Paul Krugman lauds Jonathan Chait's jeremiad against the "establishment" for using the debt ceiling as an excuse to slash spending. It's certainly true that they did that and it was obviously a bad decision, which many of them are now regretting.
But this from Chait is nonsense:
When Republicans first proposed tying a debt ceiling hike to a measure to reduce the deficit, President Obama instead proposed a traditional, clean debt ceiling hike. He found this position politically untenable for many reasons, one of them being that deficit scolds insisted that using the debt ceiling to force a fiscal adjustment was a terrific idea, and that connecting the deficit debate to a potentially cataclysmic financial event was the mark of seriousness.
I know it's unpleasant to think about, but I'm afraid that the President is one of those serious people. It's true that they came to believe that it was "politically untenable" to hold fast for a clean debt ceiling, but it's important to acknowledge why that is. Elizabeth Drew reported:
The question arises, aside from Obama’s chronically allowing the Republicans to define the agenda and even the terminology (the pejorative word “Obamacare” is now even used by news broadcasters), why did he so definitively place himself on the side of the deficit reducers at a time when growth and job creation were by far the country’s most urgent needs?
It all goes back to the “shellacking” Obama took in the 2010 elections. The President’s political advisers studied the numbers and concluded that the voters wanted the government to spend less. This was an arguable interpretation. Nevertheless, the political advisers believed that elections are decided by middle-of-the-road independent voters, and this group became the target for determining the policies of the next two years.
That explains a lot about the course the President has been taking this year. The political team’s reading of these voters was that to them, a dollar spent by government to create a job is a dollar wasted. The only thing that carries weight with such swing voters, they decided—in another arguable proposition—is cutting spending. Moreover, like Democrats—and very unlike Republicans—these voters do not consider “compromise” a dirty word.
The President proposed at least two modest plans for stimulus spending, someone familiar with all these deliberations told me, “but he’s not as Keynesian as before.” This person said, “If the political advisers had told him in 2009 that the median voter didn’t like the stimulus, he’d have told them to get lost.” By 2011, in his State of the Union address in January he moved from jobs creation (such as the stimulus program) toward longer-term investment.
The speech Obama gave on April 13 marked his conversion to fiscal centrism; to being the fiscally responsible Democrat. In that speech he stated that he wanted to reduce the debt by $4 trillion—thus aligning himself with the Republicans—but also asked for revenues to partly offset that reduction. It was all about reelection politics, designed to appeal to this same group of independents. “And that’s why,” I was told by the person familiar with the White House deliberations, “he went bigger in the deficit reduction talks; bringing in Social Security is consistent with that slice of the electorate they’re trying to reach.” This person said, “There’s a bit of bass-ackwardness to this; the deficit spending you’d want to focus on right now is the jobs issue.”
And we also know that he came to see this as an opportunity to make his long desired Grand Bargain. How do we know this? Because he told us so, over and over again.
And he and John Boehner worked together for months to get it done:
Only a President, elected to serve all the people, can do certain things — including reach out and lift up a friend or rival into the heady temple of Executive power. "I'm the President of the United States," Obama told Boehner. "You're the Speaker of the House. We're the two most responsible leaders right now." And so they began to talk about the truly epic possibility of using the threat, the genuine danger of default, to freeze out their respective extremists and make the kind of historic deal that no one really thought possible anymore — bigger than when Reagan and Tip O'Neill overhauled the tax code in 1986 or when Bill Clinton and Newt Gingrich passed welfare reform a decade later. It would include deeper cuts in spending, the elimination of all kinds of tax loopholes and lower income tax rates for all. "Come on, you and I," Boehner admitted telling Obama. "Let's lock arms, and we'll jump out of the boat together."
Perhaps he didn't originally conceive of the debt ceiling as a good way to force spending cuts, but he sure jumped on the bandwagon with gusto when the other side proposed it. And frankly, considering his early telegraphing of the Grand Bargain as a legacy item and his fetish for big bipartisan compromise, I think it's fair to speculate that he saw this as the only way to get it done early on.
The White House knew since January that the Republicans were preparing to shake the president down over the debt ceiling. They said it openly. ("It's a leverage moment for Republicans. The president needs us. There are things we were elected to do. Let's accomplish those if the president needs us to clean up the old mess.") If he had truly wanted a clean debt ceiling vote, it wouldn't have been hard to show that the Republicans were planning to blackmail the country before the President put any of his famous compromises on the table. Just because it didn't work out the way they planned it doesn't mean they didn't want it to.
None of this is to say that the Republicans aren't completely batshit insane, of course. They've proven that they are so batshit insane they won't take the best deal they've ever been offered, and that's some serious insanity. It's also true, however, that had the President and the Speaker been allowed to do their backroom deal we might not be facing a global financial meltdown --- but the United States would be facing exactly the same policy failure.