Washington Post: Obama's Grand Bargain Still On The Table

The Young Turks, March 20, 2012 This is your basic "rock and a hard place" dilemma. For months now, I've warned of Obama's dream of a Grand Bargain and his attempts to cut Social Security, Medicaid and Medicare. Some people still insisted he


The Young Turks, March 20, 2012

This is your basic "rock and a hard place" dilemma. For months now, I've warned of Obama's dream of a Grand Bargain and his attempts to cut Social Security, Medicaid and Medicare. Some people still insisted he was merely playing eleventy-dimensional chess to back Republicans into a corner. Not only is that not what happened, the Washington Post story shows it was even worse than we thought.

And why do I bring this up now? Not to discourage you from voting, but because the time to apply maximum leverage is before you've given someone your vote, not after. Now Rep. Paul Ryan is pushing another plan to cut Medicare, and this time, he's got Sen. Ron Wyden (D-Oregon) supporting his concept. Uh oh, bipartisanship! (As Dave Dayen points out, the most dangerous time that this could happen is during the lame duck session.) The Post reports:

White House officials said this week that the offer is still on the table.

It is absolutely necessary that you tell every single person who asks for your vote that you don't want any cuts to these programs. That includes these Groupon deals - "premium support," as they call it.

You paid for these programs, you expect them to be there when you need them, and you need to let these politicians know that. (Reminder: Medicaid is not only the base program for poor people under the Affordable Care Act, it's also the program that pays for nursing home care for the disabled and elderly.)

Even if it's just your local town council member, you need to send politicians the message to carry back to their state committee meetings that if they and their party aren't there for you, they shouldn't expect you to support them in November. And when someone from the Obama campaign calls and asks, "Are you in?", tell them it depends - on whether the president will protect these earned benefits in their current form.

Via Jonathan Chait in New York magazine:

Last summer, President Obama desperately attempted to forge a long-term deficit reduction deal with Congressional Republicans. The notion that he could get the House GOP to accept any remotely balanced agreement was preposterous and doomed from the start, but Obama responded to the increasingly obvious reality by reducing his demands of the Republicans to virtually nothing.

The Washington Post has a long narrative report about the negotiations between Obama and the House Republicans. The narrative frame of the Post’s account is that Obama blew the potential deal at the last minute. That’s a story that people close to Obama’s fired chief of staff, Bill Daley, have been peddling for a long time. But that conclusion is utterly belied by the facts in the Post’s own account. But let’s put that aside for now, because the facts in the Post’s account support a different and far more disturbing conclusion: Obama was even more desperate to cut a deal than previously believed — dangerously desperate, in fact.

It has previously been reported that Obama had offered John Boehner a series of cuts to Medicare, Social Security, and the domestic budget, in exchange for reducing the top-end tax rates, and to prevent the expiration of the Bush tax cuts, in return for increasing tax revenue (over current tax levels) by about $800 billion over ten years. That is a pitiful sum of new revenue, less than half as much as recommended by deficit proposals by Bowles-Simpson, the Bipartisan Policy Center, and other bipartisan worthies. The blockbuster fact in the Post’s report, which the story does not in any way grapple with, is that even the $800 billion in tax revenue offered by Boehner was not, in fact, $800 billion in tax revenue:

In Boehner’s offer Friday night, the taxes came with strings attached. The Republicans wanted Obama to give up plans to raise the tax rate paid by the wealthiest Americans, now set at 35 percent. Instead, they wanted that rate to go down. They also wanted to preserve low rates for investment income — one of the biggest perks for the wealthy in the tax code — and establish a blanket exemption from U.S. taxes for corporate profits earned overseas.

Another key caveat: Much of the $800 billion would have to come from overhauling the tax code — not from higher tax rates. The Republicans believed lower rates and a simpler code would generate new revenue by discouraging cheating and spurring economic growth. If the White House would agree to count that money, the Republican leaders said, then they might have a deal.

Remember this? Clearly, exempting overseas taxes doesn't do a damned thing for the economy. It doesn't create jobs, and it's just another way of taking our taxes and showering special-interest gifts on the very companies that moved our jobs overseas.

But that's not the most shocking part. He was ready to agree that they would count that lower tax rate as $800 billion in revenue - in other words, classic trickle-down voodoo. "Hey, Barack, here are some magic beans we'd like to sell you!" He was also ready to promise them that the Bush tax cuts for the wealthy would stay.

Now, let’s return to the Post’s version, which is likely to be the official Washington narrative of the negotiations. The Post places great emphasis on the fact that, in the middle of trying to get Republicans to a fantastically generous deal, a bipartisan group of Senators announced their own deal. This one included $2 trillion in higher revenue — in real money, not the imaginary dollars with little pictures of Ronald Reagan ascending to heaven atop the Laffer Curve on them offered up by House Republicans.

At this point it occurred to Obama that he might have a wee problem with his base. “We’d be beat up miserably by Democrats who thought we got out-negotiated,” recalls Daley. (Ya think?) So Obama briefly backtracked, and asked Boehner if he would give him a little more revenue — $1.2 trillion, still far less than all the other bipartisan deals — in return for deeper cuts to Medicare. Boehner refused to respond. Obama responded to the silence by calling back and offering to take Boehner’s previous offer. Boehner replied, “We don’t have time to reopen these negotiations.”

[...]

The obvious reality is that there never has been any way to get House Republicans to agree to a balanced deficit deal. Even the capitulation Obama offered — $800 billion in semi-imaginary revenue, all raised from the non-rich — was too much for them to agree to. Locking in that low level of revenue would have required huge cuts in spending, making a decent liberal vision of government impossible. The Post is making the case that there was a potential deal, and Obama blew it by failing to properly handle the easily-spooked Republican caucus. What the story actually shows is that Obama’s disastrous weakness in the summer of 2011 went further toward undermining liberalism than anybody previously knew.

About Susie Madrak

Comments

We welcome relevant, respectful comments. Please refer to our Terms of Service for information on our posting policy.