Tag: Bush tax cuts

Trigger happy

August 2, 2011 / Gerardo Orlando

I’m watching the coverage of the debt deal, and it’s difficult listening to people like Chris Matthews who manage to sound clueless as they let their emotions overcome their ability to think.

Of course this is a short term win for the Tea Party and the Republicans. They had leverage, as enough of them were crazy enough and dumb enough to let the stalemate continue through August 2nd, risking economic catastrophe.

Also, President Obama took the calculated risk of going for a grand bargain. Those efforts failed, and that made it more difficult in the end game. That said, he earned long-term political points, as the public was educated about the need for a balanced approach and polls show they support that in overwhelming numbers.

Now we move to the new gang of 12 and the next phase of the debt deal. Ezra Klein makes a great point, arguing that Democrats will likely prefer the trigger as opposed to a deal if the GOP won’t budge on revenues.

Start from the premise that Republicans will refuse any deal that includes significant new revenue and Democrats will realize that that’s just fine from their perspective, as Republicans can either cut a deal with them in December 2012 or all of the Bush tax cuts can expire. Now take a good, hard look at the trigger.
The Joint Committee is charged with finding $1.5 trillion in savings over 10 years. The trigger would only cut $1.2 trillion over 10 years. The Joint Committee is likely to cut Social Security, Medicaid and a host of programs Democrats aren’t going to want to touch if taxes aren’t part of the deal. The trigger exempts Social Security and Medicaid, and $1 out of every $2 in cuts comes from the Pentagon. The Joint Committee is likely to cut a deal without revenue, and Democrats will have to explain to their base why they permitted, say, Medicare cuts while letting the GOP reject tax increases. The trigger lets Democrats blame Republicans for protecting the wealthy in the 2012 election.

The trigger would also result in massive defense cuts.

So, if the Democrats prefer a trigger if a deal can’t include revenues, and many Republicans will want to avoid defense cuts, this gives the Democrats leverage!

These details are important, and commentators like Matthews should wait to understand these dynamics before whining about the deal.

Democrats, Economy, Policy, Politics, Polls, Republicans, Social Security, Taxes

Bush tax cuts debt ceiling debt deal debt limit Joint Committee national debt President Obama trigger happy

Debt limit negotiations continue

July 22, 2011 / Gerardo Orlando

Yesterday we saw a flurry of activity and plenty of consternation as the media and politicians tried to figure out what was going on behind closed doors. TPM has a very helpful account of what happened yesterday, and this passage sticks out:

Democrats favored one proposal: if Congress failed to pass tax reform by date-certain, then the top-bracket Bush tax cuts would expire — a hefty stick that would encourage Republicans to cut a deal. Boehner never agreed to that — and now that the grand bargain has been revived, Democrats are worried that Obama has abandoned that trigger, and perhaps his insistence on a trigger of any kind.
Multiple reports surfaced late Thursday that a trade-off might be in the works: Republicans would agree to the tax trigger if Obama and Dems would agree to nix the health care law’s individual mandate — an unpopular, but crucial component of the reforms Obama signed last year. This is precisely the sort of swap House Majority Leader Eric Cantor (R-VA) has argued for recently.
Referring to negotiations with Democrats, Cantor last week told reporters, “Every time the discussion started about, well, Republicans need to raise taxes, I would proffer back, then you put ObamaCare repeal on the table.”
By multiple accounts, Democrats left Thursday’s White House meeting unhappy.

I like this potential deal for many reasons. First, decoupling the Bush tax cuts so that those for the wealthy would expire is a big deal and would be a huge win for Obama and the Democrats. It would be a serious concession from the GOP, and I have no problem with the idea that this happens in the future if it’s locked in. The statement from Grover Norquist yesterday about the Bush tax cuts is a huge tell that the GOP is seriously considering this.

On the individual mandate, this has been the single most unpopular provision of health care reform. If this could be replaced by some kind of annual open enrollment period with penalties for people who don’t buy insurance so they can’t game the system, then this would be acceptable from a policy point of view. It would also be a significant positive from a political point of view, as it would remove the most controversial issue surrounding health care reform and dilute it as a political issue.

The Democrats were quiet last night, which tells me they aren’t out there trying to kill this potential deal, even if they aren’t thrilled about it. I just saw Claire McCaskill just said on MSNBC that she was open to it. Also, as pointed out in the article, Boehner can’t get behind it until the Cut, Cap and Balance bill gets killed in the Senate, so this won’t move in public until after today’s vote.

I will be stunned if a grand bargain actually happens, but if it does it will be a huge victory for President Obama, John Boehner and the country.

Economy, Policy, Politics

Bush tax cuts Claire McCaskill debt ceiling debt limit Eric Cantor John Boehner MSNBC national debt ObamaCare President Obama tax trigger trigger for Bush tax cuts