Sunday, July 10, 2011


The reason I alternately rail against President Obama and defend him against charges of being a Republican in Democrat's clothing is that I genuinely believe he believes he's fighting the good fight, and I also think he's passed up opportunities to just rubber-stamp the Republican agenda -- even though I agree that he's done a very poor job of sticking up for our values. Here's what I'm seeing as I read the news that John Boehner has walked away from negotiations on a "grand bargain": obvious Obama has disastrously allowed this hostage crisis to take place; obviously he's willing to put the core Democratic programs, Medicare and Social Security, on the table; obviously he's willing to accede to other draconian cuts; obvious he's not willing to argue that it's insane to go Hooverite at this moment, or even that, if you're going to go Hooverite, it's crazy the budget cut/revenue increase ratio to be so one-sided in favor of cuts...

... and yet he's fighting for a tiny but crucial bit of liberalism, and that seems to be what was intolerable to Boehner:

...Tax policy disputes were at the center of the collapse, including differences with the White House over President Barack Obama's demand that future tax reforms must maintain or increase the progressivity of the tax code....

Ending oil and gas tax breaks, as well as the favorable "carried interest" capital gains rates used to shelter investor income, would be part of the picture. But reform also would have to contribute its share of new revenues.

Boehner's camp argued that much of this could be accomplished through the extra revenues generated from new economic growth. But it would have been very difficult to cover the entire $1 trillion this way and some net increase in taxes -- perhaps $400 billion -- seemed almost certain, albeit much smaller than the spending cuts Obama was offering.

In this context there was a fear that some tax breaks, such as favorable capital gains, could be jeopardized. And it appears the Boehner negotiators wanted a freer hand than the White House would accept given its insistence that middle- and lower-income tax payers be kept whole.

Progressivity was to be measured by the percentage in after-tax income for each quintile as well as the top 2 percent, and that was a standard that apparently met objections from the speaker's camp.

A Republican familiar with the negotiations agreed that the tax issues were the central issue....

So Obama was talking about a $4 deficit reduction package in which a mere 25% was supposed to come from new revenues and a mere 10% was supposed to come from revenues generated by tax increases -- and those pittances were too much for Boehner, as was an insistence that non-rich taxpayers wouldn't pay a greater share of the tax burden after all aspects of the bargain kicked in. If that's the case, that's a fight for some degree of liberal principle. So I give Team Obama a little credit.

And yet Boehner holds all the cards -- he has nothing to lose by playing good cop and hoping that Obama will give everything away voluntarily, or at least he has nothing to lose by seeming to be interested in a deal, because he knows Democrats, and Obama in particular, will blink first, either just as the debt ceiling is about to be reached or just after the Republicans blow everything up.

Meanwhile, I don't know how the hell Time's Jay Newton-Small can write this, and I'm baffled as to why Steve Benen is nodding in agreement:

...the collapse of the grand bargain leaves President Obama in a more favorable political position. If both parties agree to cut $2 trillion from the budget with minor tax increases....

Right there Newton-Small loses me: Republicans are simply never going to agree to any tax increases. They don't have to. They won't be punished if everything blows up.

...If both parties agree to cut $2 trillion from the budget with minor tax increases, he'll notch a bipartisan accomplishment. But he can also say he tried something more ambitious in putting cuts to Social Security and Medicare on the table without facing the political fallout of actually slashing those programs. He went big and congressional Republicans -- not to mention the noticeably silent 2012 Republican presidential candidates -- didn't. It will be Republicans who will have to justify bowing to the extreme wing of their party and walking away from a deal that included some ten times more spending cuts than revenue increases.

Rhetorically, however, Republicans, particularly Republican presidential candidates, are "going big" -- because in empty rhetoric you can call for anything and it sounds good: Cut trillions and pass a balanced budget amendment and don't vote for a debt ceiling increase and go for a flat fax or a "Fair Tax" or a Fed audit or the abolition of the EPA or an abolition of the capital gains tax or an abolition of the "death tax" or the repeal of "Obamacare" or all of the above, and more.... This is where Republican rhetoric stands now. Low-information voters don't understand the implications of it all; they just know Republicans are promising ponies -- blue-sky promises of balanced budgets and jobs and lower/fairer/simpler taxes -- while Obama, in the real world, possibly accedes to benefit cuts and absolutely doesn't bring the economy back. And God knows what he'll agree to when a debt ceiling crisis is either imminent or at hand. So how on earth is Obama at a political advantage?

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