In it, but not of it. TPM DC

How Tea Party Absolutism Cost The GOP A Huge Win On Entitlements

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AP Photo / KEVIN LAMARQUE

House Speaker John Boehner wanted to seal the so-called grand bargain, and was willing to reciprocate with the $800 billion in new tax revenues that the president sought in return. Democratic leaders were grudgingly willing to support Obama on what they feared was a lopsided deal for conservatives.

But the Ohio Republican, facing a tea party mutiny that threatened his Speakership, and loyalty issues within his own leadership team, was forced to walk away from the table. By many accounts, he was eager to make it happen, but the pressure from the anti-tax tea party movement was too strong to overcome. And so the deal was dead, never to be resurrected.

Nearly three years later, history suggests Boehner was right and the tea party was wrong. Republicans had a once-in-a-generation opportunity to capture their Great White Whale if they had compromised on taxes. (During the talks, Obama had upped his ask to $1.2 trillion in taxes, which Boehner said blew up the deal, but according to multiple accounts the president sought to return to the $800 billion offer.) It turns out Republicans were forced to soak up $650 billion in taxes anyway in the end-of-2012 fiscal cliff deal. Only they got nothing in return on entitlements.

As of this week, Obama has rescinded his offers to chop Medicare and Social Security benefits. The political landscape has changed, and the dream is over.

The president was resoundingly re-elected. The deficit has been cut in half and austerity-mania has fizzled. Health care cost growth has slowed. The liberal wing of the Democratic Party is revolting against retirement benefit cuts. And as senior White House officials characterize it, the president is tired of extending unrequited olive branches to the GOP.

"[O]ver the course of last year," a White House official said, "Republicans consistently showed a lack of willingness to negotiate on a deficit reduction deal, refusing to identify even one unfair tax loophole they would be willing to close, despite the President's willingness to put tough things on the table."

In 2012, due to a mix of policy judgments and election-year considerations, Obama backed off his offer to raise the Medicare eligibility age to 67. And on Thursday, he came full circle by also abandoning his proposal to slow the rate of inflation for Social Security benefits via a policy known as Chained CPI, which he included in his budget unveiled one year ago this month.

The backtracking reflects a dramatic shift since 2011, when Democrats, spooked by their thrashing in mid-term elections, were willing to slash their party's most cherished achievements.

"The days of terrible grand bargains are gone for the foreseeable future," said an aide to a progressive Democratic senator.

Conservatives forced Boehner to squander a golden opportunity when it was within reach, in favor of a risky bet that they could stonewall Obama then, run the table in the 2012 elections, and get what they wanted without having to make significant compromises. They lost, and now there's not much left to do but go on the attack.

"This reaffirms what has become all too apparent: the president has no interest in doing anything, even modest, to address our looming debt crisis," Brendan Buck, a spokesman for Boehner, said after TPM reported Obama's decision to drop Chained CPI from his upcoming budget proposal. "With three years left in office, it seems the president is already throwing in the towel."

Democrats and liberal activists, who were mobilizing against Social Security cuts ahead of the 2014 elections, were thrilled. "The President has got the congressional Democrats' backs and has them in the front of his mind," said a Senate Democratic leadership aide.

So, what happens next? Few expect Congress to pass major bills before the November elections. And no matter the results, Obama insists he won't budge on entitlements without tax revenues in the mix, and Republicans are highly unlikely to go there. The GOP understands the difficulty of trimming entitlement benefits -- their push to partially privatize Social Security went nowhere in 2005 even though they controlled the White House and both chambers of Congress.

Thanks to aging baby boomers, the programs will eventually have to be reformed -- Medicare is projected to be solvent through 2024 and Social Security through 2033. But don't expect structural changes anytime soon.

"If anyone was hoping for a serious budget [from the president] that did more than increase Washington spending and find new ways to tax job creators, it sure sounds like they'll be disappointed," said Don Stewart, a spokesman for Senate Republican Leader Mitch McConnell.