With Deal Announced, The White House Makes It’s Case
So the final deal has been announced, pending approval by the House, and one of the key new pieces of the compromise is that the Congressional committee tasked with coming up with a second round of spending cuts in exchange for the later debt ceiling hike would be forced to act by the new “trigger.” In the event that the committee deadlocks, that trigger would force an even division of non-defense and defense cuts, and since the latter is anathema to Republicans, they would not have any incentive to deliberately sabotage the committee in order to force the deep entitlements cuts they want.
The White House’s argument is that even if the deal is far short of what liberals hoped for, Republicans have effectively surrendered the amount of leverage they were expected to have over entitlements cuts. Now that the committee — which is half Republicans and Democrats — will all but certainly advance a package of cuts in exchange for the later debt ceiling hike, the argument is that Democrats can live to fight it out another day on entitlements.
The White House is also arguing that the deal sets the stage for a re-litigation of the tax cut fight, and it’s now distributing talking points to outside allies that are heavily devoted to making that case on entitlement and taxes, an argument that seems designed to quiet angst and criticism among liberals:
* Expedited Process for Balanced Deficit Reduction: Puts in place a longer term process for additional $1.5 trillion in deficit reduction through a committee structure that will put everything on the table, including tax and entitlement reform. To prevent either side from using procedural tricks to prevent Congress from acting, the committee’s recommendations will receive fast track authority, which means they can’t be amended or filibustered.
* Sets the Stage for a Balanced Package Including Revenues: The American people and a growing number of Republicans agree that any deficit reduction package must be balanced and included revenue.
* Even Speaker Boehner was open to a deal with $800 billion in revenues, and nearly 20 GOP senators were supportive of the Gang of 6 framework, which had more than $2 trillion in revenue.
* If the Committee does not succeed in meaningful balanced deficit reduction with revenue-raising tax reform on the most well-off by the end of 2012, the President can use his veto pen to raise nearly $1 trillion from the most well-off by vetoing any extension of the Bush high income tax cuts.
By;: Greg Sargent, Washington Post-The Plum Line, July 31, 2011
Taxing The Poor: The Only Tax Increase Republicans Support
Throughout the debate about raising the federal debt ceiling, Republicans have denied deal after deal because Democrats insist on adding new revenues to trillions of dollars in spending cuts. Republicans have opposed repealing oil and gas subsidies, removing a tax loophole for corporate jet owners, letting the Bush tax cuts expire, and all other forms of revenue Democrats have suggested. Raising taxes in a weak economy, they argue, is unthinkable — even if conservative patriarch Ronald Reagan did just that.
But there is one tax increase some Republicans seem to favor: raising taxes on the working poor, senior citizens, and other low-income Americans.
While they fight the expiration of the budget-busting Bush tax cuts, Republicans have continually cited a report that shows that 51 percent of Americans don’t pay income taxes, even admitting that middle- and lower-class Americans need to shoulder a larger burden in deficit reduction efforts. Here is a sample of Republicans who have made that argument:
Sen. Orrin Hatch
(R-UT): In a May 5 appearance on MSNBC, Hatch said, “The place where you’ve got to get revenues has to come from the middle class,” saying the poor needed to understand “that there’s a civic duty on the part of every one of us to help this government to, uh, to be better.” On the Senate floor July 7, Hatch said the poor “need to share some of the responsibility” for deficit reduction.
Sen. John Cornyn
(R-TX): Cornyn also cited the report on the Senate floor July 7, when he said Congress needed to address tax reform to make the system “flatter, fairer, and simpler.” He then cited the report, saying, “51 percent — that is — a majority of American households — paid no income tax in 2009. Zero. Zip. Nada.”
Sen. Dan Coats
(R-IN): Coats echoed the talking point last weekend, saying “everyone needs to have some skin in the game.” He added: “I realize that some with low incomes and not much money are not paying much in taxes. Nonetheless, we all have a stake in this country and what needs to be done. I think it’s important that this burden not just fall on 50 percent of the people but falls on all of us in some form.”
House Majority Leader Eric Cantor
(R-VA): Cantor was among the first Republicans to begin hitting this particular talking point, doing so in April on CNBC’s Squawk Box. “We also have a situation in this country where you’re nearing 50 percent of people who don’t even pay income taxes,” he said.
