIRD UPDATE: Paul Krugman is brutal:
It’s hard to escape the impression that Republicans have taken Mr. Obama’s measure – that they’re calling his bluff in the belief that he can be counted on to fold. And it’s also hard to escape the impression that they’re right.
The real question is what Mr. Obama and his inner circle are thinking. Do they really believe, after all this time, that gestures of appeasement to the G.O.P. will elicit a good-faith response?
What’s even more puzzling is the apparent indifference of the Obama team to the effect of such gestures on their supporters. One would have expected a candidate who rode the enthusiasm of activists to an upset victory in the Democratic primary to realize that this enthusiasm was an important asset. Instead, however, Mr. Obama almost seems as if he’s trying, systematically, to disappoint his once-fervent supporters, to convince the people who put him where he is that they made an embarrassing mistake.
Whatever is going on inside the White House, from the outside it looks like moral collapse – a complete failure of purpose and loss of direction.