The Fight Will Continue: Democrats Will Lose Now But They Can Win Later
Democrats are going to lose this one. The first stage of the emerging deal doesn’t include revenue, doesn’t include stimulus, and lets Republicans pocket a trillion dollars or more in cuts without offering anything to Democrats in return.
The second stage convenes a congressional “Supercommittee” to recommend up to $2 trillion in further cuts, and if their plan doesn’t pass Congress, there’s an enforcement mechanism that begins making automatic, across-the-board cuts to almost all categories of spending. So heads Democrats lose, tails Republicans win.
It’s difficult to see how it could have ended otherwise. Virtually no Democrats are willing to go past Aug. 2 without raising the debt ceiling. Plenty of Republicans are prepared to blow through the deadline. That’s not a dynamic that lends itself to a deal. That’s a dynamic that lends itself to a ransom.
But Democrats will have their turn. On Dec. 31, 2012, three weeks before the end of President Barack Obama’s current term in office, the Bush tax cuts expire. Income tax rates will return to their Clinton-era levels. That amounts to a $3.6 trillion tax increase over 10 years, three or four times the $800 billion to $1.2 trillion in revenue increases that Obama and Speaker John Boehner were kicking around. And all Democrats need to do to secure that deal is…nothing.
This scenario is the inverse of the current debt-ceiling debate, in which inaction will lead to an outcome — a government default — that Democrats can’t stomach and Republicans think they can. There is only one thing that could stand in the way of Democrats passing significant new revenues on the last day of 2012: the Obama administration.
Republicans — and even some Democrats — think that the Obama administration lives to collect revenue. The truth is closer to the opposite. Senior administration aides view the expiration of the Bush tax cuts as less of an opportunity than a chore. About four-fifths of the cuts go to households making less than $250,000 a year, and they don’t want to raise taxes on those folks. They don’t like the politics of the issue, either. It’s an article of faith among Democratic strategists that debates on taxes inevitably favor Republicans, allowing Democrats to be hammered from the right and undermined from the left. White House aides would rather focus on “win the future” issues like infrastructure, education and energy.
The White House’s strategy in the debt-ceiling negotiations has reflected its ambivalence, with Obama trying to extract either as much revenue as Republicans would allow or as little as Democrats would accept. Obama even offered Boehner a deal in which the Bush tax cuts would be extended right now, so Republicans wouldn’t have to fear a subsequent negotiation in which they lacked leverage. Boehner rejected that deal and, in doing, might have saved the safety net.
But the Obama administration doesn’t want to take its second chance. They argue that the economy will still be recovering in 2013, and so it’s not an ideal time for a large tax increase. True. But what happens in 2012 is not simply setting tax policy for 2013. It’s setting tax policy for decades to come.
Health costs are rising and the Baby Boomers are retiring. If taxes don’t rise, none of these commitments are sustainable. And Republicans, in normal times, are perfectly capable of blocking any and all attempts to raise taxes. For Democrats, the expiration of the Bush tax cuts presents a unique opportunity in which GOP intransigence will mean more new revenues rather than no new revenues.
The alternative has been on clear display in recent months. Republicans can’t necessarily sell the country on big cuts in federal programs, but they can make them necessary. All they need to do is hold the line aganst taxes, allow deficits will continue to mount, and then use forcing events like the debt ceiling or the budget to demand huge spending cuts. A world in which the two parties can’t agree on tax increases but can agree on spending cuts is one in which the government eventually shrinks dramatically. Republicans understand this. Do Democrats?
A year ago, I was less concerned about the Bush tax cuts. I assumed, as did many in Washington, that the Republicans’ antipathy to taxes was a negotiating stance. Eventually, we would strike a “grand bargain” that would reduce spending and raise revenue substantially. The past few months have proved me wrong.
Republicans have shown, that they will block any and all tax increases, no matter what incentives they are offered in return and no matter how dire the consequences of their refusal. Next year’s deadline offers Democrats their only chance to negotiate from a superior strategic position. Republicans will still be able to refuse to raise taxes. But if they do, it won’t matter. The only way they can succeed in keeping taxes from rising is if the Obama administration and the Democrats stand shoulder-to-shoulder with them to extend the Bush tax cuts.
