“It’s Just A Matter Of Math”: President Obama Rejects John Boehner’s “Out Of Balance” Fiscal Cliff Proposal
Sitting down for his first interview since the election, President Barack Obama remained optimistic about reaching a deal on the fiscal cliff, but not before rejecting House Speaker John Boehner’s “out of balance” proposal.
Obama reiterated the need for a balanced approach, dispelling the notion that he was driven by politics—“It’s not me being stubborn, not me be partisan; it’s just a matter of math,” Obama told Bloomberg News’ Julianna Goldman. The full interview can be viewed here.
The president said he was “prepared to make some tough decisions on this issue,” and allowed that he would not get “100 percent” of his demands, but stated that he would not “agree to a plan in which we have some revenue that is vague and potentially comes out of the pockets of middle-class families in exchange for some very specific and tough entitlement cuts that would affect seniors or other folks who are vulnerable.”
Speaker Boehner’s proposal yesterday called for slashing $600 billion in federal health care programs—driven partly by increasing the Medicare eligibility age from 65 to 67—$200 billion in savings by modifying how the government calculates inflation estimates for increasing Medicare and Social Security benefits, and extending the Bush tax cuts for the wealthy.
Obama restated the need for increasing top tax rates, while maintaining current rates for those making less than $250,000. “We’re going to have to see the rates on the top 2 percent go up, and we’re not going to be able to get a deal without it,” he said. The Republican plan proposed generating new revenue by closing special-interest loopholes and deductions while lowering rates. But Obama soon rejected that approach. “If you do not raise enough revenue by closing loopholes and deductions, it’s going to be the middle-class families that make up the difference,” the president said. “And that would be bad for business.”
By: Axel Tonconogy, The National Memo, December 4, 2012
“The Pimp And His Pendulum”: Grover Norquist Still Calling Cadence In The GOP Ranks
At times, it has seemed that Republican lawmakers eyeing a fiscal compromise with President Obama were moving closer to a public split with Grover Norquist, author of the famous no-new-taxes pledge that has defined conservative politics for decades.
Yet Norquist, whose influence in the conservative movement spans well beyond his well-known fixation on taxes, remains an unwavering force in the GOP debate — and even some of the most prominent lawmakers publicly flirting with a break from Norquist have assured him in private that they remain loyal soldiers in the anti-tax cause.
Sen. Saxby Chambliss (R-Ga.), for example, might have seemed a perfect illustration of the trend away from Norquist’s hard-line views when he said recently that policies backed by Norquist would lead to more debt.
“I care too much about my country — I care a lot more about it than I do Grover Norquist,” the senator told a Georgia TV station.
But five days later, on the phone with Norquist, Chambliss was sounding a conciliatory tone. As Norquist read aloud a transcript of Chambliss’s earlier remarks, item by item, Norquist recalled later, the senator repeatedly assured him on each one that he did not mean to imply they had major differences when it came to GOP principles on taxes.
“He said he’d wished he hadn’t invoked my name and wished that he’d been clearer,” Norquist recalled from the Monday conversation.
Norquist said he came away from the conversation with this understanding of Chambliss’s position: “If he’d get a jillion dollars of spending cuts, he’d be willing to get rid of a deduction or two.”
Chambliss’s office said he was unavailable for an interview. A Chambliss aide later said that the purpose of the call was “most definitely not an apology.” In a written statement to The Washington Post, the senator said he and Norquist agree on “the vast majority of fiscal policy,” including that tax rates should not rise and spending should be reined in, though he added: “Grover disagrees with my longstanding position of using some revenue from closing special-interest loopholes to pay down our national debt, which is something I’ve never apologized for.”
For two decades, Norquist, 56, has been the most ardent enforcer of the Republican Party’s anti-tax theology. And Republicans have dutifully hewed close to that dogma.
But humbled by last month’s election results, and facing a determined President Obama in deficit-reduction negotiations with tax rates set to rise Jan. 1 for all Americans as part of the “fiscal cliff,” several Republicans in recent days have expressed a willingness to compromise. Some have suggested striking a deal with Obama to raise tax rates on higher-earning Americans, as the president has pushed for, or rolling back tax credits and closing loopholes as a way to increase revenue — stances that could well violate the Norquist pledge.
