Boehner's failure leaves Obama with all the leverage

By Michael J.W. Stickings

Two must-read posts from Jonathan Chait (with whom I disagree somewhat on what we should be willing to give up for a deal but who as usual is providing some of the soundest commentary on the current fiscal clusterfuck): 

-- Boehner's Plan B Fails; Inmates Running Asylum

-- House Republicans Again Show Why We Need to Wait Until January for a Deal

Basically, Boehner can't get a deal done, at least not a deal that is remotely acceptable to Democrats and that President Obama will sign, even though the president has put a lot on the table already that arouses the wrath of progressives (understandably, in my view) and event though there's no doubt a Republican-friendly deal could get done (if only they were prepared to allow modest tax increases on the rich).

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Americans side overwhelmingly with Obama and the Democrats on fiscal policy

By Michael J.W. Stickings

I've got this, Speaker. You lose.

Reflecting the right-leaning, Republican-friendly, split-the-difference views of the Beltway media generally, NBC is pumping up a new poll that suggests Americans are hungry for compromise:  

An overwhelming majority of Americans want Congress and the Obama White House to reach a deal featuring both tax increases and spending cuts to avert the so-called fiscal cliff, according to the latest national NBC News/Wall Street Journal poll.

Oh really. So Americans just want each side to give in and meet halfway, because apparently each side is equally right/wrong and perfection can be found right in the middle alongside the Beltway media and its indisputable wisdom? 

Uh, no:

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More "fiscal cliff" bullshit from Republicans and the media

By Michael J.W. Stickings

And really, if you want bullshit (as opposed to all-out right-wing evil), just turn to CNN:

One of the reasons Tuesday night's conversation between President Barack Obama and John Boehner did not go well was because the GOP House speaker sent the White House a fiscal cliff proposal calling for a permanent extension of Bush-era tax cuts for all Americans, including for incomes in the top 2%, a Democratic source said Wednesday.

Democrats took the GOP counter offer to mean that tax reform cannot result in any marginal rates higher than current law, according to the source, who said Boehner's proposal was a "sign" to Democrats that "Boehner and the GOP are unwilling or unable to do any sort of deal that can pass the Senate or be signed by the president."

Democrats favor raising tax rates on wealthy Americans as part of a deal to avoid the year-end fiscal cliff, while Republicans want to extend the Bush-era cuts for all income levels.

A Republican source insists the White House may have misinterpreted the latest GOP offer, since Boehner's offer includes tax reform down the road, which would render anything permanent moot.

Okay. Deep breath.

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No, Boehner, you tell us what popular programs you'd like to cut

By Michael J.W. Stickings

As usual, more ridiculousness from Republicans on the "fiscal cliff":

House Speaker John Boehner (R-OH) said on Tuesday that he was still waiting on the White House to detail what spending cuts President Obama would be willing to make in a potential deal to avert the so-called fiscal cliff at the end of the year.

"Where are the President's spending cuts?" Boehner said in speech on the House floor.

Talk about negotiating from a position of weakness. This is just bullshit posturing. As Greg Sargent notes, "Dems have already agreed to well over $1 trillion in spending cuts in 2011 -- cuts Boehner himself said were significant at the time. By contrast, Republicans have not agreed to a penny in new rates."

Two things are going on:

1) As Sargent suggests, "the idea is to try to blame the White House and Dems for the failure to reach a deal. But polls continue to show that Republicans are losing this PR battle badly."

2) "As for the demand that the White House go first in detailing its spending cuts, this is an almost laughably transparent ruse. As I keep noting, if Dems propose more in detailed spending cuts, Republicans will simply dismiss them as unserious, no matter what Dems offer -- pulling the talks further and further in their direction."

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Is Obama selling us out -- again?

By Frank Moraes 

Ezra Klein reported yesterday afternoon and then again in the evening on The Rachel Maddow Show, that a debt ceiling deal is all but done: the president will take a top marginal tax rate of 37% and raise the retirement age to 67. It sounds outrageous, but Klein makes a compelling case, even though it is very much akin to tea-leaf reading. Basically, he's saying that Obama used to always say the top marginal tax rate must go back up to the Clinton levels and now he is signaling that he would take less. But this isn't new. I noticed right after the election that Obama had started saying that income over a quarter million must be taxed more -- specifically neglecting to mention how much more. So this isn't some sudden change.

Also note that Ezra Klein was completely wrong a couple of weeks ago when he said that fiscal cliff negotiations were all but done -- right before the Republicans made a week long show of how there was no progress on the negotiations. So I'm not at all certain that he is right. But as I said, he makes a compelling case. And if he is right, this is really bad.

Paul Krugman wrote exactly what I think:

First, raising the Medicare age is terrible policy. It would be terrible policy even if the Affordable Care Act were going to be there in full force for 65 and 66 year olds, because it would cost the public $2 for every dollar in federal funds saved. And in case you haven't noticed, Republican governors are still fighting the ACA tooth and nail; if they block the Medicaid expansion, as some will, lower-income seniors will just be pitched into the abyss.

