APRIL: Government Shutdown
This fight set the tone for the remainder of the year. At the tail end of the last Congress, Republicans blocked a bipartisan effort to fund the government through the end of the fiscal year in September 2011. They'd made big gains and wanted an early bite at the apple in the new Congress. With government funding set to expire, House Republicans sought to make good on their pledge to cut $100 billion from domestic federal programs right away. In addition, they sought to attack the Obama administration's power to govern from the executive branch with scores of legislative riders meant to limit access to women's health centers, weaken environmental regulations and so on. The administration and Senate Dems sought to limit the damage -- but it wasn't easy. In negotiations that lasted until minutes before the government shutdown, Republicans locked in billions of dollars in budget cuts, and even a few riders, including one that reinstated a ban preventing the District of Columbia from spending local tax dollars on abortion services.
AUGUST: Debt Limit
This is where House Republicans overplayed their hand -- but also made, from a conservative point of view, the most substantive gains. Republicans held the country's borrowing authority hostage. They implicitly threatened to let the country default on its debt obligations unless Democrats agreed to massive cuts to federal programs over the course of a decade. For a time, the White House genuinely saw this as an opening to strike a fiscal "grand bargain" with House Speaker John Boehner. But in an early indication of the limited room Boehner's conference would give him to deal, those negotiations fell apart over the GOP's reluctance to increase taxes on the wealthy. So Democrats reverted again to a "contain the damage" strategy. The damage was pretty severe: $1 trillion in cuts to defense and domestic discretionary spending over the next year, enforced through statutory budget caps; a downgrade to the country's AAA rating by Standard & Poor's; and, because the Super Committee the debt deal created would ultimately fail, the prospect of another $1.2 trillion in across the board cuts to national security programs, Medicare providers, and other parts of the budget, which are set to kick in on January 1, 2013, unless Congress finds savings elsewhere.
The good news for now is that the budget cuts are somewhat backloaded and won't become too severe until later in 2012 and 2013. In the meantime, the country's fiscal fate -- whether we're on a bumpy path toward unwinding the New Deal or toward shoring it up -- now hinges on the outcome of the 2012 elections. If a Republican beats President Obama, the GOP will continue to put the squeeze on government revenue and pursue a course of swapping out the automatic defense and Medicare provider cuts with cuts to other key support programs.
SEPTEMBER: Disaster Relief
The debt limit fight was a political disaster, and an embarrassment for Dems who found themselves outmaneuvered throughout. But it also marked the point at which they adopted a new, more confrontational strategy with the GOP. That manifested itself in a small skirmish over funding the government in the new fiscal year that began in October. Republicans attempted to use the expiration of government funds at the end of the fiscal year as leverage to force Democrats to offset the cost of federal disaster relief with cuts to a successful hybrid vehicle incentive program. Indeed, House Republicans they tried to jam Senate Dems and skip town. In the end, Democrats refused to budge, FEMA managed to squeak by with the disaster relief funds it had, and a shutdown was again averted.
NOVEMBER: Super Committee
The debt limit fight led to the creation of the Super Committee, and a whole new fight over reducing federal deficits. But this fight was completely different. With the threat of a debt default off the table, Democrats drew a line: no cuts to entitlement benefits until Republicans agreed to break the stranglehold anti-tax conservatives have on their party. That break never really happened, and so the 12-member panel failed. As a result, major across the board cuts to defense, Medicare providers and other programs are set to kick in on January 1, 2013, unless Congress comes up with something better. That's why the coming year and the presidential election are so high-stakes. They're all about the nation's priorities.
DECEMBER: Payroll Tax Cut
The GOP strategy of pushing negotiations to the brink of crisis finally caught up with them in the fight over extending the payroll tax cut, giving Democrats their most decisive victory of the year. Not only did Dems manage to turn the Republicans' reluctance to renew the 2011 payroll tax cut into a huge political liability, they reset the consensus entirely. And in the process they left the House GOP conference -- and the relationship between House and Senate Republicans -- in shambles. In the end, Congress renewed the payroll tax cut for two months, and both parties have committed to extending it through the end of 2012. But Republicans will have to do so on Democrats' terms. If they learned nothing from the last month, and try to pick another fight over payfors and unrelated riders, they risk a much more severe political embarrassment in the middle of primary season and, many observers have speculated, losing control of the House in 2013.