The debate over the fiscal cliff presents a test for Norquist, whose influence is likely to rise or fall depending on how the fight plays out in the coming weeks — and what punishment, if any, Norquist can exact on GOP lawmakers he views as transgressors.
“There are going to be some people who took that pledge that vote for tax increases, and the way he handles that will either preserve his influence or diminish it,” said Charlie Black, a veteran Republican lobbyist and strategist. Still, for now, Black acknowledged, “he is as influential as ever.”
More evidence of Norquist’s enduring influence in the GOP came last week in the way conservatives closed ranks around him during an unusually packed session of the regular meeting of activists and GOP officials Norquist hosts every Wednesday at his Americans for Tax Reform offices near Metro Center.
One after the other, participants rose to congratulate Norquist for his multiple television and radio appearances defending the tax pledge, and to assure the crowd that Republican activists and lawmakers would stand firm against Obama’s call to raise taxes. Attendees included emissaries from House Speaker John A. Boehner (R-Ohio) and Senate Minority Leader Mitch McConnell (R-Ky.).
“The fact they’re attacking Grover really shows the impact of what he’s doing,” Rep. Steve Scalise (R-La.), incoming chairman of the conservative caucus in the House known as the Republican Study Committee, said as the room burst into applause and cheers. Scalise then declared himself “proud to be a pledge signer.”
Norquist says he will not hesitate to support 2014 primary challenges against Republicans who violate the pledge. His group spent $15.7 million in the 2012 election, mostly against Democrats, according to the Center for Responsive Politics.
The threat of a primary fight is unnerving for many Republicans, and it helps explain why even some of Norquist’s apparent critics in the GOP — such as Chambliss, who is up for reelection in 2014 — want to smooth over any apparent tensions.
Sen. Lindsey O. Graham (R-S.C.) told ABC last week that Norquist was wrong to oppose finding new revenue by capping deductions and that “I will violate the pledge, long story short, for the good of the country, only if Democrats will do entitlement reform.”
The remarks did not faze Norquist. In an earlier private telephone chat, Norquist said, Graham had assured him that he would compromise on taxes only if Democrats agreed to entitlement changes “on a massive scale” — prompting Norquist to tell Graham that he would “never be tempted” to raise taxes because the left would never make such a concession.
Rep. Tom Cole (R-Okla.), who caused a stir when he urged House Republicans to consider letting taxes rise on the highest-earning Americans to preserve lower rates for others, later told CNN that “I admire Grover Norquist, I think he’s doing a lot of good,” and that he was “honored” to have signed the tax pledge. Cole said he did not think his idea violated the pledge.
Norquist said he also has had private conversations with Sen. Bob Corker (R-Tenn.), who said Sunday on “Meet the Press” that he was “not obligated to any pledge other than my oath.” Norquist, appearing on the same program, said Corker had been “seduced into thinking, well, maybe I’ll have a small, tiny tax increase and have real reform and we’ll move forward.”
Norquist’s influence extends beyond the famous anti-tax declaration. In addition to heading Americans for Tax Reform, which he launched at the behest of President Ronald Reagan to lobby for White House priorities during the 1986 tax debate, Norquist is closely aligned with some of the GOP’s most well-heeled and politically active groups.
He sits on the board of the National Rifle Association, for instance.
Americans for Tax Reform does not disclose its donors, but The Post reported in April that Crossroads GPS, the political organization co-founded by Karl Rove, gave Norquist’s group $4 million in 2010.
Norquist also has built clout among key activists and politicians in Washington and around the country through his regular Wednesday meetings. His focus on fiscal policy, a unifying issue across all facets of conservatism, has helped Norquist take on the additional role of a sort of orchestra conductor for the political right.
The meetings, begun in 1993 with a small group rallying opposition to President Bill Clinton’s health-care plan, now bring together fiscal hawks, social conservatives, tea party followers, home-schoolers, gun enthusiasts, opponents of same-sex marriage — even Republican gays and abortion rights backers — for invitation-only strategy sessions. Top GOP officials or their staff members attend each meeting, as do key conservative group leaders. During the George W. Bush presidency, the White House regularly dispatched senior aides to attend.