Second, why on earth would Obama be selling Medicare away to raise top tax rates when he gets a big rate rise on January 1 just by doing nothing? And no, vague promises about closing loopholes won't do it: a rate rise is the real deal, no questions, and should not be traded away for who knows what.

So this looks crazy to me; it looks like a deal that makes no sense either substantively or in terms of the actual bargaining strength of the parties. And if it does happen, the disillusionment on the Democratic side would be huge. All that effort to reelect Obama, and the first thing he does is give away two years of Medicare? How's that going to play in future attempts to get out the vote?

He's completely right. If Obama does this, it will indicate that he's been playing us all along. He talks pretty, but he is nothing close to liberal. I wish I weren't so cynical that I didn't believe it entirely possible.
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Wishful thinking

By Mustang Bobby

David Brooks sees a glimmer of hope for the Republicans: 

Over the past month, the Republican Party has changed far more than I expected. First, the people at the ideological extremes of the party have begun to self-ghettoize. The Tea Party movement attracted many people who are drawn to black and white certainties and lock-step unity. People like that have a tendency to migrate from mainstream politics, which is inevitably messy and impure, to ever more marginal oases of purity.

Jim DeMint, for example, is leaving the Senate to go lead the Heritage Foundation. He is leaving the center of the action, where immigration, tax and other reforms will be crafted, for a political advocacy organization known more for ideological purity and fund-raising prowess than for creativity, curiosity or intellectual innovation.

Second, politics is being reborn. For a time, Republican candidates like Richard Mourdock of Indiana proudly declared that they didn't believe in compromise. Political activists spent more time purging deviationists than in trying to attract new converts.

But that mania has passed. There are increasing signs that House Republicans are willing to unite behind Speaker John Boehner so he can cut a deal to avert the "fiscal cliff." There has been an epidemic of open-mindedness as Republicans try to win minority votes and create a version of their party that can be competitive in states like Connecticut and California.

[...]

The Republicans may still blow it. If President Obama is flexible and they don't meet him partway, Republicans would contribute to a recession that would discredit them for a decade. But they are moving in the right direction and moving fast. These are first steps, and encouraging ones.

In other words, when you've had the snot beaten out of you with a sockful of horse manure by an electorate that is tired of your demonization, racism, and xenophobia, it might be a good idea to rethink your business plan. 

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Don't fear the non-existent "fiscal cliff"

By Michael J.W. Stickings 

"WH 'Absolutely' Willing To Go Off 'Fiscal Cliff,'" headlines ABC News, breathlessly hyping the drama:

President Obama's lead negotiator in the "fiscal cliff" talks said the administration is "absolutely" willing to allow the package of deep automatic spending cuts and across-the-board tax hikes to take effect Jan. 1, unless Republicans drop their opposition to higher income tax rates on the wealthy.

Treasury Secretary Timothy Geithner said in an interview with CNBC that both sides are "making a little bit of progress" toward a deal to avert the "cliff" but remain stuck on Obama's desired rate increase for the top U.S. income-earners.

"There's no prospect for an agreement that doesn't involve those rates going up on the top two percent of the wealthiest," Geithner said. 

And you know why Obama and his team are willing to go off the "fiscal cliff"?

Because the president has all the leverage: He just won re-election. The Bush tax cuts are expiring, meaning he can push for popular middle-class tax cuts as part of any deal without giving up too much in terms of revenue. The Republicans are up against public opinion in promoting an extension of the Bush tax cuts for the rich, as well as cuts to Medicare and Social Security, two hugely popular programs. And Obama is much more popular than Republicans these days anyway.

Because it should be fairly easy for Obama to get what he wants without having to give up too much and without forcing the Republican leadership to accept a deal they can't sell to their party (even if the right-wing base pushes back).

Because it just makes more sense to get a deal done in January.

And because... there's no fucking fiscal cliff.

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One good thing

By Mustang Bobby

Paul Krugman comes up with one of the bright sides to heading for the fiscal cliff:

Now Republicans find themselves boxed in. With taxes scheduled to rise on Jan. 1 in the absence of an agreement, they can't play their usual game of just saying no to tax increases and pretending that they have a deficit reduction plan. And the president, by refusing to help them out by proposing G.O.P.-friendly spending cuts, has deprived them of political cover. If Republicans really want to slash popular programs, they will have to propose those cuts themselves.

So while the fiscal cliff — still a bad name for the looming austerity bomb, but I guess we're stuck with it — is a bad thing from an economic point of view, it has had at least one salutary political effect. For it has finally laid bare the con that has always been at the core of the G.O.P.'s political strategy.

This above all is what I think has got the Republicans so worked up. In 2011 they thought they had laid the perfect trap for President Obama in 2012. They figured he would either be a lame duck sitting out the last few weeks of his term after losing re-election, or even if he was re-elected, they could still roll him like they did the last time he extended the Bush tax cuts in 2010.

