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In Case It Wasn’t Already Obvious

[ 193 ] November 9, 2012 |

The best way to play the budget negotiations is to let the Bush tax cuts expire and use the resulting leverage to get something relatively favorable to liberal interests. The fact that Erskine Bowles is advocating the opposite approach should be all the proof necessary for this propositon.

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  1. rea says:

    Well (1) it’s all very well to get enthused about raising taxes and cutting defense, but remember, we’re playing with antistimulus here. December 31 may not be a hard deadline, but this msut be resolved, or we’ll crash the economy.

    And (2) do not forget that although letting this go beyond December 31 may not be catastrophic, there are going to be real people having a hard January if we take that course. People whose unemployment benefits have been cut off; people whose food stamps have been cut.

    • mark f says:

      I’m very much enjoying know-nothing fiscal cliff panic from the same people who’ve spent the last four years screeching about the deficit, though.

    • JKTHs says:

      There’s a push-pull dynamic here though. The Administration has the authority to put off the effects of the tax increases and spending cuts (withholding tables, how they actually dish out money) which would take away the anti-stimulus but would also take away the sense of urgency from Republicans

    • mpowell says:

      I don’t know about benefits, but it’s a pretty minor inconvenience as far as tax increases go. The only thing that can have an immediate impact is payroll taxes. And even those can be dealt with retroactively if desired. It certainly doesn’t seem worth it to give up much negotiating ground- certainly nowhere near what the Republicans are demanding.

    • david mizner says:

      Yes, the GOP, having won such a huge victory on Tuesday, should be able to call the shots again.

      it’s not a cliff – the economy can absorb the expiring measures for a few weeks or even a few months. In fact, OMB can structure the sequester cuts so they have no immediate effect, and Treasury, in anticipation of a resolution, can even freeze withholding rates, so the tax changes have no immediate effect. There’s simply no reason to bind to anything in the lame duck session, given the leverage points in the system.

      More than that, in economic terms, moving forward on austerity is absolutely insane. The relative lack of austerity and continued budget deficit in the United States, mostly due to gridlock, has kept the economy ahead of competitors. To the extent that there has been softness in the economy, it can be directly attributed to austerity – fiscal policy at the federal, state and local levels have actually dragged on growth since mid-2010, though not as much as it would if we let all these fiscal policies expire.

      John Boehner doesn’t want a deal hammered out in the lame duck, but he wants a framework put in place for tax and social insurance program reform, with the only tangible elements to be a “down payment” of $100 billion in spending cuts. In other words, his plan to react to a winning Democratic election is for Republicans to dictate more spending cuts.

      http://news.firedoglake.com/2012/11/09/pressure-increases-for-a-grand-bargain-without-any-policy-rationale/

      • The problem with this reasoning is that “moving forward on austerity” is what happens if there is no deal struck.

        Did you miss that part? Do you understand what this issue is about at all?

        • david mizner says:

          Yeah, I missed it, along with dumbass Krugman.

          Mr. Obama should hang tough, declaring himself willing, if necessary, to hold his ground even at the cost of letting his opponents inflict damage on a still-shaky economy. And this is definitely no time to negotiate a “grand bargain” on the budget that snatches defeat from the jaws of victory…

          the president is in a far stronger position than in previous confrontations. I don’t place much stock in talk of “mandates,” but Mr. Obama did win re-election with a populist campaign, so he can plausibly claim that Republicans are defying the will of the American people. And he just won his big election and is, therefore, far better placed than before to weather any political blowback from economic troubles — especially when it would be so obvious that these troubles were being deliberately inflicted by the G.O.P. in a last-ditch attempt to defend the privileges of the 1 percent.

          Most of all, standing up to hostage-taking is the right thing to do for the health of America’s political system.

          So stand your ground, Mr. President, and don’t give in to threats. No deal is better than a bad deal.

          The good news is, you’re not negotiating with Republicans, cause you would have already surrendered.

          • Oh, I see: all your bitching over the past four years about Obama’s insufficient Keynesianism was bullshit.

            The good news is, you’re not negotiating with Republicans, cause you would have already surrendered.

            See, when anyone else trades one liberal goal for another, or accepts half a loaf, it’s “surrender.” When david mizner does it, it’s the height of stout-hearted principle.