“I’ve never seen anyone who understands coalitions more fully,” said Marjorie Dannenfelser, president of the Susan B. Anthony List, which raises money to elect women who oppose abortion rights, and a regular Wednesday attendee. “I’m in there with pro-choice Republicans.”
The off-the-record meetings have been replicated in 48 states. Norquist and his staff help coordinate those gatherings, giving him frequent and direct access to governors, state legislators and key activists on the ground far outside the Beltway — and in the back yards of GOP lawmakers considering a break from the tax pledge.
In 2009, Americans for Tax Reform moved locations, and Norquist custom-designed a meeting space with stadium seating and a giant glass wall to allow for sidebar conversations among participants who come to network as much as to listen to presenters.
At the 11 / 2-hour meeting, an intern counts participants every 15 minutes so Norquist can monitor the level of attendance throughout each session. Last week, with Norquist at the center of the fiscal-cliff debate, there were as many as 205 attendees.
Norquist used characteristically colorful language to warn Republicans that should they agree to raise taxes on wealthy people, pressure will mount for them to give even more ground. “The reason you don’t want your fingerprints on the murder weapon,” he said, “is that someone will ask you to use it again.”
Heads nodded in approval.
By: Peter Wallsten, The Washington Post, December 2, 2012
“Seriously? You’re Going To Block A Tax Cut?”: The Only One Relevant Question For Republicans To Ask
The Republicans are trying hard to make it look like they’re the ones driving the Fiscal Cliff negotiations, but Wall Street isn’t buying it.
No matter how many times House Speaker John Boehner says the Democrats’ opening offer is ridiculous, for example, the more clued-in pundits (Politico’s Ben White, for example) and investors stick to their guns:
The Democrats have won. Taxes on the highest earning Americans are going up.
Given the reality of the situation, in fact, the only real question for Republicans is this:
Seriously? You’re going to block a tax cut?
Because if the Republicans really do refuse to come to the table in the next month, that’s exactly what they will be doing.
On January 1, by law, tax rates are going to go up and government spending is going to get cut.
The Republicans can’t stop that from happening by being obstructionist. They can only stop it by compromising.
The Obama Administration’s proposal cuts taxes for all but the highest earning Americans.
If the Republicans “just say no” to that proposal, they will be rejecting a tax cut.
Given that the main economic plank of the Republican party is still cutting taxes, there’s no way they’re going to do that.
So you can go ahead and tune out the many media appearances of John Boehner, et al. This one’s over. There’s no way the Republicans are going to block a tax cut.
By: Henry Blodgett, Business Insider, December 2, 2012
“The GOP And Its Urge To Purge”: Don’t Get Caught Reading Marx In The Republican Cloakroom
It seems the Republicans have run out of squishy moderates to purge. Now they’re starting to run conservatives out of town for being insufficiently doctrinaire.
Exhibit A: The defenestration of Tom Cole.
Cole, a deeply conservative congressman from deeply Republican Oklahoma, is not to be confused with a RINO: Republican in name only. But when the lawmaker, who has been part of House GOP leadership, floated a perfectly sensible notion this week — that Republicans should accept President Obama’s offer to extend tax cuts for the 98 percent of Americans who earn less than $250,000 a year — he was treated as if he had been caught reading Marx in the Republican cloakroom.
“I think he’s wrong, and I think most of the conference thinks that he’s wrong,” declared rookie Rep. Raul Labrador (R-Idaho). Cole, he said, is “a man who has voted for a lot of the increased spending in Washington, D.C., and that’s the problem. We have a lot of Republicans who are, you know, catching their hair on fire right now, but they’re the ones who were here for 10 or 20 years causing all the problems that we’re now facing.”
Rep. Scott Garrett (R-N.J.) called Cole’s position “absurd.” House Speaker John Boehner went before the cameras to deliver Cole a rare public rebuke.
Cole, who enjoys a lifetime rating of 92 percent from the American Conservative Union as he enters his sixth term, isn’t worried about a putsch. “I think I’m going to be hard to sell as a dangerous liberal,” he told me with a chuckle. The outrage, he said, “surprised me a little bit, because I think the politics of this are blindingly clear.”