But he's not falling for it this time and now we have the GOP coming up empty. Better yet, the White House is basically laying their own trap for them: propose deep cuts to popular programs and see who gets to campaign against them with that ammo in 2014. 

(Cross-posted at Bark Bark Woof Woof.)

Dumb, Dumberer, Dumberest

By Carl 

You'd think after having their asses handed to them in the November elections, Republicans might be a little more... flexible.

And you'd be wrong. The Great Orange Satan -- No, not Kos, the other one -- has stopped crying long enough to lash out at working Americans:

U.S. House Speaker John Boehner proposed $2.2 trillion of spending cuts and new revenue that lack what President Barack Obama calls essential for a fiscal agreement: higher tax rates for top-earning Americans. 

Boehner, an Ohio Republican, yesterday called it a "credible plan that deserves consideration by the White House." The Obama administration promptly rejected the proposal, which would raise the Medicare eligibility age and slow Social Security cost-of-living increases. 

[...]

With the Republican blueprint, both parties now have their opening offers on the table. Nebraska Senator Ben Nelson, a Democrat, said the Republican plan signals "act two" in negotiations over the so-called fiscal cliff. "There will be an act three undoubtedly, and hopefully the distance between the bid and ask is closed," he said.

In fairness, at least one of the aspects noted above might make sense, in a perverse way: raising the Medicare eligibility age.

Look, people are going to have to work longer for a bunch of reasons (not least of which is the two major recessions that have triggered on the watch of President Bush, destroying 401(k)s), which means there is a good chance that they'll have private health insurance available to them under Obamacare. By delaying the port over to Medicare, the nation could save billions over time.

Of course, who relies on Medicare but the folks who weren't able to sock away shrinking wages for retirement.

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It's a little game we play

By Mustang Bobby

Is there anyone out there who didn't see this one coming a mile away?

Republicans have rejected President Obama's opening budget bid.

In a Capitol meeting with House Speaker John Boehner Thursday, Treasury Secretary Timothy Geithner submitted the Obama administration's proposal for addressing medium term deficits, and avoiding across the board tax increases and spending cuts at the end of the year.

Republicans called the proposal outlandish and brushed it aside as unserious. But it's almost entirely comprised of policies Obama campaigned on and included in his budget for the current fiscal year. And by satisfying GOP demands that Obama offer up a plan that includes spending cuts, it paints Republicans, who have been reluctant to specify their own Medicare cut proposal, into a tight corner.

The White House formally proposes to increase tax revenues by $1.6 trillion over 10 years by increasing top marginal income tax rates and taxes on both capital gains and dividends, and by limiting tax deductions for top earners, according to Republicans.

I am pretty sure I predicted this in August 2011 when we did this the last time. It would start out with everyone saying that they were sure they could come to an agreement to avoid the imminent threat, then each would come up with something, and the jousting of the talking points would begin. The Republicans would accuse the White House of not being serious (irony and self-awareness not being their strong suit), then they would come back with something equally unserious. Meanwhile the Very Serious People on the cable shows would go back and forth with their chin-stroking about who's at fault and decide it's both sides, even if it isn't. And life goes on as the deadline approaches.

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Republicans reject Obama's initial "fiscal cliff" proposal, but he was right to make it

By Michael J.W. Stickings

The Times reports:

Treasury Secretary Timothy F. Geithner presented the House speaker, John A. Boehner, a detailed proposal on Thursday to avert the year-end fiscal crisis with $1.6 trillion in tax increases over 10 years, $50 billion in immediate stimulus spending, home mortgage refinancing and a permanent end to Congressional control over statutory borrowing limits.

The proposal, loaded with Democratic priorities and short on detailed spending cuts, met strong Republican resistance. In exchange for locking in the $1.6 trillion in added revenues, President Obama embraced the goal of finding $400 billion in savings from Medicare and other social programs to be worked out next year, with no guarantees.

Tax increases (on the rich)? Stimulus spending? No more Republican-made debt ceiling crises? Now that's some change I can believe in. No wonder Republicans immediately rejected the proposal.

So does that mean it was pointless? Absolutely not.


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The neverending tax story

By Mustang Bobby

Ed. note: I just want to point out that the news media's reporting on this has been miserable -- and wrong. As Dan Amira pointed out at Daily Intel the other day, the media are saying that the extension applies only to those who make less than $250,000 a year. This reflects a failure to undersand how taxation, and specifically progressive taxation, works. The extension of the tax cuts on income under $250,000 will apply to all Americans who pay income tax -- because all Americans who pay income tax have income in the $1-to-$249,999 range. The rate will rise (to pre-Bush levels) only on income over that higher amount.

President Obama himself made this mistake in selling his own proposal: "I'm calling on Congress to extend the tax cuts for the 98 percent of Americans who make less than $250,000 for another year." Uh, sort of. The tax cuts will be extended for these 98 percent -- and also for the other two percent. Okay, what Obama said is literally true, and he no doubt framed it that way for political reasons, but the point is that the extension is for everyone. The rich just have to suck it up and pay their fair share on the income that makes them rich.