Republicans, of course, ignore why most of the 51 percent do not pay income taxes and the myriad ways in which they are subject to other forms of taxation. The majority who do not pay federal income taxes simply do not make enough money to qualify for even the lowest tax bracket. But they do contribute through payroll, state, and sales taxes. Less than a quarter of Americans don’t contribute to federal tax receipts, and the majority of those are students, the elderly, or the unemployed.
Meanwhile, the richest Americans are paying less than they were a generation ago, leaving the United States with one of the largest income gaps in the industrialized world.
By: Travis Waldron, Think Progress, July 25, 2011
Boehner’s New Proposal Could Produce Greatest Increase In Poverty And Hardship Of Any Law In Modern U.S. History
House Speaker John Boehner’s new budget proposal would require deep cuts in the years immediately ahead in Social Security and Medicare benefits for current retirees, the repeal of health reform’s coverage expansions, or wholesale evisceration of basic assistance programs for vulnerable Americans.
The plan is, thus, tantamount to a form of “class warfare.” If enacted, it could well produce the greatest increase in poverty and hardship produced by any law in modern U.S. history.
This may sound hyperbolic, but it is not. The mathematics are inexorable.
The Boehner plan calls for large cuts in discretionary programs of $1.2 trillion over the next ten years, and it then requires additional cuts that are large enough to produce another $1.8 trillion in savings to be enacted by the end of the year as a condition for raising the debt ceiling again at that time.
The Boehner plan contains no tax increases. The entire $1.8 trillion would come from budget cuts.
Because the first round of cuts will hit discretionary programs hard — through austere discretionary caps that Congress will struggle to meet — discretionary cuts will largely or entirely be off the table when it comes to achieving the further $1.8 trillion in budget reductions.
As a result, virtually all of that $1.8 trillion would come from entitlement programs. They would have to be cut more than $1.5 trillion in order to produce sufficient interest savings to achieve $1.8 trillion in total savings.
To secure $1.5 trillion in entitlement savings over the next ten years would require draconian policy changes. Policymakers would essentially have three choices: 1) cut Social Security and Medicare benefits heavily for current retirees, something that all budget plans from both parties (including House Budget Committee Chairman Paul Ryan’s plan) have ruled out; 2) repeal the Affordable Care Act’s coverage expansions while retaining its measures that cut Medicare payments and raise tax revenues, even though Republicans seek to repeal many of those measures as well; or 3) eviscerate the safety net for low-income children, parents, senior citizens, and people with disabilities. There is no other plausible way to get $1.5 trillion in entitlement cuts in the next ten years.
The evidence for this conclusion is abundant.
The “Gang of Six” plan, with its very tough and controversial entitlement cuts, contains total entitlement reductions of $640 to $760 billion over the next ten years not counting Social Security, and $755 billion to $875 billion including Social Security. (That’s before netting out $300 billion in entitlement costs that the plan includes for a permanent fix to the scheduled cuts in Medicare physician payments that Congress regularly cancels; with these costs netted out, the Gang of Six entitlement savings come to $455 to $575 billion.)
The budget deal between President Obama and Speaker Boehner that fell apart last Friday, which included cuts in Social Security cost-of-living adjustments and Medicare benefits as well as an increase in the Medicare eligibility age, contained total entitlement cuts of $650 billion (under the last Obama offer) to $700 billion (under the last Boehner offer).
The Ryan budget that the House passed in April contained no savings in Social Security over the next ten years and $279 billion in Medicare cuts.
To be sure, the House-passed Ryan budget included much larger overall entitlement cuts over the next 10 years. But that was largely because it eviscerated the safety net and repealed health reform’s coverage expansions. The Ryan plan included cuts in Medicaid and health reform of a remarkable $2.2 trillion, from severely slashing Medicaid and killing health reform’s coverage expansions. The Ryan plan also included stunning cuts of $127 billion in the SNAP program (formerly known as food stamps) and $126 billion in Pell Grants and other student financial assistance.