Cole is correct, for two reasons. On a practical level, his plan calls Obama’s bluff: Because raising taxes on the top 2 percent of earners won’t bring in nearly enough tax revenue to fix the budget problem, Obama would likely be forced to come up with some serious entitlement-program cuts as part of a larger tax-and-spending deal.
But Cole is right for a larger reason: The Republicans’ negotiating position is morally indefensible. They are holding 98 percent of Americans hostage by refusing to spare them a tax hike unless the wealthiest 2 percent are included.
“Some people seem to think this is leverage. I think that’s wrong,” Cole said. “You don’t consider people’s lives as leverage. I live in a blue-collar neighborhood. I’ve got a retired master sergeant as my next-door neighbor, police officer across the street. These are working folks, they’re great people, and the idea that I would ever use them as leverage is just wrong.”
In defying the party purists, Cole is taking a novel approach: doing what his constituents want him to do. His staff reports that calls and e-mails to his Washington office are running 70 percent favorable, and calls to his south-central Oklahoma offices are 90 percent positive.
No surprise: Median income in his district is under $47,000, below the national average of $52,000. Only 1.8 percent of households there have income of $200,000 or more.
“They’re pro-business, they’re pro-free enterprise,” Cole said of his constituents, who are farm and ranch workers, oil employees and the like. “But they’re going to want to know that we’re not going to raise taxes on them because they make $43,000 a year, and $1,000 to $2,000 is a lot of money when you’re trying to raise a family.”
Cole, who worked as a political consultant and as chief of staff at the Republican National Committee before coming to Congress, understands this reality better than many of his peers. In their obsession with protecting the wealthiest, Republicans often work against their own constituents, because red states tend to be poorer and more reliant on government spending.
Cole’s stand is a refreshing reminder that being conservative doesn’t mean you have to be unreasonable. “Both sides, I think, need to be a lot more clear-eyed,” he told me. “We’re going to be living in this house together for four years in all likelihood. Let’s get some things done that we can agree on.”
Thankfully, Cole, who won reelection with 68 percent of the vote, isn’t intimidated. Of his intraparty critics, Cole asks: “Where’s your political courage? It’s pretty easy to vote ‘no’ around here. But we’ve got a divided government. The American people ratified that in this election. They’ve basically told us to work together. Here’s something we both agree on that would be in their interest. Why don’t we do this?”
By: Dana Milbank, Opinion Writer, The Washington Post, November 30, 2012
“A Solid Template”: President Obama’s Opening Bid To Avert The Fiscal Cliff Is Familiar And Sound
President Obama’s opening bid for negotiations resolving the “fiscal cliff” has surfaced, and the contours are both familiar and sound. The Washington Postand an unofficial outline drafted by Republican aides both suggest that the administration has essentially proposed its budget request for fiscal 2013. And the president’s latest budget offers a solid framework for navigating the fiscal obstacle course, as it would substantially moderate the pace of deficit reduction while making a responsible down payment on longer-term deficit reduction. Relative to current policy, the contours are shaping up roughly as follows:
- Allow the upper-income Bush tax cuts to expire (+$850 billion)
- Restore the estate and gift taxes to 2009 parameters (+$120 billion)
- Curb tax expenditures (+600 billion)
- Stimulus spending (-$50 billion)
- Extend emergency unemployment benefits (-$30 billion)
- Extend or replace the payroll tax cut (-$110 billion)
- Continue AMT patch, “doc fix,” and tax extenders (-$240 billion)
- Defer sequestration (?)
Most critically, the Obama framework includes a variation of his American Jobs Act, proposing increased near-term government spending on infrastructure and state fiscal relief while maintaining the ad hoc stimulus set to expire at year’s end—the emergency unemployment compensation (EUC) program, the payroll tax cut, and recent expansion of refundable tax credits—which is the single largest economic headwind threatening recovery among the major components of the scheduled fiscal restraint. (See our à la carte deconstruction of these major components’ budgetary versus economic impacts) The Republican aides’ draft suggests the administration would dedicate $50 billion for infrastructure and stimulus spending, $30 billion for EUC, and $110 billion for an extension of the payroll tax cut or a targeted tax credit, all relative to current policy. And if the administration is looking for a replacement for the payroll tax cut, they could adopt our proposed targeted refundable tax rebate, which would provide a bigger and better economic boost.