Now on to Mustang Bobby's post...

-- MJWS

**********

President Obama would like to once again extend the Bush tax cuts, but only for another year, and only on income under $250,000 a year.

(It should also be explained that the tax on $250,000 does not apply to a person's gross income; it applies only to the Adjusted Gross Income, which is what is left after all the deductions and credits and so forth. A person paying taxes on $250,000 would have to gross a lot more than that to qualify. Also, the higher rate doesn't apply to the whole $250,000; only the amount over it. So if your AGI is $260,000, you pay the higher rate on the $10,000, not the whole nut. An additional 3% on $10,000 is $300, which, to someone with that kind of money, is lunch. Also, if you have that kind of income and you haven't got an accountant that can find a way to shelter your income (hello, Mitt), then you deserve to pay whatever the IRS can get out of you.)

As you'll remember, the whole lot of the Bush tax cuts were supposed to expire in December 2010, and the whole idea of them in the first place was that they were to be temporary just to get the economy roaring back when Mr. Bush was president. (Hmm. How'd that work out?) The deal with the GOP to extend them expires in December.

This time the extension of just the cuts for the middle class (making up to $249,999.99 is middle class? Who knew?) is being done for obvious political reasons: it puts the Democrats on the side of tax cuts and forces the GOP be against them since they want everybody -- which to them means more than just the "common people" -- to keep their tax cuts and even get some more because the 35% rate that the wealthy are struggling under is such a horrible burden that they have to send their money overseas to protect it.

Judging from the fuming and the foaming from the Republicans, it looks like Mr. Obama has pulled yet another rabbit out of his hat, at least in terms of campaign positioning: he's on the side of the middle class while Mitt Romney and rich are on the other. It will make for some pretty good ads in Ohio and the other swing states, and it will be up to the Republicans to explain why they're going to vote against it.

Trying to gin up sympathy for the rich? Good luck with that.

(Cross-posted at Bark Bark Woof Woof.)

Interesting strategy

By Carl 

First, let me state my preference: in a perfect world, I'd let the Bush era tax cuts-- all three of them-- expire in full. The Clinton tax structure developed 23 million jobs and it was foolish and foolhardy to risk that kind of growth.

Then we could have talked about the fair share of the rich, rather than listen to them whine of how they pay such a proportionately high percentage of a dishearteningly low national tax burden. 

That said... 

CBS News has confirmed that President Obama will call on Congress Monday to pass a temporary, one-year extension of the Bush-era tax cuts for people who make less than $250,000 a year.

The tax cuts are set to expire on January 1. With Monday's announcement, the president is hoping to show voters a very clear difference between himself and Mitt Romney.

For an election year in a sluggish economy, this is not a bad strategy. It does two things: it maintains the tax cuts for the real job creators (the middle class, who own something like 95% of the small business in this nation and created something like 90% of our jobs) while forcing Mitt Romney to defend lower taxes for the wealthy, who clearly do not create jobs, particularly when their money remains in the Cayman Islands or Switzerland. 

Or in the Hamptons. 

This does force Romney's hand at a time when Congress is in session, albeit a bit on the early side to have much impact in the silly season later. Except that Romney's words had best be chosen very carefully or Obama will use them in the debate.

Obama seems to be a pretty decent lawyer. He's entering evidence now that can be used later at what can only be considered a trial: the Presidential campaign, in which an entire 100,000,000 member jury will weigh each word and then vote precisely how they are told to.

Although, in fairness, people seem to be paying attention already and making up their minds.

In the back of my mind, I see something like $6 to $8 billion being spent by Republicans and their super PAC allies in an attempt to unseat the incumbent. I don't see a lot of jobs being created and I see a romp by Obama in November.

And these are the guys who swear they're smart businessmen?

(Cross-posted to Simply Left Behind.)

The best laid plans of mice

By Carl 

People over a certain age, say twenty, will recall the last time a GOP Congress tried to hold a presidency hostage.

Clearly, overtones of that debacle shadowed Republican obstructionism all year, but as I predicted early on (can't be arsed to do the search, I'm guessing it was late February,) sooner or later events were going to catch up with Weaker Boehner and his faction. The split in the Republican party was too deep for the usual "marching orders" to have much effect.

In the 1995-1996 shut down, the signature moment, when the Republican Congress became the hated enemy and lost the political ground they slowly earned in the 1994 election as well as any moral authority with the Clinton administration, came during a trip to Israel aboard Air Force One for the funeral of Yitzhak Rabin. Newt Gingrich lambasted the president on the record for not taking the opportunity to discuss the budget impact and for making Gingrich exit through the back door of the plane (like every other Congressional leader before and since).

Any negative impact the shutdown had on Clinton's poll numbers immediately shifted to Gingrich and he lost the battle and the war. 

