Thursday, April 14, 2011

No Grand Bargain on the Horizon

Keith Hennessey is the most astute observer of the inside baseball of Washington economic policy that I know.  Here is his bottom line on President Obama's speech from yesterday:

The President’s proposal could be the opening bid in a negotiation with Congressional Republicans. When you combine this substance with the President’s aggressive partisan attacks and framing of the Ryan budget, however, it’s hard to see how this leads to a big fiscal deal this year or next....the chances of a long-term grand bargain in the next two years just plummeted from an already low starting point.

I am afraid that Keith might be right.

President Obama certainly has the ability to disagree without being disagreeable.  But yesterday he decided, I presume quite consciously, that demonizing the opposition was the right strategy for him.  Perhaps this decision suggests that the speech was written to be the beginning of a heated reelection campaign rather than an invitation for negotiation and compromise.  I hope this interpretation is wrong.  If it is right, then my hypothetical 2026 speech may have be given a few years earlier than planned.