By: Ezra Klein, The Washington Post, July 31, 2011
From Crazy To Insane: Conservatives Still Want More In Debt Ceiling Deal
Over on the progressive side of politics, they’re nursing their wounds and drowning their sorrows as details of the deal to increase the debt ceiling emerge. They feel like they lost to a Republican party that dug in and used the debt ceiling to achieve their goal of dramatically shrinking government spending and solving the deficit problem without raising a single penny in new revenue.
So they might be surprised to know that conservatives don’t think they won, either. The right, despite apparently negotiating Obama into a corner that pits him against large parts of his base, still isn’t satisfied.
“While this deal is moving in the right direction rhetorically thanks to pressure from conservatives, it still falls well short of the standards we have consistently laid out,” wrote the Heritage Action’s Michael Needham.
The group, a sister organization to the Heritage Foundation, says the upfront cuts included in the reported deal are “insufficient” and the super committee in charge of creating the next round of deficit reduction is a bad idea as reported.
“This deal highlights how dysfunctional Washington has become and we will continue to oppose it as insufficient to the task at hand,” Needham wrote.
On TV Sunday morning, Sen. Lindsey Graham (R-SC) said he expected a large number of conservatives to share Heritage’s view.
“It’s a $3 trillion package that will allow $7 trillion to be added to the debt in the next decade,” Graham said, dismissively. “So how much celebrating are you going to do?”
Graham said he expected around half of the House GOP caucus to vote against the deal. It doesn’t have his vote yet, either.
One of the patron saints of those hardcore conservative Republicans in the House, blogger Erick Erickson, is also underwhelmed by the deal (it’s not the first time.)
Despite the fact that progressives and Democrats are publicly lamenting the reported deal as indicative of the effect of rhetoric like Erickson’s has had on Washington, Erickson sounds as if he feels as betrayed as some on the left.
“What we know about the pending deal is that the Democrats and Republicans are agreeing to a Deficit Commission,” Erickson wrote Sunday. “Despite the media spin — and the spin of some Republican sycophants — the deficit commission, which will be a super committee of the Congress, will have the power to come up with new tax revenue.”
By: Evan McMorris-Santero, Talking Points Memo, July 31, 2011
A False Equivalency: Don’t Blame ‘Both Sides’ For Debt Impasse
Washington has many lazy habits, and one of the worst is a reflexive tendency to see equivalence where none exists. Hence the nonsense, being peddled by politicians and commentators who should know better, that “both sides” are equally at fault in the deadlocked talks over the debt ceiling.
This is patently false. The truth is that Democrats have made clear they are open to a compromise deal on budget cuts and revenue increases. Republicans have made clear they are not.
Put another way, Democrats reacted to the “grand bargain” proposed by President Obama and House Speaker John Boehner by squawking, complaining and highlighting elements they didn’t like. This is known throughout the world as the way to begin a process of negotiation.
Republicans, by contrast, answered with a definitive “no” and then covered their ears. Given the looming Aug. 2 deadline for default if the debt ceiling is not raised, the proper term for this approach is blackmail.
Yet the “both sides are to blame” narrative somehow gained currency after Boehner announced Saturday that House Republicans would not support any increase in revenue, period. A false equivalence was drawn between the absolute Republican rejection of “revenue-positive” tax reform and the less-than-absolute Democratic opposition to “benefit cuts” in Medicare and Social Security.
The bogus story line is that the radical right-wing base of the GOP and the radical left-wing base of the Democratic Party are equally to blame for sinking the deal.
Leave aside, for the moment, the fact that in the Obama-Boehner proposal, there would be roughly three dollars’ worth of budget cuts for every dollar of new revenue. Don’t pause to ask whether it makes sense to slash government spending when the economy is still sputtering out of the worst recession in decades. Instead, focus narrowly on the politics of the deal.
It is true that House Minority Leader Nancy Pelosi howled like a blindsided politician when she learned that entitlement programs were on the table. But her objections — and those of Democrats in general — are philosophical and tactical, not absolute.