Weaker Boehner has been particularly circumspect when it comes to overt signals like that, and avoiding a shut down in the first place (something that would have angered his constituency more than a small tax hike on the rich, I suspect).

Until now. By walking away from a tax cut, albeit a stop-gap cut designed to allow Congress to head home for the holidays but more important, to give hope to the working people of America, Weaker Boehner has committed the unpardonable sin of not only raising taxes, but taking away a tax cut he himself opposed in the first place, but eventually acceded was a good idea.

Meaning, he's going to get blamed for this failure. Correctly, in my view. It's disingenuous to first oppose, then grudgingly support, then steal back a tax cut, particularly in an era when real Americans are watching every penny. Now he'll have to pass the original tax cut Obama proposed extending (one year) which he vehemently opposed in favor of the two-month stop gap, which he was okay with then, but not now. 

$40 a week matters to people who live paycheck to paycheck and that sadly has become the norm in the American middle and especially working classes. It's a day or two worth of food. It's bus fare for a month. It's a tutor for a child struggling with algebra. It's gas for the car.

Boehner's shortsightedness looks like it may finally have driven a stake deep into the heart of the undead party that is the GOP, as well. He will have to continue to placate the Eric Cantor batwing, while explaining to the Senate Republican caucus, which backed this extension by 83% to 17%, how he could sell them out so readily.

There's a woodshed on the back of which his name is emblazoned, methinks.

(Cross-posted to Simply Left Behind.)

Patriotic Millionaires demand higher taxes on the wealthy

By Michael J.W. Stickings

Very often, patriotism is indeed the last refuge of the scoundrel, as Samuel Johnson said. But sometimes it's genuine -- and sometimes these genuine patriots really do know what their country needs and how they can help.

Via Hullabaloo:

Debt and taxes

By Carl 

It never ceases to amaze me, the ability of the uberrighteous to shoot themselves in the foot: 

Greenspan said he expected more turmoil on Wall Street.

"Considering the momentum in which the market went down over the last week, it's very unlikely — if history is any guide — that this isn't going to take a while to bottom out. So the initial reaction, in my judgment, is going to be negative," Greenspan said of S&P’s downgrade.

Treasury Secretary Timothy Geithner tried to reassure investors in a Sunday night interview but conceded he could not predict the reaction.

"It's hard to know what'll happen in this context," Geithner said on CNBC. "But, again, I think that everyone can be confident, both here and around the world, that treasuries are the most — these days — the most liquid — the strongest place to put your money at a time like this."

He said S&P "has shown really terrible judgment" and "a stunning lack of knowledge about basic U.S. fiscal budget math."

Actually, Mr. Secretary, I think the S&P has this just right. After all, it's a temporary arrangement that will have to be revisited sooner than you expect, since the Federal tax on gasoline expires next month and budget projections included that in the debt ceiling agreement. It is very likely that tax will be at least scaled back if not eliminated, thanks to the Teabaggers. You can't say this. S&P can.

We get the government we deserve. We are officially a banana republic.

A lot of fingerpointing went on this weekend, but ultimately, the blame rests in two places: The Bush administration and the Teabaggers.

After all, the only significant spending the Obama administration passed was the $787 billion stimulus package, a thickly-wrongheaded attempt to shore up the banking system when that banking system was responsible for the mess we found ourselves in AND will suffer now from the debt ceiling debacle, as interest rates will ratchet up.

Better he should have spent the money here, at home, on works projects designed to get people permanent jobs. There's so much we can use idle labor for, from replacing the national grid to upgrading bridges and tunnels, to just cleaning the damned streets. Jobs = income = spending = more jobs. It's not a hard calculation to make, and given how the banks rebounded better than expected...

How the Bush administration fits into all this? Well, the national debt in 2001 was somewhere around $6 trillion. It's now $14 trillion. Obama can rightly be blamed for $1 trillion or so (let's credit -- debit? -- him with the unnecessary extension of the Bush tax cuts, too), leaving... carry the one... $7 trillion dollars that Bush spent without the income to show for it.

Republicans: they do spend big.

The Teabagger mantra with respect to the debt ceiling was basically nihilist from the get-go: burn it down, let God sort it out.

All we have ever had to do was to roll back the Bush tax cuts, restore the Clinton tax rates (proven job creator, that) and history would have been happy and marked this as a remarkable time when the US yet again ducked a bullet. The idea of minimalist government is so ludicrous, so stupid, so moronic, that I seriously believe the "libertarians" who propose this ought to be locked away in a cage and put on display in the Coney Island freak show.

(Cross-posted to Simply Left Behind.)

On vacation, full of debt ceiling rage

By Michael J.W. Stickings

I'm currently on vacation and won't be blogging all that much over the next few weeks. Here and there, when the mood is right, but otherwise not. Rest, relaxation, and family are the priorities.

But, fear not, Richard and the gang will keep things rolling, and so I hope you keep checking back for new posts from my wonderful team.

