You’ve heard the old joke about the two hikers who round a bend only to find themselves face to face with a growling bear. One sits down and begins lacing up his running shoes. “You’ll never outrun a bear,” whispers his terrified companion. “I don’t have to,” replies the first hiker. “I just have to outrun you.” Today’s news conference was President Obama lacing up his running shoes...To whatever extent Obama is pursuing a large-scale, cut-oriented deficit deal, I think he's making a horrible choice. But there is no reason to be concerned that this (potentially) cynical political calculation will pay off for him. The notable thing about austerity economics is that it doesn't work. And whatever happens during Obama's administration is going to be laid squarely on his own head by voters.
I’d guess that White House political adviser David Plouffe is very happy about how this debate is playing out, while White House economic adviser Gene Sperling is pretty unhappy about it. Republican intransigence is great for the Obama brand. These negotiations have been an extended opportunity for Obama to continually emphasize his commitment to bipartisanship, his desire to get things done, his frustrations with Washington, his status as the adult in the room.
Much of Washington is currently embracing a poisonous idea: that Obama can take a moderate stance on the deficit, and negotiate an outcome that is substantively worse but politically more appealing, and thereby increase his chances of reelection. This is a delusion. Anything Obama does that undermines the economic recovery will decrease his chances of reelection. If the recovery stalls further, Obama can't "argue to voters" or "make the case" or "illustrate the difference between him and Republicans." The voters aren't listening; they're too busy worrying about how to make ends meet.
At this point, the president's political wellbeing and the economic wellbeing of Americans are virtually the same thing. Whatever bad decisions the administration makes on the economy, it'll pay the consequences in full.