Exhibit A, of course, is the hapless quest for a grand budget bargain. Talk to any credible economist, wire any serious politician to a polygraph, and you will hear at least 80 percent agreement on what is to be done: investment to goose the lackluster recovery and rebuild our infrastructure, entitlement reforms and spending discipline to lower the debt, and a tax code that lets the government pay its way without stifling business, punishing the middle class or rewarding sleight of hand. The bipartisan Simpson-Bowles commission assembled a grand bargain that does most of this. Of course, in this Washington, in this election year, there is no chance of accomplishing anything constructive, right? So crisis be damned, let’s scream about Romney’s outsourcing and whether Obama hates capitalism. But President Obama has a bold option at hand, should he choose to use it. And some of his fellow Democrats are starting to warm to the idea. It has been called the nuclear option and likened to falling off a cliff. It is widely regarded as a possible catastrophe. In fact, it may be our best hope. In January, two fiscal time bombs planted by Congress are due to explode. On Jan. 1, all the Bush tax cuts expire, constituting a $400-billion-plus tax hike in 2013. The next day — unless Congress agrees on a major deficit-reduction plan — a fiscal discipline known as sequestration will slash about $100 billion a year from federal spending, divided between defense and nondefense. Blanket repeal of the tax cuts and across-the-board spending reductions are both pretty bad ideas. Taken together they are a kind of grotesque, automated austerity program. Lawmakers of both parties are desperately seeking ways to evade some of the consequences. Republicans are more focused on sparing the defense budget, and Democrats are pressing to preserve the middle-class tax cuts. For months now, Erskine Bowles, the former Clinton chief of staff and a co-chairman of the Simpson-Bowles commission, has been quietly proposing that Obama treat the January Armageddon as an opportunity. The president should head straight for the cliff and let Congress know he’s prepared to take us over the edge unless they build a bridge. In other words: President Obama should declare now that unless Congressional leaders come up with a serious bargain on fiscal reform, something very like Simpson-Bowles, he will allow all of the Bush tax breaks to lapse and all of the draconian cuts to take effect. Assuming no deal is consummated in the poisonous pre-election climate, he should insist on a lame-duck session after Election Day. He should invite Congressional leaders to Camp David, put Simpson-Bowles on the table, and negotiate — not a lot, since the plan already includes considerable compromise, but enough to show good will. If no deal emerges, all the Democrats have to do is take a page from the Republican playbook: dig in their heels and do nothing. The best case (Bowles is optimistic, I’m a little less so) is that the lame-duck session passes a bipartisan plan that actually helps the country out of its enduring recession. Worst case, the president and his party seize the moral high ground and shape the economic debate around a plan that would be both wise and popular. When the tax breaks expire and the robo-cuts go into effect, the next Congress and president, whichever party prevails, will be forced to face the subject with real urgency. Lawmakers will be under siege from legions of constituents, and the markets, demanding an end to stalemate. Moreover, as Jonathan Weisman pointed out in The Times the other day, after Armageddon the issues on the table would no longer be the perilous business of raising taxes and cutting spending, but the opposite: cutting taxes (at least some of them) and restoring spending (at least some of it). Republicans will howl that this is blackmail, a priceless complaint from the party that periodically threatens to let America default on its debt. But does Obama have it in him? This is the kind of tactic Lyndon Johnson would have employed with relish. You can imagine Bill Clinton pulling it off. President Obama, whether out of diffidence or inexperience, has not shown a comparable audacity or mastery of political leverage. Well, here’s his chance to show us what we can expect if he’s re-elected: fruitful leadership, or another four years of gridlock.