Actually, though, I'm full of rage at the moment. I'm generally trying to avoid the news, and especially U.S. politics, but, well...

What has me enraged? The Deal, of course.

Yes, the new bipartisan deal to avert default by raising the debt ceiling and, to please Republicans, slash spending (of course, mostly spending that benefits the poor and downtrodden, the usual GOP targets, those no one in power seems to give a shit about).

Now, it's not yet a done deal. President Obama and the Democratic and Republican leadership have agreed to it, but not the rank and file -- and there are sure to be many on both sides who object to it.

Democrats have good reason to object. The deal is heavily Republican, a largely right-wing fix to a crisis created by Republicans. It's all about cuts, not revenue increases, and cuts that, again, will hurt those Democrats supposedly care about. Some Republicans will object as well, but only because -- let's put it kindly -- they're a bunch of petulant extremists who refuse to compromise and who are willing to let the country go into default, and face economic calamity, to get everything they want.

In fact, it has come to this largely because Republicans, from the top down (the leadership included), are bullies crazy enough to risk the country's health, so "patriotic" are they, having basically held the country hostage throughout this entire process.

Sure, I'm deeply critical of Democrats, including the president, for not fighting harder to prevent this, and for not standing up more determinedly for what they purportedly stand for, but, honestly, what were they supposed to do? Let the country go into default? Let the debt ceiling deadline pass, come what may? Sure, maybe. Maybe they could have spun that and kept the blame on the other side, and even come away with a political win, and maybe the impending crisis and public outcry would have forced Republicans back to the negotiating table with their tails somewhat between their legs, but... should they really have taken such an enormous risk?

Maybe Republicans were always going to win this, maybe it was inevitable, because all along they were willing to go further and risk more. That's the problem trying to negotiate with crazy people. They're willing to do things you're not. (Isn't that how Keyser Söze solidified his power?) In this case, Republicans were willing to sacrifice their country for their ideological demands. Democrats, being mature and rational and responsible, were not. And so they had to agree to a deal on Republican (i.e., insane) terms.

There was a brief time when Obama had the upper hand, after he had turned the tables on Republicans and back them into a corner, and with public opinion on his side, but he was only going to win this if he went all the way. And, say what you will about him, he wasn't prepared to play that game, not with so much at stake.

I suspect the deal will pass tomorrow. There will be major defections, but surely enough arms can be twisted, enough dissenters bought off, to make it happen.

And then? Crisis will have been averted, at least temporarily, but Republicans will declare victory -- for getting most of they want (loads of cuts, no new revenue).

The Democrats? They'll get nothing out of this politically.

Obama? Yes, probably. He'll be able to reinforce his credibility among independents by presenting himself as a bipartisan leader who got it done when it mattered (no matter the awful details of what got done).

But unless Democrats can gain control of the narrative and make the debate about ending the deeply unpopular Bush tax cuts for the wealthy and protecting deeply popular entitlement programs (Social Security, Medicare, etc.), this deal won't do them any political favors next year, with with Republicans set to hammer them, however dishonestly (as usual), for being tax-happy, spend-happy socialists.

At least for now, there is reason for cautious, extremely cautious optimism. The deal would allow the president to raise the debt ceiling by $2.4 trillion (with $900 billion in spending cuts):

That will be paired with the formation of a Congressional committee tasked with reducing deficits by a minimum of $1.2 trillion. That reduction can come from spending cuts, tax increases or a mixture thereof.

If the committee fails to reach $1.2 trillion, it will trigger an automatic across the board spending cut, half from domestic spending, half from defense spending, of $1.2 trillion. The domestic cuts come from Medicare providers, but Medicaid and Social Security would be exempted. The enforcement mechanism carves out programs that help the poor and veterans as well.

If the committee finds $1.5 trillion or more in savings, the enforcement mechanism would not be triggered. That's because Republicans are insisting on a dollar-for-dollar match between deficit reduction and new borrowing authority, and $900 billion plus $1.5 trillion add up to $2.4 trillion.

However, if the committee finds somewhere between $1.2 and $1.5 trillion in savings, the balance will be made up by the corresponding percentage of the enforcement mechanism's cuts, still in a one-to-one ratio.

Democrats say they're confident that the enforcement mechanism is robust enough to convince Democrats and Republicans to deal fairly on the committee -- to come up with a somewhat balanced package of entitlement reforms and tax increases. However, the White House assures them that if the committee fails to produce "tax reform" he will veto any attempt to extend the Bush tax cuts, which expire at the end of next year.

Again, the focus is on spending cuts, not revenue increases, but at least cuts to defence spending are on the table and at least it's possible that revenue increases will be part of any future deal.

Actually, scratch that. I'm still highly enraged. And there's really no good reason for optimism at all, even cautious optimism. Obama may want to use the Bush tax cuts for the wealthy in his re-election campaign, as a winning issue (assuming public opinion stays roughly where it is), but he has shown little to no willingness to stand up for progressive principles -- indeed, for principles that are simply not Republican, so much of a moderate Republican does he appear to be -- and, what's more, neither have most Democrats on Capitol Hill, it seems.

