Kuttner on TAP: Is Kevin McCarthy’s Secret Weapon Joe Biden?

In the infamous fiscal cliff deal of 2012 that led to a permanent extension of most of the Bush tax cuts and an automatic formula of more than a trillion dollars in spending cuts over a decade, Senate Democratic leader Harry Reid was hanging tough. Democrats held the stronger hand because the Bush tax cuts of 2001 and 2003 were expiring. Not reaching a deal would have resulted in massive tax increases for the wealthy. And Reid wanted to go over the cliff and then negotiate a new tax plan.

But Barack Obama sent his vice president, Joe Biden, to negotiate a deal with his old colleague Mitch McConnell behind Reid’s back. Biden and the Democrats got rolled. Reid was so mad that he threw the White House’s proposed list of concessions into his office fireplace. In 2013, at the insistence of an outraged Reid, Obama barred Biden from that year's budget negotiations, which led to a government shutdown, but ultimately a deal with no giveaways to Republicans.

Now, we are on the brink of even more momentous budget negotiations. House Republicans, who are far more extreme and less crafty than McConnell, have threatened to allow the U.S. to default on the public debt, unless Democrats agree to crippling cuts, including in Social Security and Medicare. Once again Democrats have the better hand, if they will only play it well.

The strategy of the Democratic congressional leadership is simple. Don’t give an inch. Let Republicans take the government into default—and take the heat for the massive public backlash when Social Security checks don’t go out. Even if McCarthy and the crazies revel in the wreckage, enough Republicans will soon vote with Democrats to increase the debt limit.

This time, Biden is president and can’t be sidelined. So far, he has talked a good game, saying that he won't negotiate. That remains to be seen.

Sources in the congressional Democratic leadership tell me that when the FY 2023 omnibus spending bill was being negotiated in the lame duck session, they constantly had to fight the White House tendency to make concessions before the negotiations even began. That bill had impressive spending increases, including full funding of all the industrial policy and climate initiatives and more money for the NLRB.

All this is to the credit of the congressional leadership, not the White House. According to my sources, the current White House chief of staff, Ron Klain, was far too eager to make concessions in order to get a deal, despite the fact that Democrats in Congress had the discipline and the votes. And his successor, Jeff Zients, is likely to be worse.

For starters, Zients is from the plutocratic wing of the Democratic Party, having become very rich from taking two David Bradley ventures public, the Advisory Board Company and the Corporate Executive Board. When he was 35, Fortune estimated his net worth at $149 million.

He them became head of the Cranemere Group, a holding company with many ventures in the health care field. The Prospect has documented a series of Cranemere actions that show contempt for the public interest, including tens of millions in payments to settle allegations of Medicaid and Medicare fraud, before Zients took a leave from Cranemere to become Biden's COVID-19 vaccine czar, a job that he abruptly left. He also had no problem joining the board of Facebook in the wake of the Cambridge Analytica scandal.

In the Obama administration, Zients did two stints as acting OMB chief, where he was allied with other fiscal hawks such as Bruce Reed, now another Biden senior staffer. Zients then became head of Obama's National Economic Council. After Biden was sidelined as White House negotiator following the disastrous fiscal cliff deal, it was Zients who took over.

He reveled in the age of austerity. In an April 2013 press conference, Zients went on and on about how many cuts the White House was imposing on the American people. “Democrats and Republicans have worked together to cut the deficit by more than $2.5 trillion,” Zients said. This was a time of slow economic and job growth, and austerity made it worse.

Zients is likely to reinforce Biden’s own propensity to make a bad deal. This is not because Zients is a lousy negotiator, but because he is a committed budgetary conservative.

So on the Democratic side, there are now two opposite scripts. One calls for advance negotiations on budget cuts, in a futile effort to appease McCarthy and company. This is either a fool’s game—or a more cynical fiscal conservative’s game.

Joe Manchin and Kyrsten Sinema have already met with Republican counterparts to discuss cuts. And on the House side, corporate Democrat Josh Gottheimer of New Jersey has been conferring with Republicans from the “Problem Solvers Caucus” to pursue the same kind of deal. In the wings, McConnell is waiting to play the role of closer, working with his old chums Biden and Zients.

The other script calls for letting Republicans bear the onus of denying people their Social Security checks and other valued services. Is this even a close question? If strategic sense prevails, it will only be because the Democratic congressional leadership save Biden and Zients from themselves.