            Was their ever a time you weren’t a dishonest hack, and actually stuck to a principle you’ve been advocating?

            • david mizner says:

              Jeez, I’d hate to see how scared you would be of the GOP if they’d actually won this week. Why don’t you just go crawl under your couch.

              • Says the guy who keeps insisting that we go along with the spending cuts the Republicans demanded last July.

                Avoiding austerity is now surrendering to Republicans, says the guy who spent the last three years claiming that adopting austerity was surrendering to Republicans.

                Do you ever have any constant beliefs? Or do you always flip-flop like this?

                • david mizner says:

                  We shouldn’t even try to win a political showdown against the GOP — they’re so strong and manly.

                • Win a political showdown against the Republicans?

                  You mean like in July 2011, when Obama entered into negotiations with them?

                  You are a cretin when it comes to political tactics, david. You should just observe when these arguments take place. Maybe you’ll learn something.

                • DocAmazing says:

                  I thought that we had already established that the “11-dimensional chess master” thing was a crock, and that Obama benefitted from having morons for opponents.

                  Did I not get the memo?

            • Jay B. says:

              Wait, so the pre-emptive move here for Obama is to cave already? Thanks, Joe. I appreciate the windsock.

              • Timb says:

                Yeah, I appreciate David makes your blood boil and all, but there is no cliff, only an artificial deadline which gives Democrats MORE leverage. Why would you think that is austerity?

          • along with dumbass Krugman.

            Krugman is great on policy, but when it comes to political tactics, he’s almost as bad as you.

  2. newsouthzach says:

    I loved this, from the linked WSJ editorial:

    Our sources say that to get past these immediate deadlines, Mr. Boehner will ask Mr. Obama to maintain the Bush tax rates for at least another year, ease the sequester for defense in particular, and in return GOP House leaders will be open to giving the President new revenue. Then the two sides can negotiate the bigger tax and entitlement questions next year.

    So, if the Democrats preemptively give the Republicans everything they want, they get a promise from Boehner that the Republicans will negotiate in good faith over exactly how much of the welfare state to dismantle. Sounds like a great plan to me!

    • somethingblue says:

      Well, plus a shiny nickel (“new revenue”), if he gets their shoes really clean.

    • NBarnes says:

      So…. Boehner wants Obama to maintain the Bush tax cuts, ease the sequester, and in return…

      Boehner ‘will be open to giving’ Obama new revenue.

      Well, gosh…

      And given how little control Boehner has over the GOP caucus in the House and how much comfort the GOP is taking over having the House be the only place they did well (nice work on the gerrymandering there, Rs), how likely is it that Eric Cantor is going to rush out to compromise on taxes?

      • LosGatosCA says:

        In Boehner’s defense, two pieces of information:

        1. His tactic worked before (Bush cuts renewed, no new revenue)
        2. There’s no downside to trying it again.

        One problem I see (repetitively with Democrats) is that some people do not understand the difference between negotiating tactics and expected outcomes. Like a strike threat by a union to gain a negotiating edge. The goal is not to lose wages, it’s to use the threat of lost wages and consequential lost revenue and profit to the business as leverage for them to negotiate in good faith. But if the business thinks the union will never strike (make the sacrifice) then the strike threat is empty.

        Doing nothing in the lame duck is the same as getting strike authorization from the bargaining unit. Republicans will only bargain with the proverbial ‘gun to their head’ if then, even. So Democrats need to put the gun to their head and see what happens.

    • JKTHs says:

      And $20 says that new revenue can only come from the magic of dynamic scoring.

  3. The first hint we might get of where Obama’s heading on this might be the new Treasury Secretary. By all accounts TIMMY! wanted out a while ago, and we should get at least a nomination long before the, ahem, “cliff”. If it’s Bowles himself or some other leathery deficit dimwit, batten down the hatches.

  4. rea says:

    The real question (which might have a different answer in the new Congress) is whether the Republicans are still going to play the obstruction game, or whether there are any of them seriously interested in a functioning government and economy. It would not take all that many defectors to get a reasonable program through the House . . .

    • Richard says:

      Here’s the problem. I dont see any Republican House members who are going to defy the leadership to make a deal with the Democrats. That means making a deal with Boehner.