All of which is to say, if Obama and the Democrats have been willing to cave so much already, what should make us think anything will change?

The right-wing obsession with President Obama's "obsession" with raising taxes

By Michael J.W. Stickings

We're hearing it all the time from Republicans these days: Obama's "obsessed" with raising taxes. It's the same old tired partisan bullshit, of course, and a blatant lie, but the uninitiated, those unaware of how Republicans do their thing, might be excused for thinking, upon hearing this over and over again, that the president is maniacally trying to transform America into some sort of retro-Scandinavian dystopia, Scandinavia before right-wing neo-liberalism arrived on the scene.

Take James Pethokoukis, for example. In his latest smearfest of a post at Reuters, Pethokoukis opens, as usual, by stacking the deck against reasonable debate and an appreciation of the facts:

It's the great mystery of the debt ceiling debate: Why is President Barack Obama so darn adamant about raising taxes?

Really, that's "the great mystery"? Well, I suppose it's no mystery why Republicans, even those who should know better (and probably do) have caved in to the Tea Party and are pulling the country towards financial, fiscal, and economic catastrophe.

But how exactly is Obama "so darn adamant"? Dismissing progressives altogether, not to mention his party's base, the president has responded to the debt ceiling crisis by playing aggressively to the center. He has put Social Security, Medicare, and Medicaid on the table, much to our chagrin. He continues to negotiate with a Republican Party that refuses to compromise and that is essentially holding the process -- and the country -- hostage. Indeed, he appears to have positioned himself not as some sort of Big Government leftist (not that such leftists even exist anymore in the Democratic Party, or on the American left at all, they're just straw men created by the Republicans to scare people) but rather as a moderate Republican, as the sort of Republican who used to run the GOP. If this were the '90s, Obama, at least on economic policy, would be very much at home there.

Even now, even with Republicans doing poorly in the polls over the debt ceiling crisis, even with Republicans divided and on the run, even after he turned the tables and backed them into a corner, gaining the upper hand, Obama continues to push for a Grand Bargain that includes massive spending cuts and only relatively small revenue increases (mostly by closing tax loopholes, not by actually raising taxes). The so-called Gang of Six re-emerges yesterday with a $3.7 trillion deficit-reduction package, a package that while bipartisan is Republican in terms of its priorities, a package that if passed may not actually benefit him politically, and Obama showers it with praise.

Now, maybe Obama is being so kind to it because he knows it will never pass the GOP-led House of Representatives, and so maybe he's still just trying to appeal to independents by presenting himself as open to compromise and serious about getting something meaningful done -- and so when the package goes nowhere he can let Republicans take the fall for sinking it. But he's been pretty consistent on the policy and at no point has he even come close to appearing obsessed with raising taxes. Not now, not before, not ever.

If anything, Obama is just being responsible. He knows full well, even if Republicans do not (and Pethokoukis does not), that the only way to solve America's deficit/debt problem over the long term is to increase revenue. And that can be done in part by closing loopholes and letting the Bush tax cuts, and particularly the Bush tax cuts for the wealthy, expire. Though of course it was Obama who agreed with Republicans last fall to extend the tax cuts.

Pethokoukis also accuses Obama of violating Keynesianism by calling for tax increases. Well, I agree that the focus should be on economic stimulation (deficit spending) instead of deficit-cutting, but, again, Obama hasn't called for anti-stimulative tax increases. If anything, Obama wants more stimulus.

Obama's tax obsession becomes understandable when you realize the long game he's playing: Big Taxes to fund Big Government. Decade after decade. See, it's an almost universal belief among left-of-center journalists, economists, policymakers and politicians that Americans must pay higher taxes in coming years to cover the medical expenses of its aging population – not to mention all sorts of brand new social spending and green "investment." Dramatically higher taxes. On everybody. And if we have a debt crisis, maybe those tax increases come sooner rather than later.

This makes no sense at all. Across the board, taxes are at an extremely low level. Raising them slightly -- for example, by letting the Bush tax cuts expire -- would only mean a return to Clinton-era levels. And that was hardly an era of Big Government Socialism. In fact, it was a rather successful era for the economy. And if Obama's agenda is really all about "Big Government," what are we to make of his willingness to cut core entitlement programs? Is it all about health care? About, say, funding a government-controlled single-payer system? How could it be, given that the Affordable Care Act, while extending coverage to tens of millions, proposes only a reformed market-based approach to health insurance? Green investment? Please. Obama isn't even talking cap and trade anymore, and that, too, is a market-based approach to reducing greenhouse gas emissions, one that Republicans used to support (just as they used to support what's in the Affordable Care Act).

Okay, enough. I think you get the point. (If you don't, you need help.) Pethokoukis is just regurgitating the same old lies, the Obama-as-tax-loving-Socialist meme that has no basis whatsoever in reality.

