Sunday, July 31, 2011

REALLY? THIS WOULD BE ALLOWED BY THE TEA-LIBAN?

I woke up today to discover that all the smart people are cautiously optimistic that a deal is taking shape, as reported by ABC's Jonathan Karl:

Democratic and Republican Congressional sources involved in the negotiations tell ABC News that a tentative agreement has been reached on the framework of a deal that would give the President a debt ceiling increase of up to $2.4 trillion and guarantee an equal amount of deficit reduction over the next 10 years....

Key elements include:

* The formation of a special Congressional committee to recommend further deficit reduction of up to $1.6 trillion (whatever it takes to add up to the total of the debt ceiling increase). This deficit reduction could take the form of spending cuts, tax increases or both.

Really? Is there even the slightest possibility that tax increases of any kind could get past the Tea-liban?

...* A vote, in both the House and Senate, on a balanced budget amendment.

Wait -- not a requirement that the balanced budget amendment must pass? We're back to something like the old McConnell plan? They just have to vote on it?

And this seems really hard to imagine:

...* If Congress does not approve those cuts by December 23, automatic across-the-board cuts go into effect, including cuts to Defense and Medicare....

Democrats won't like the fact that Medicare could be exposed to automatic cuts, but the size of the Medicare cuts is limited and they are designed to be taken from Medicare providers, not beneficiaries.

Two sources briefed on the framework say the automatic cuts would hit Defense spending harder than Medicare.


Karl goes on to add, regarding those defense cuts:

A Republican briefed on the framework says this will be unacceptable to many Republicans because it could force them to face a choice between accepting tax increases (if that is what the committee recommends) or automatic cuts that would gut the Pentagon's budget.

Exactly. I don't see how this gets through. Maybe Mitch McConnell will deign to allow it to pass the Senate by lifting the filibuster threat, but I still worry that it can't possibly get through the House. Reports of the tea party's isolationism are greatly exaggerated; forced to choose between tax increases and Pentagon cuts, teabaggers are going to say, "Neither of the above, thank you," with a gun to our heads.

And Talking Points Memo's Brian Beutler emphasizes that key senators in both parties acknowledge the possibility of tax increases emerging from this process:

On CNN's State Of The Union, McConnell sought to reassure conservatives that the deal includes no tax increases -- though did not specifically address the scope of the Special Committee. "There are no tax increases in this bill," he said. "There will be no tax increases in this proposal." Emphasis added.

Also on CNN, Sen. Chuck Schumer (D-NY) said the final trigger must include incentives that don't simply allow Republicans to draw a line in the sand over revenues. "What is the sword over the Republican?" Schumer asked.
Well it has to be equal -- the one thing we are certain of, it has to be of equal sharpness and strength. The preference would be some kind of revenues, on wealthy people, on tax loopholes that would be in that. But another alternative, possible, being discussed, no agreement has been reached, would be defense cuts of equal sharpness and magnitude to domestic cuts.

In the past, when the trigger has had significant defense cuts, it's brought the parties to the table and they've come up with a balanced agreement that had both revenues and cuts.

Isn't this suggestion that tax increases could happen going to kill the deal in the House?

Or have fat cats really somehow put the fear of God into enough people to get this through? In other words, have the tea party suicide bombers really been put in their place? Forgive me if I'm skeptical.

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