That House Republicans would likely seek to reach the Boehner budget’s $1.8 trillion target in substantial part by cutting programs for the poorest and most vulnerable Americans is given strong credence by the “Cut, Cap, and Balance” bill that the House recently approved. That bill would establish global spending caps and enforce them with across-the-board budget cuts —exempting Medicare and Social Security from the across-the-board cuts while subjecting programs for the poor to the across-the-board axe.
This would turn a quarter century of bipartisan budget legislation on its head; starting with the 1985 Gramm-Rudman-Hollings law, all federal laws of the last 26 years that have set budget targets enforced by across-the-board cuts have exempted the core assistance programs for the poor from those cuts while including Medicare among programs subject to the cuts. This component of the “Cut, Cap, and Balance” bill strongly suggests that, especially in the face of an approaching election, House Republicans looking for entitlement cuts would heavily target means-tested programs for people of lesser means (and less political power).
In short, the Boehner plan would force policymakers to choose among cutting the incomes and health benefits of ordinary retirees, repealing the guts of health reform and leaving an estimated 34 million more Americans uninsured, and savaging the safety net for the poor. It would do so even as it shielded all tax breaks, including the many lucrative tax breaks for the wealthiest and most powerful individuals and corporations.
President Obama has said that, while we must reduce looming deficits, we must take a balanced approach. The Boehner proposal badly fails this test of basic decency. The President should veto the bill if it reaches his desk. Congress should find a fairer, more decent way to avoid a default.
By: Robert Greenstein, President, Center on Budget and Policy Priorities, July 25, 2011
Republican Paradox: The Party That Can’t Say Yes
For days, the White House has infuriated its Democratic allies in Congress by offering House Republicans more and more in exchange for a deal to raise the debt ceiling and prevent default. But it was never enough, and, on Friday evening, it became clear that it may never be enough. Speaker John Boehner again walked away from the “grand bargain” he had been negotiating with President Obama, leaving the country teetering on the brink of another economic collapse.
At the White House podium a few minutes later, the president radiated a righteous fury he rarely displays in public, finally placing the blame for this wholly unnecessary crisis squarely where it belongs: on Republicans who will do anything to upend his presidency and dismantle every social program they can find. “Can they say yes to anything?” he asked, noting the paradox of Republicans, who claim that financial responsibility and debt reduction are their biggest priorities, rejecting yet another deal that would have cut that debt by at least $3 trillion.
Mr. Obama, in fact, had already gone much too far in trying to make his deal palatable to House Republicans, offering to cut spending even further than the deficit plan proposed this week by the bipartisan “Gang of Six,” which includes some of the Senate’s most conservative members. The White House was willing to cut $1 trillion in domestic and defense spending and another $650 billion from Medicare, Medicaid and even Social Security.
Much of that savings would have come from raising the eligibility age for Medicare benefits and reducing the cost-of-living increases that elderly people depend on when receiving their health and pension benefits. It could have caused significant damage to some of the nation’s most vulnerable people.
The “bargain” would require that alongside these cuts, tax revenues would go up by $1.2 trillion, largely through a rewrite of the tax code to eliminate many deductions and loopholes. That’s substantially less in revenue than the $2 trillion in the “Gang of Six” plan. The problem is that while much of the cutting would start right away, most of the revenue increases would be put off, in part because a tax-code revision would take months, and in part to allow House Republicans to say they did not agree to any specific tax revenue increases.
Democratic lawmakers were rightly furious when they heard about these details this week, calling the plan wholly unbalanced. But, in the end, it was Mr. Boehner who torpedoed the talks. He said Friday evening that he and the president had come close to agreeing on $800 billion of the revenue increases (the equivalent of letting the upper-income Bush tax cuts expire as scheduled next year — not much of a heavy lift) but could not stomach another $400 billion the White House wanted to raise through ending tax loopholes and deductions.
So, on the eve of economic calamity, the Republicans killed an overly generous deal largely over a paltry $400 billion in deductions. Mr. Obama was willing to take considerable heat from his liberal critics over the deal, and the Republicans were not willing to do a thing to anger their Tea Party base. As the president forcefully said, there is no evidence that House Republicans are capable of making those tough decisions. If last-ditch talks beginning Saturday fail, they will have to take responsibility if the unimaginable — a government default — happens in 10 days and the checks stop going out.
By: The New York Times, Editorial, July 22, 2011
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