Analyzing The Shutdown Deal

Around midnight on Friday, the House and Senate approved a six-day “bridge” bill to avert a shutdown as they draft and approve an agreed-upon bipartisan bill to fund the government for six months, through the end of the fiscal year. The big questions now are who won, who lost, and what does it all mean?

Here are the terms of the deal:

1. The deal cuts $38.5 billion from the remaining six months of the 2011 budget. This joins $40 billion already cut.

2. The deal does not block funding for ObamaCare, BUT it does require the Senate to vote separately on blocking funding. It also requires (1) studies to examine the full impact of the law’s mandates, including the effect on the cost of premiums, (2) an audit of all waivers given to businesses and unions, and (3) a report on all contractors who have been hired to implement the law and the cost of those contracts to taxpayers.

3. The deal does not block funding for Planned Parenthood, BUT it does require the Senate to vote on this issue separately. It also bars the use of federal money for abortions in Washington, D.C.

4. The deal does not block funding for the EPA, NPR, or PBS.

5. The bill requires the Consumer Financial Protection Bureau to undergo yearly audits from the private sector and the GAO.

6. The deal prevents Obama from closing Guantanamo Bay.

7. The deal reinstates the school voucher program in Washington, D.C., which Obama cut when he came to power.

1. The Cuts. Some on the right are upset about the level of cuts. Some are not. Michelle Bachmann says these cuts did not dig deeply enough. Tea Party Nation head Judson Phillips said he will recruit a primary challenger to run against Boehner for “selling us out.” But Paul Ryan dismissed these claims, saying it was more important to focus on the 2012 budget: “this is the first bite of the apple. . . we want to get talking about trillions in savings.” John Thune echoed this, saying “this is just the opening act.” Newt Gingrich also called this “a good start.”

On the left, many are irate. Harry Reid himself called $32 billion in cuts “extreme” and “draconian” before he agreed to $38.5 billion. Chuck Schumer continues to echo those sentiments. Forty-four House “progressive” Democrats announced they will vote against the measure. A top Democratic strategist also complained that this deal destroyed the party’s credibility on the spending cut issue because its assumptions have shifted the debate from "whether to cut" to "how much to cut."

So who’s right? The Republicans are clear winners in this.

For starters, the numbers are bigger than the critics admit. The Tea Party candidates ran on the promise to get $100 billion in cuts out of this budget. Obama folded right away on $40 billion in spending increases he had originally sought in the 2011 budget. This deal adds another $38.5 billion on top of that, for a total reduction of $78.5 billion. That’s short of the $100 billion promised but is quite significant given that the Republicans only control one chamber.

Further, these cuts are in baseline discretionary numbers, which means they form the basis for future spending. That translates into hundreds of billions of dollars in automatic future cuts even if nothing else happens budget-wise because of the lower baselines.

Also, while many are upset that Boehner didn’t hold out for the full $100 billion, people need to realize that negotiations don’t work that way. The only way for Boehner to get 100% would be if the Democrats were desperate to avoid a shutdown. They weren't. And since the Democrats thought a shutdown would work in their favor, and the public was split on who to blame, this would have been a highly risky and unpredictable move. Taking an unpredictable move over $21.5 billion in cuts (just 0.7% of the budget) when the real issue will be the $6 trillion in cuts in Ryan's proposed 2012 budget would have been entirely foolish -- especially as Ryan's budget will supersede those cuts. In effect, the people who are claiming Boehner failed by not standing firm are suggesting that he should have gone to the mat over $0.70 on a hundred dollar dispute that will become irrelevant in six months when a new budget is passed.

That's not a smart fight to wage, especially since Boehner will need the shutdown weapon in the future and using it too often or too soon will only get him labeled as a serial shutdowner, which will diminish its effectiveness?

2. The Riders. The riders also became an issue that set off both left and right. The left in particular is incensed, with Washington, D.C. Mayor Vincent Gray calling the deal “ludicrous” and claiming that District residents had “been sacrificed on the altar of political expediency.” Eleanor Holmes Norton said, “the administration and Senate Democrats . . . roll[ed] over and use[d] our right to self-govern as a bargaining chip. It appears that District residents and detainees at Guantanamo Bay were the only groups singled out in the bill.”

So who is right? Again, this was a clear victory for the right.

First, there was no way Republicans could get these items without shutting down the government. And it's not clear that would have worked with the Democrats having nothing to lose by causing chaos. Further, shutting down the government when the issue could be framed as an attempt to ban abortion or destroy the EPA would not have played well with a public that is overwhelming concerned with deficit issues.

More importantly, the Republicans turned this into a tremendous weapon for use against the Democrats in the upcoming election, which will prove to be much more important than any of these riders. A large chunk of Senate Democrats will be up for re-election in 2012, including numerous supposed moderates. The moderates, like Joe Manchin and Ben Nelson, maintain the illusion of their moderate-status by claiming to be pro-life and opposed to ObamaCare. So far, they've been able to get away with this because Harry Reid has assured them that he will never allow votes to defund ObamaCare or Planned Parenthood to make it to the Senate floor. This deal forces both of those votes. Now Manchin and Nelson and others will need to cast votes. If they vote against, then they are exposed to their voters. If they vote in favor, then these measures might pass. They are in a bind.

Also, the other riders will generate the kinds of data that will help the Republicans sell things like defunding ObamaCare because they will show the connection between influence peddling with Obama and the granting of waivers.

In the end, the most important victory here may be that these riders will help the Republicans capture the Senate seats they need to get total control over the budget process, which control will let them implement Ryan’s budget. This is much more important than trying to squeeze these few concession from the Democrats at the moment.

3. What’s Next?. The next battle will be raising the debt ceiling, which is likely to happen in May/June. Republican leadership aides are already saying they intend to use that to get more spending cuts and more reforms. After that comes Ryan’s 2012 budget, where the real war begins. That one probably won’t be over until after the 2012 elections. . . which will be the real fight and will make all of this nothing more than an opening round distraction.

Finally, as an interesting side note, Obama is now trying to claim credit for the cuts that he opposed from the get go. This is a pretty good indication that Obama’s internal polling tells him the Republicans are on the right side of this one. Sadly for him, the public won't credit him with this because he spent all of his time attacking the cuts and he seemed barely involved in the process. Moreover, the public has stopped giving him credit for good things. In fact, despite his efforts to claim credit for extending the Bush tax cuts, 60% of the public still think Obama plans to raise their taxes. It’s the same thing with the cuts, 58% of the public thinks Obama wants to increase spending. Good luck changing that mindset!