I was going to go with a simple “chart of the day,” but felt more (longer post, but bear with me) needed to be said about this (Via Ezra):
What’s going on there?! Apparently, Obama has been willing to give away the store on the Bush tax cuts.
What Obama offered Boehner was an opportunity to take the Bush tax cuts off the table. So though $800 billion in revenue sounds sizable, it’s only half as much in total revenue as the White House’s April proposal, two-fifths as much as Simpson-Bowles wanted, and one-fifth what we’d get if the Bush tax cuts expire next year.
Yowza! But Republicans rejected this. Huge tactical error according to the usual sources. Ezra again:
In rejecting that deal, which liberals would have loathed, Speaker of the House John Boehner (R-Ohio) might have inadvertently saved President Obama from facing a primary challenge. But more to the point, he might have locked in higher taxes down the road. Few noticed that the White House offer of $1 trillion in revenues in return for $3 trillion of spending cuts would have taken the expiration of the Bush tax cuts off of the table. That would mean the tax debate concluded this year, a time when the debt ceiling gives the GOP leverage, rather than next year, when the Bush tax cuts are set to expire and the White House has most of the leverage.
In other words: If Republicans could have agreed with Democrats now, taxes would have gone up by $1 trillion. If they can’t agree with Democrats next year, they’ll go up by more than $4 trillion. And Republicans had a better hand this year than they will next year. I expect they’ll come to wish they’d played it.
To which, one can only ask, “what are the Republicans thinking?!” I’m not expert on things Middle-Eastern, but I’ve heard it said on a number of occasions that the Palestinians had a deal on the table where they got about 95% of what they wanted from Israel, and then rejected it. This seems about the same to me.
According to Ezra, liberals should be grateful to Eric Cantor for killing the deal, as it is full of stuff liberals hate:
Here’s what appears to have been in the $4 trillion deal they offered the Republicans: A two-year increase in the Medicare eligibility age. Chained-CPI, which amounts to a $200 billion cut to Social Security benefits. A tax-reform component that would raise $800 billion and preempt the expiration of the Bush tax cuts — which would mean, for those following along at home, that the deal would only include half as much revenue as the fiscal commission recommended, and when you add the effect of making the Bush tax cuts a permanent part of the code, would net out to a tax cut of more than $3 trillion when compared to current law.
Okay, chained-CPI ain’t the worst thing in the world, but, yes I’m a liberal and I do hate this deal. Thank you Eric Cantor indeed.
Finally, Kevin Drum suggests that he knows what Obama is thinking and that’s the lens through which we need to look:
His primary position is that he really, truly wants to make a significant deal that includes both large spending cuts and moderate (but still substantial) tax increases. Once you understand this, a lot of seemingly inexplicable things suddenly make sense.
So, why is this what Obama wants?
I don’t know all the reasons for this. But my guesses are fairly conventional. (1) Obama truly believes that the long-term debt is a problem, and this is a good opportunity to do something about it with bipartisan cover. (2) He wants Republicans on record as supporting a tax increase. Why? Perhaps he believes that once he’s forced Republicans away from an absolutist position, that position is gone for good and it will make future negotiations less hostile. (3) He’s courting independents, and independents want a deal that gets concessions from both sides.
Hmmm. Sounds about right, I suppose. I think I’d be a lot happier, though, if I felt like Obama sincerely cared more about making the smartest policy choices (and getting people back to work) and less about looking bipartisan and having independents love him.