Between Barack and a hard place

It never ends: America’s ideological combat over its debts. The battlefield is the stretch of Pennsylvania Avenue from the Capitol building to the White House, along which limos race back and forth in these increasingly ritualised fights.

In April it was a battle royal over the delayed federal budget. This almost led to the government shutting down before President Obama and Republican John Boehner, the House Speaker, agreed to $38.5bn in spending cuts. In May, the fight will be over raising the national debt ceiling, which is currently $14.3 trillion. Sometime in the autumn, when the budget for 2012 is debated, it has generally been agreed that long-term deficit reduction must be addressed. No one expects that debate to be anything other than rhetorically violent.

Two years into his presidency, it is clear that Obama is not the man to impose his will in these battles. A conciliator by nature, he is following a playbook for governance that is several decades out of date: one predicated on the idea that the US government functions as a series of compromises between its executive and legislative branches, and between two political parties.

That simply does not happen any more. The Republican party has long been unmoored from the traditional pragmatism which characterised it when it was known as the party of business. It is now a zealously ideological party, and the ideology is simple: reduce taxes and slash spending everywhere its adherents find distasteful.

Republicans do not practice the conservatism of their British counterparts. Whatever you think about his deficit reduction programme, David Cameron is at least cutting government spending virtually across the board—including defence—while raising income taxes on middle and top earners. Republicans won’t do either.

Obama’s dilemma is clear from this example. At the end of 2010, two government programmes, seemingly disconnected, needed to be addressed. Long-term unemployment benefits were due to run out for millions of Americans who lost their jobs following the crash of 2008, and an extension needed to be enacted. With unemployment nosing towards 10 per cent, Obama wanted to extend the benefits. At the same time, tax cuts brought in under George W Bush were also due to run out. In order to stimulate demand, Obama wanted to keep the tax cuts for every household with an income of under $250,000. The Republicans linked the two issues and demanded that the Bush cuts be extended for everyone in return for supporting an extension of unemployment benefits. No prizes for guessing who backed down.

Now, the Republicans are looking to link cuts to programmes they abhor to extending the debt ceiling. The US government’s current debt ceiling is $14.3 trillion. That figure is expected to be reached sometime in May—with the prospect of default on government bonds by July if it is not raised. The Republicans see this, in the words of House Majority Leader Eric Cantor, as “a leverage moment.”

Given his track record it is hard to imagine Obama saying: “This is not a leverage moment. The debt ceiling is a separate issue from deficit reduction. We will have that discussion later.” And he certainly can’t add: “…after we have grown the tax base by getting Americans back to work.”

This is the saddest part of the lonely fight between the Democrat pragmatist and the Republican zealots. Obama has allowed his opponents to frame the terms of the debate around deficit figures. The numbers that a Democrat should care about—labour force participation at an all time low, over 8m long-term unemployed—do not get a look in. Another “leverage moment” is approaching—for the progressive Democratic activists who made Obama president. You can be sure they will use it. Obama already knows the rock, he is about to meet the hard place.