Obama Loses Credibility over Debt Deal

Obama Loses Credibility over Debt Deal

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Is it acceptable for the President of the United States to lie to the American people? In cases where the truth would undermine national security, absolutely. In cases where the truth undermines the president’s approval ratings, not so much.

Over the weekend, the Washington Post published a carefully reconstructed account of the failed debt ceiling negotiations that occurred last summer between House Speaker John Boehner and President Obama. In the aftermath of the breakdown in the talks, Mr. Obama was quick to blame “irresponsible” House Republicans for his inability to conclude a “grand bargain” to rein in future budget deficits. He maintained that his was the middle course, that he was open to a balance of spending cuts and revenue increases but that the GOP refused to allow any tax hikes.

The narrative stuck. The worried country was irate at the inflexibility of Republican leaders. On August 5, when Standard & Poor’s downgraded the credit rating on U.S. debt for the first time in U.S. history, Americans knew just whom to blame. 

Only it turns out, according to the version released by the Post, the president wasn’t telling the truth. John Boehner was right when he said that the president was the one who had stepped away from the budget talks, fearful of the political fallout that might attach to bold measures to tackle our nation’s deficit. Because the“Gang of Six” senators inserted into the talks an agreement at the last minute that called for bigger spending cuts and greater increases to taxes than those under discussion in the White House, the president became alarmed that his bargain would not seem so grand after all. If Gang of Six conservative senators like Tom Coburn and Saxby Chambliss could accept tax hikes of $2 trillion, how could he press for only $800 billion?

Panicked that he was losing the high ground, the president ditched a nearly-concluded agreement with Boehner that called for raising taxes while also cutting sacred cows like Medicaid and Medicare and raising the age for receiving Social Security benefits.  He scuttled that deal by suddenly demanding 50% more in tax hikes; then, when the GOP blanched, Obama pivoted again to the “hand shake” deal almost concluded. Finally, Republicans had had enough. In the end, Mr. Obama chose political comfort instead of manning up to a risky but essential effort to change our fiscal trajectory. 

This is no small lie. At the beginning of this year, President Obama laid out his reelection themes. He accuses Republicans for choosing to protect the wealthy from higher taxes at the cost of the nation’s fiscal health and blames a “do-nothing” Congress for refusing to pass more job-creating legislation. It may not seem like a particularly impressive message – most people think the presidency is a powerful post – but it suits Mr. Obama to blame his predecessor George W. Bush for the deep recession that took hold in 2007 and to blame Republicans in Congress for our abnormally slow recovery. (It should be noted that Mr. Obama also occasionally throws Democrats in Congress under the bus too; he is an equal-opportunity blamer.)

If the story is not true – if it was Mr. Obama who caved into political pressure and not Mr. Boehner – much of his message over the past several months becomes not only false but massively distasteful. It would certainly explain why the GOP leadership has been unwilling to meet the president half-way; no one likes to be the fall-guy. The president vented his frustration over the breakdown of talks by attacking the GOP, and by personally going after Mr. Boehner. He accused the House Speaker for not returning his phone calls, complained that it was the GOP leader that walked away from the talks, and whined that “I’ve been left at the alter a couple of times now.” 

In his East Room address in July concerning the debt ceiling negotiations, Mr. Obama blamed “a significant number of Republicans in Congress (who) are insisting on a cuts-only approach.” As we now know, this was not the reason the negotiations failed.  While some Republicans may have wanted such an agreement, their leadership was prepared to agree to some $800 billion in higher taxes. In any event, it wasn’t the cuts-only crowd that balked; it was the president. Railing at the GOP wasn’t a smart move; petulance does not become the Commander in Chief. In the end, both Mr. Obama and Congress suffered a decline in approval ratings.

As Americans learn the truth of this failed effort, they may start to question other aspects of the White House narrative. They may wonder whether the president blocked the Keystone XL pipeline out of safety concerns or to appease environmentalists whose support he needs, or whether Obamacare will in fact slow the rise in healthcare costs. They may even begin to question whether millionaires and billionaires actually pay less in taxes than their secretaries. Losing credibility is a terrible thing; on the other hand, Mr. Obama’s loss may be the country’s gain.  

After more than two decades on Wall Street as a top-ranked research analyst, Liz Peek became a columnist and political analyst. Aside from The Fiscal Times, she writes for FoxNews.com, The New York Sun and Women on the Web.