Memo To Villagers: Obama Won And Raising Capital Through Tax Reform Lost

I've been re-watching the Sunday talk shows again. A segment on CBS's Face The Nation, featuring a panel discussion of Ben Bernake's made-up term, the 'fiscal cliff,' left me asking myself if they thought Republicans won the election, and now

I've been re-watching the Sunday talk shows again. A segment on CBS's Face The Nation, featuring a panel discussion of Ben Bernake's made-up term, the 'fiscal cliff,' left me asking myself if they thought Republicans won the election, and now had a mandate over President Obama on tax increases? Every time I turn on a program it's slanted one way and one way only: Tax reform will appease Tea Party obstructionists in Congress.

That was Mitt Romney's losing position. My God, shoot me. America just had a two-year election cycle that clearly defined raising taxes on the rich and raising revenues to help this country, along with protecting Medicare and Social Security from Paul Ryan. And we're still talking as though the only solutions at hand are the right-wing crap the losers were peddling?

Senator Patty Murray is being attacked by the boneheaded conservative media for saying this:

We just had an election where President Obama ran on that. We increased our majority in the senate with Democratic candidates who said that so solve this problem the wealthiest Americans have to pay their fair share, too.

So if the Republicans will not agree with that, we will reach a point at the end of this year where all the tax cuts expire and we'll start over next year. And whatever we do will be a tax cut for whatever package we put together. That may be the way to get past this.

That's not controversial, or shouldn't be. It's simple common sense. But then, there's nothing sensible about Republican politics these days.

Digby observes the following, after witnessing a similar discussion on CNN also featuring David Gergen:

This is why, my friends, we can't have a nice country. Our top opinion leaders are caught in a feedback loop of misinformation, delusion and self-interest. We just had an election and nobody voted for the president because they wanted to cut vital programs. But that's what everyone says has to happen right now in a lame duck session because congress and the White House over two administrations passed some laws and made some agreements that are all expiring and they are treating those expiration dates as if they were handed down by Moses and can only be fixed if we slash debt immediately. That's nonsense from beginning to end.

I dare you. Find a show and tune in to the Villagers trying to decide our economic fate. Every one will have some form of this discussion on Face the Nation, which was kind of a classic of its kind:

DAVID GERGEN: You can extend it. But, look, the Washington Post on its editorial today pointed out that you can keep tax rates exactly where they are, limit deductions to fifty thousand dollars and you would raise as much basically as you would raise by increasing rates on the wealthy. And that-- that would be a fair compromise, as long as it's accompanied by entitlement reform.

BOB SCHIEFFER: But wouldn't that mean that the President would then be willing to extend tax cuts for the wealthy?

DAVID GERGEN: But at that rate. But with the understanding, it's got to be tied to actual reform. And that's the trick, how do you-- what's the trigger mechanism.

PEGGY NOONAN: And through tax reform they would also be making our impossible, ridiculous tax code more coherent, more efficient, more helpful, which a lot of people would like.


Tax reform, tax reform, tax reform, tax reform. Oy. I'm not saying don't do any tax reforms or simplifying the tax code within the structure of any deal, but it's not the Holy Grail. Well, maybe for conservatives it is.

How about we get the economy rolling again, and balance the budget by pumping up the revenues, eh? That means making the wealthy pay their fair share, narrowing instead of widening the gap between rich and poor in America, and getting more of the national wealth in the hands of more people. Not very Randian -- but it's perfectly American.

(Full transcript below the fold)

BOB SCHIEFFER: --what-- what happens next, David? I mean and let's just talk about this. Unless they find some compromise here, you're going to see these horrendous across-the-board cuts in defense and social programs. You're also going to see these tax cuts expire which means everybody gets a tax increase. Do you think they can do it before the end of the year or will they just kick it down the road?

DAVID GERGEN: I-- I think they can find a way to postpone the fiscal cliff for another six months to a year. I think that's-- that's certainly doable because everybody understands you're going to get tipped into recession and everybody pays a price if you do that. And, you know, they-- they're often dumb in Washington but they're not crazy. And I just don't think they'll let us go over the cliff. The real question to me is can they begin to fashion a bargain that is based on Simpson-Bowles. I thought Lindsey Graham earlier in your show, Bob, was very smart by going to-- to Simpson-Bowles because I think there are going to be Democrats who want Simpson-Bowles or some would disagree with it but the question to me is if the Republicans are willing to take Simpson-Bowles, will the Democrats take it, it's not clear.