Progressives understand that Medicare and Social Security are not sustainable on their current trajectories; in the long term, both must have their revenue and costs brought into balance. Pelosi’s position is that each program should be addressed with an eye toward sustainability — not as a part of a last-minute deal for a hike in the debt ceiling that covers us for two or three years.
It’s also true that Democrats believe they can win back a passel of House seats next year by highlighting the GOP plan to convert Medicare into a voucher program. They don’t want Republicans to be able to point and say, “See, the Democrats want to cut Medicare, too.”
There’s nothing in these Democratic objections, however, that couldn’t be creatively finessed. You can claim you haven’t actually “cut” a benefit, for example, if what you’ve done is restrained the rate at which its cost will grow. You can offset spending with new revenue, and you can do so in a way that gives low-income taxpayers a break. Democrats left the door open and these options could have been explored.
The story on the Republican side is entirely different. There are ways to finesse a “no new taxes” pledge, too. Instead of raising tax rates, you close loopholes in the name of reform; you add an enhancement here, a “user fee” there, and you can manage to get the revenue you need and still claim you haven’t voted to raise taxes.
But Republicans are taking the position that not a cent of new revenue can be raised, no matter the euphemism. Some Democrats, yes, are being scratchy and cantankerous. But Republicans are refusing to negotiate at all. That’s not the same thing.
I understand why President Obama, in his news conference Monday, chided “each side” for taking a “maximalist position.” For political and practical reasons, it’s advantageous for him to be seen as an honest broker.
Meanwhile, though, the clock ticks toward Aug. 2 and the possibility of a catastrophic default becomes more real. And no one should be confused about what the president confronts: On one side, grousing and grumbling. On the other, a brick wall.
By: Eugene Robinson, Opinion Writer, The Washington Post, July 11, 2011
GOP Passes Up Generational Conservative Victory In Order To Protect The Wealthy
Oh, the irony.
After generations of conservative dogma based solidly in the belief that fundamental changes to America’s entitlement programs are essential to the economic survival and betterment of the nation, that goal is now, finally, within the reach of the true believers.
Yet, remarkably, this dramatic change in national direction is being permitted to slip right through conservative fingers by the very people whom those ensconced on the right should be counting upon to bring home this great philosophical victory.
The fulfillment of the conservative dream is not vanishing from sight because Nancy Pelosi and the forces of progressivism are prepared to defend entitlements to the death. Nor is it happening because the President of the United States has counted up the votes and decided that messing with entitlements will cost him re-election.
It is not even the result of “bleeding hearts” like me rising nobly in defense of the needy and downtrodden.
Significant entitlement reform, long the goal of the fathers of modern day conservatism, is being flushed down the drain by the very Republican Party that has long battled to bring that goal to reality.
Somewhere in Connecticut, William F. Buckley Jr. is turning over in his grave.
On Saturday, Speaker of the House John Boehner announced that the ‘grand bargain’ – rumored to bring $4 trillion in debt reduction over the next ten years through a mixture of entitlement reform, defense cuts and a measure of revenue increases resulting from cleaning up the tax code to get rid of some of the corporate entitlement programs that result in lower taxes and higher subsidies – is now off the table.
Apparently, Boehner could not sell the GOP Congressional Caucus on a deal that involved anything in the way of revenue increases- not even in exchange for accomplishing reforms for which his party has fought since the days of FDR and his “New Deal”.
True conservatives should not blame Boehner for this heresy as it appears that he is no happier with the position he is being forced to take than the President is with his proposal being rejected by House Republicans who don’t grasp the whole compromise thing.
What Boehner likely understands – better than those who he is supposed to be leading – is that the GOP is permitting the fundamental change, long at the heart of the conservative cause, to vanish into thin air and that it is happening in the name of protecting corporate subsidies that are the very antitheses of a free market economy – another of the inviolate tenets of conservative policy.
Subsidies that provide government incentives to industry are as anti-free market as government subsidies and controls that conservatives argue have skewed the costs of health care in America and led to our current crisis.
According to American conservative scripture, a truly free market requires that players compete on level ground – not with the edge that comes from government handouts and special tax breaks, whether they be for the benefit of a corporation or an individual.