Beyond these job creation measures, the president’s proposal for dealing with the economic challenge at hand of overly rapid deficit reduction would largely adhere to current policy—the alternative minimum tax would be indexed for inflation, scheduled Medicare physician reimbursement cuts would be prevented (i.e., the “doc fix” would be continued), expiring business tax provisions would be continued, the sequester would not be implemented in 2013, and the Bush-era tax cuts would be extended for all but upper-income households (those earning more than $250,000 a year). Again, this is all consistent with the president’s budget, with the exception that the budget repealed the sequester instead of deferring it to an unspecified date.
Overall, this proposal would substantially moderate the pace of deficit reduction relative to the current policy, which is critical because this baseline includes sizable fiscal contraction (the payroll tax cut and emergency unemployment benefits are assumed to expire and discretionary spending caps ratchet down). Indeed, the entire challenge posed by the fiscal obstacle course is that budget deficits closing too quickly will push the economy into an austerity-induced recession, and the president’s opening bid actually addresses this very real economic challenge, prioritizing job creation and economic recovery over the (not imminent) problem of longer-term deficit reduction.
But the proposal would make substantial long-run deficit reduction as well. It would allow the upper-income Bush tax cuts to expire, raise roughly another $600 billion from upper-income households and business (presumably by capping the value of tax expenditures), return the estate and gift tax to 2009 parameters, reduce Medicare and Medicaid spending by nearly $400 billion (largely without cost-shifting to states or households, with most savings from providers and pharmaceutical companies). Again, these are all proposals from the president’s budget request. As I calculated a few months back, the president’s budget—as scored by the Congressional Budget Office and adjusted for subsequent baseline revisions—would reduce public debt by $3.0 trillion relative to current policy, lowering the debt-to-GDP ratio to a sustainable 73.4 percent. (Add in the nearly $1 trillion from ending the war in Afghanistan, already built into current policy, and you hit the $4 trillion mark that has become the arbitrary but symbolic threshold for fiscal seriousness.)
A back of the envelope calculation suggests that the combination of continuing EUC, continuing the payroll tax cut, increased infrastructure spending, and expiration of the upper-income tax cuts would boost real GDP growth by 1.5 percentage points and increase nonfarm payroll employment by 1.8 million jobs by the end of 2013, relative to current policy. Details on timing of other deficit reduction are lacking, and would likely somewhat reduce the net economic boost, but the proposal nevertheless offers substantial net fiscal support for our depressed economy. My colleague Josh Bivens and I estimated in another recent paper that the president’s 2013 budget would boost employment by about 1.1 million jobs in 2013, largely because of AJA spending and targeted tax cuts (which we delayed one year from the now-ended 2012 fiscal year to allow for feasible implementation).
This framework also closely resembles the proposals in our recent EPI and Century Foundation report Navigating the fiscal obstacle course: Supporting job creation with savings from ending the upper-income Bush-era tax cuts. We proposed diverting half of the savings from ending the upper-income Bush tax cuts and recent estate tax cuts—roughly $600 billion—to job creation measures heavily weighted toward the next three years, which would boost real GDP growth by 1.7 percentage points and increase employment by 2.0 million jobs in 2013. The upper-income Bush tax cuts are the least economically supportive component of the fiscal obstacle course and have a huge opportunity cost; as far as down payments on deficit reduction go, this is the most sound starting point—as the president has proposed in all four budget requests.
The one major departure from the president’s budget is the new and excellent proposal to eliminate the statutory debt ceiling. The statutory debt ceiling has proved an unacceptable economic liability, particularly since Speaker of the House John Boehner (R-Ohio) irresponsibly pledged in May that he would again hijack the nation’s debt ceiling to be used as a bargaining chip. This duplicative, ill-conceived law should be repealed, or at the very least ruled inoperative.
The president’s budget offered a sound template for moderating the pace of deficit reduction, coupled with a down payment on longer-term deficit reduction that would impose little near-term economic drag—substantially less than the economic boost from the AJA. By adding repeal of the debt ceiling to this balanced package, the president’s opening bid makes for an even more responsible economic and budgetary policy.
By: Andrew Fieldhouse, Economic Policy Institute, November 30, 2012
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