If you really want to talk about obsession, look no further than these anti-Obama smearmongers on the right. They just keep repeating themselves, and looking increasingly desperate and stupid in the process.

Bush tax cuts cost $329,220 for each job created

Guest post by Publius

The Bush tax cuts cost $329,220 for each job it created. That, according to the math recently employed by The Weekly Standard in its analysis of the cost per job from Obama’s stimulus package.

The Weekly Standard argued that because the overall cost of the stimulus to date is $666 billion, and the number of jobs created since the stimulus was passed (according to the low estimate by the Council of Economic Advisors) is 2.4 million jobs, the cost per job from the stimulus equals $278,000 per job. The Weekly Standard went on to note that we could have simply written a check for $100,000 to everyone whose employment was allegedly made possible by the stimulus and come out $427 billion ahead.

Sounds pretty bad, right?

Well, using the exact same formula, the Bush tax cuts passed in 2001 were estimated by the Joint Committee on Taxation to cost about $864.2 billion from 2001-2008 (the first year of the Bush tax cuts through the last year of his presidency). During that period, according to The Wall Street Journal, 2,625,000 jobs were created. That comes out to a total cost of $329,220 per job under the Bush tax cuts. And that’s if we assume that every single job which was created during Bush’s presidency was attributable to the Bush tax cuts (pretty unlikely) AND if we exclude the costs of the 2003 tax cut (estimated to cost another $350 billion over 10 years). We could have written a check for $100,000 to each person who “allegedly” had their job created by the Bush tax cuts and saved $600 billion, but they wouldn’t have received it because the check was instead delivered to really wealthy people.

My point isn’t that the Obama stimulus was good because the Bush tax cuts were bad. Instead, my point is that the math employed by The Weekly Standard is absurd. This example highlights the absurdity.

It’s wrong to suggest that the sole purpose of the stimulus was to “buy jobs.” If that was the sole purpose, then yes- the cost would arguably have been $278,000 per job. As White House spokesperson Liz Oxhorn noted the other day, however:

[The Weekly Standard] study is based on partial information and false analysis. The Recovery Act was more than a measure to create and save jobs; it was also an investment in American infrastructure, education and industries that are critical to America’s long-term success and an investment in the economic future of America’s working families. Thanks to the Recovery Act, 110 million working families received a tax cut through the Making Work Pay tax credit, over 110,000 small businesses received critical access to capital through $27 billion in small business loans and more than 75,000 projects were started nationwide to improve our infrastructure, jump-start emerging industries and spur local economic development.

The concept of the stimulus was grounded in Keynesian economic theory- government countercyclical spending is critical to countermand the effects of a recession. Increased government spending increases GDP, frees up capital and, consequently, creates jobs. Jobs are part of the benefits of stimulus. They aren’t the direct purchase.

By most metrics, the stimulus was a success. According to the CBO, the stimulus increased GDP by 3.1%. It added as many as 3.6 million jobs to boot. It gave us new factories, roads, bridges, and other infrastructure which we benefit from each day. Boiling all of this down to a cost per job is just silly.

The Weekly Standard would also be wise to note that about $288 billion of the projected $747 billion stimulus came in the form of tax cuts (about 38.5% of total spending), despite the fact that according to many prominent economists (such as Mark Zandi), tax cuts are far less stimulative than other types of spending, such as food stamps, unemployment benefits and infrastructure spending (all of which Republicans opposed).

If The Weekly Standard wants to argue the stimulus could have been more effective, it won’t find many on the left who disagree. If it wants good ideas on how to make it more effective, step one is to stop believing tax cuts are the best solution to all economic ills.

(Cross-posted at The Fourth Branch.)

How you know Republicans aren't serious about tackling the deficit

By Michael J.W. Stickings

Is it when they fall in line behind their chief budget guru, wunderkind Rep. Paul Ryan, who once said the deficit was "too small" and now supports the Bush tax cuts, and especially those for the wealthy, that are perhaps the greatest impediment to addressing the deficit problem in a meaningful way?

Yes, sure.

But it's also when they pull out of bipartisan budget talks because, really, they have no interest at all in compromise given their extremist right-wing position on taxes:

After House Majority Leader Eric Cantor (R-VA) dropped out of the talks [yesterday] morning, Senator Kyl was the lone Republican in the group left. And with his withdrawal late [yesterday] morning, the group does not have a Republican negotiator left in the room.

That's right. Zero Republicans. There's what Republicans think of bipartisanship. And about tackling the deficit.

Although, I should say, a few Republicans realize that they have to be at the table and have to work constructively with Democrats to get something done -- or at least have to make it appear as if they're serious:

A Senior Democratic aide says, "Cantor and Kyl just threw Boehner and McConnell under the bus. This move is an admission that there will be a need for revenues and Cantor and Kyl don't want to be the ones to make that deal."

There you go. If only future generations of Americans could express their disgust. They're the ones, after all, who will be left with this mess.

Way to put your country before your partisan agenda, Republicans.