PEGGY NOONAN: Yeah, that's a question. You know--

JOHN DICKERSON: And the President-- and can the President sell (INDISTINCT) entitlement--

BOB SCHIEFFER: If they do Simpson-Bowles, Republicans in the House will have to disavow the pledge they took not to raise taxes that they all took.

JOHN DICKERSON: They have a little escape route-- they may have to do that for sure. But the escape route could be through tax reform.

PEGGY NOONAN: Yeah.

JOHN DICKERSON: Which is to say we're not going to-- the rate doesn't change but you remove a lot of deduction so you get some revenue and it gives you a rhetorical way out to say we never raised rates.

DEE DEE MYERS: Well, and the challenge is, you canot do tax reform in the next two months, right?

JOHN DICKERSON: Yes.

DEE DEE MYERS: You-- and-- and the tax rates as they are now expire December 31st on New Year's Eve.

DAVID GERGEN: That's right. That's right.

DEE DEE MYERS: So how do you get to a compromise.

BOB SCHIEFFER: So what--
(Cross talking)

DAVID GERGEN: You can extend it. But, look, the Washington Post on its editorial today pointed out that you can keep tax rates exactly where they are, limit deductions to fifty thousand dollars and you would raise as much basically as you would raise by increasing rates on the wealthy. And that-- that would be a fair compromise, as long as it's accompanied by entitlement reform.

DEE DEE MYERS: It would. And it's what the--

BOB SCHIEFFER: But wouldn't that mean that the President would then be willing to extend tax cuts for the wealthy?

DAVID GERGEN: But at that rate. But with the understanding, it's got to be tied to actual reform. And that's the trick, how do you-- what's the trigger mechanism.

DEE DEE MYERS: And I think you're hearing the President is the wealthy have to pay more. He's not saying rates have to go up. They've been very careful.

DAVID GERGEN: That's right.

DEE DEE MYERS: We heard David Axelrod say the same thing this morning. He didn't say rates.

PEGGY NOONAN: And through tax reform they would also be making our impossible, ridiculous tax code more coherent, more efficient, more helpful, which a lot of people would like.

DEE DEE MYERS: Very successful in 1986 when they lowered rates, limited deductions--

PEGGY NOONAN: It's certainly gross. And Republicans, in fairness, Republicans have been saying for a long time do tax reform, not just a tax hike, do the reform. The rich will pay more if you put a cap of, say, fifty thousand dollars on what they can write off each year. You can work it out.

DAVID GERGEN: Do you think-- my sense is, Peggy, that the President is right if he establishes two principles (a) we have to have more revenue. I think more Republicans are coming around to that. And (b) the rich need to pay a higher proportion. How you get there is-- is a question. But those are the basic principles.

PEGGY NOONAN: But how you-- yeah.

BOB SCHIEFFER: Does anybody think--

PEGGY NOONAN: But how you get there is very meaningful.

DAVID GERGEN: Yeah.

PEGGY NOONAN: One way would be very hard for Republicans; another way would be much more acceptable.

DAVID GERGEN: Exactly. I totally agree.

PEGGY NOONAN: Indeed, many Republicans have been pushing it.

DAVID GERGEN: I agree with you.

JOHN DICKERSON: And-- just back to David's point, you have to figure out the shape of the animal on entitlements.

DEE DEE MYERS: Right.

JOHN DICKERSON: What that compromise is--

DEE DEE MYERS: Yeah, we've forgotten that.

JOHN DICKERSON: --and-- and we're all going to forget the rhetoric of the campaign by the way, where it used to be, if you touched Medicare, you were terrible and horrible. Now everybody's going to be finding a way to--

PEGGY NOONAN: Absolutely.

DEE DEE MYERS: And by the way, there is this whole other question of-- of the sequester, right, which takes effect beginning in January. And so you have to deal with that in the lame duck as well. You have to come up with some kind of a down payment--

DAVID GERGEN: You got to find some way to-- yeah, that's right.

DEE DEE MYERS: --right on those hundred and ten billion dollars in-- in cuts that will take effect in the coming year if something's done.

DAVID GERGEN: Sounds like a lot of fees.

PEGGY NOONAN: Can I have a dream?

DEE DEE MYERS: Yeah.

BOB SCHIEFFER: I will let Peggy have the last word.

PEGGY NOONAN: My dream is that after this election, two things that are a little surprising will happen. One is that the President's approach will be newly magnanimous and eager to make sound history quickly. It will add to his legacy. It will be helpful to the American people. And the Republicans on the other hand will be newly sober and thoughtful and brave and Republican leaders in Washington will come forward and say this isn't a perfect deal but it's a good deal. Move forward.

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