Thus, the GOP is rejecting the opportunity to accomplish a landmark, philosophical milestone by protecting a policy that is, in and of itself, a violation of that same conservative philosophy.
Is the irony of this enough to make even the most ardent conservative believer question what in the world is going on here?
It certainly should be.
Could the explanation for this odd behavior be that the Congressional Republican Caucus has decided to turn its back on what is supposed to be their most fundamental beliefs because their constituents are demanding that they do so?
Apparently not.
According to the Christian Science Monitor, the GOP Caucus does not appear to have any interest whatsoever in listening to its base.
“Two-thirds (67 percent) approve of making more of high earners’ income subject to Social Security tax, and nearly as many approve of raising taxes on incomes of over $250,000 (66 percent), reducing military commitments overseas (65 percent) and limiting tax deductions for large corporations (62 percent),” the Pew Research Center reported last month.
“Notably,” Pew found, “Republicans are as likely as Democrats to approve of limiting corporate tax deductions.”
Still, any kind of tax increases – whether it be a greater tax bite on the wealthy or on corporations seen as “job creators” – is off the table as far as large numbers of Republican House members are concerned. Via The Christian Science Monitor
So, the GOP rejection of the debt deal is neither based in the free market philosophy nor the fundamental belief in entitlement reform. It is also not based on meeting their obligations to their constituents.
So, what is driving their rather remarkable position?
It must be jobs and the economy.
Surely, the Republicans in Congress are convinced that removing tax subsidies to the oil industry and cleaning up the tax code to get rid of corporate welfare that is no longer of any discernable value to the nation will make what is already a very bad jobs situation even worse.
Except that it turns out that you have to search long and wide to find an economist who supports this notion.
The other argument that advocates of tax cuts for the rich make is that many small-business owners would be see their taxes go up and thus would be discouraged from hiring workers. The facts do not support this. “Only 3 percent of small-business owners are in the top bracket,” notes Roberton Williams, a senior fellow with the Tax Policy Center, which is sponsored by the Brookings Institution and the Urban Institute. And, he adds, “They are not all what we think of as job-creating small businesses. A lot of them are hedge-fund managers and law-firm partners.” So other than perhaps a few restaurateurs on Manhattan’s Upper East Side, the workforce is unlikely to be affected. Via Newsweek
So, while Eric Cantor continues to try and sell his base on this argument, it’s pretty hard to find anyone who knows anything about economics who actually is buying the pitch.
If it’s not philosophical dogma or fulfilling their obligation to those who elected them and it’s not the economy and/or jobs, what exactly is their problem?
I don’t know about you, but I can only think of one other explanation – fealty to the wealthy corporations and wealthy individuals who keep your Republican leadership rolling in the campaign cash so they can remain in their powerful jobs.
Now, if you believe this is a good enough reason to risk the financial stability of the nation – and possibly the world – then it’s all good.
Personally, I’m a little concerned.
I fear we are witnessing one of the most perverse and dangerous games our leaders have ever embarked upon. I’m stunned by the sheer audacity of these elected officials so ready to play chicken with the financial lives of so many simply to benefit a very few.
But what really amazes are the millions of middle class Americans who continue to believe that these officials are somehow acting in their best interest.
As curious as I am to see what will ultimately come of this game, my curiosity is far more piqued by the possibility that these middle class Americans might finally understand that the Republicans they sent to Congress work for the big corporations and care little for their needs and problems.
Should that light bulb (incandescent or otherwise) finally turn on, these folks should be assured that nobody is expecting them to run into the waiting arms of the Democratic Party. They can still quietly send their Congressional representatives a message indicating that they would prefer not to be abandoned so that Exxon might keep the government checks flowing in while maintaining their standing as upright, committed conservatives.
If these folks could – just this once – grasp what is being done in their name and communicate their rejection of the behavior of their leaders, the rest of us would genuinely appreciate it.
A true conservative should be as disgusted with what the Congressional Republican Caucus is doing as the rest of us and probably a great deal more so.
By: Rick Ungar, The Policy Page, Forbes, July 10, 2011
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