Debt Ceiling Deal: Lose-Lose-Lose, but it Still May Work Out

While many have rightfully decried the debt ceiling deal as the epitome of DC Kabuki theater, and avoiding our biggest problems under the guise of superficial "problem solving" meant only to look good politically, I believe it was likely an absolute disaster-stroke for Obama and his political fortunes.

On the surface and out of the box, the deal plays poorly for Obama as it makes him look like a weak-kneed capitulator. Indeed, almost no one believes he should have given up more and the dissatisfaction with his base is getting awfully loud. On substantive grounds, the deal doesn't come across as all that serious or "adult" since $1 trillion over ten years in reduced projected spending a) isn't all that much b) doesn't actually cut spending c) doesn't start until 2014 and d) can easily be undone by the five or six Congresses yet to come that can simply vote to say "yeah, no" anytime they feel like it. So, that leaves Barry with the victory of avoiding default and being the most adult in terms of decorum and compromise. That's not nothing, but untethered to results and leadership, it's not all that great.

Looking ahead, the aftermath of this deal makes things worse for winning a second term. The most conventional of all wisdoms says that re-election of a President is closely correlated with the economy. Jobs are a major issue that, left unaddressed, could create conditions whereby Americans elected a pig wearing a monacle just to kick out the sitting President. Yet, Obama has tied his own hands by conducting the debt ceiling debate on Republican terms: that the debt is serious and impacting our economy. This means a $1 trillion dollar tax cut/stimulus plan like the one passed in December '10 can't be taken seriously anymore after all this dire talk of debt andf spending cuts. It means a job program that involves spending on infrastructure or clean energy will be smothered in its crib for fear of an inability to sell it short-term. And, even if you could sell it short term, and get it passed that crazy Congress, you then hit the problem of having way too short of a long-term to see results. In other words, any seriously expensive jobs program has to have results by the first Tuesday in November 2012 or the President will get creamed for it. That all means you probably don't even start down the road of rolling out such a plan. (Did I mention that Congress is crazy?)

This may set up a somewhat inverted pyramid effect where Obama is in the reverse roll he played in the 2008 election. Back then, many Democratic candidates for Congress rode Obama's coat tails and benefitted from the starry-eyed first-time voters that were energized by Obama's soaring rhetoric and earth-shifting charisma. Now, Democrats in Congress can paint themselves as the alternative on job creation, desperate to take government money and stuff it into the overall pockets of America's working class if only these wacky Tea-Party goons would let them. Roll out a few hypothetical, pie-in-the-sky job programs with projections to create 45 bazillion new jobs in six hours, really flesh out the details and put it up for a vote and let the Republicans crush/ignore it. See how that plays.

Let Obama wax that of course he'd love to see any legislation that projects to create jobs but the Congress has to get one to him, and then use that as a hammer against the Republicans who vote against it. Top that off with the looming Bush tax cuts and how they need to expire because.. wait for it.. now again debt is serious (ignore the dissonance and hypocrisy here) and tax cuts don't create jobs evidently. Boom! You may have enough people excited to vote for their congress-critter! And hey, I mean, I guess this Obama guy is better than Romney, so I'll check the box for him too.