      And some other inconvenient truths:

      1. Tuesday was a great day but Obama’s margin of victory (2.5%) was about 40% of his margin of victory (7%) four years ago.

      2. The Democrats picked up only a handful of seats in the House and are twenty seats away from a majority.

      3. If all the tax increases, payroll tax increases and spending cuts go into effect next year, the economy is very likely to go into a recession. The payroll tax increase will be felt early in January.

      4. If the economy goes into recession or is still struggling with near 8% unemployment two years from now, the Republicans will keep the House and likely gain the Senate.

      I’m hopeful for a deal that we can live with but this is not going to be easy and no way the President can just steamroll the Republicans.

      • NonyNony says:

        Tuesday was a great day but Obama’s margin of victory (2.5%) was about 40% of his margin of victory (7%) four years ago.

        This is actually probably far more meaningless than anyone is willing to talk about.

        GOTV in 2008 hit every state. GOTV in 2012 was really limited to swing states. Take a look at Ohio’s numbers (as reported by CNN here and here):

        2008 – Obama 2,933,388; McCain 2,674,491; 100% votes tallied and reported
        2012 – Obama 2,697,308; Romney 2,593,789; Estimated 90% of votes tallied and reported

        Which looks like a big drop off for Obama – except oh wait. Not all of the votes have been counted yet. If the estimate of 90% is correct, then there is an additional 530,000 votes to add to the two totals. And of course we don’t know where those missing votes are from – so it isn’t terribly safe to try to assign them (They could all be from Cuyahoga, Hamilton and Wood counties – and break for Obama – or they could be from rural areas and break for Romney). Even if we apply a break that gives Obama the same proportion that he’s already won, that gives him roughly an additional 264K votes – which puts his vote total right up where it was the last time (and incidentally says that Romney outperforms John McCain).

        So if he didn’t lose votes in Ohio where did all of those lost votes come from? From the non-swing states where nobody invested GOTV energy.

        Unfortunately in this country the popular vote is meaningless – so trying to judge a mandate from the fact that Obama lost some proportion of the popular vote he won last time around is equally meaningless.

      • Timb says:

        There is little to no danger that the American people will stop spending money in January when the payroll tax that 90% of them don’t know they have expires. There is danger that the pain caucus can scare the rich and journalist class to being scared over nothing, but that pain will be short-lived.

    • Timb says:

      I like tis new and hope-filled rea, but I don’t see how it survives the next 6-8 weeks.

  5. NonyNony says:

    The best way to play the budget negotiations is to let the Bush tax cuts expire and use the resulting leverage to get something relatively favorable to liberal interests.

    I like this idea in the abstract, but considering that the Republicans don’t give a rat’s ass about middle class tax cuts, I’m not sure what leverage the Democrats actually have with the House.

    Maybe I’m misreading the situation, but here’s a scenario that at least seems plausible:

    1. Everything expires as it is set to do. Panic sets in among the WaPo editorial staff.
    2. Democrats propose a package that includes setting some military spending levels back to where they were and restoring tax cuts for all but the top rates back to where they were before the Bush tax cuts.
    3. Republicans in the House round up enough obstruction to say that they want all that plus a massive cut in the top rate plus a unicorn, a resignation letter from Barack Obama on their desks in the morning, and a player to be named later.
    4. Democratic “centrists” negotiate long and hard and finally whittle them down to just the cut in the top rate, the resignation letter, and the unicorn, along with massive cuts to Medicaid and Social Security (since they had to cut a deal to get rid of the player to be named later).
    5. John Boehner shows up drunk and crying on my television.

    I have to joke or else I’ll cry, but honestly – I don’t trust that this House actually honestly believe in Tax Cuts Uber Alles. I think they believe in Tax Cuts For Me and Mine, And If You People Get Some Too Then You Should Kiss My Ring And Thank Me.

    I think some analysts are far, far too sanguine about Republican willingness to cut taxes when the tax cuts aren’t on their terms.

    • JKTHs says:

      This sounds about right. The Democrats will negotiate 75% of the way to the Ryan plan and claim victory.

    • rea says:

      I don’t trust that this House actually honestly believe in Tax Cuts Uber Alles

      I don’t think all that many of them actually believe in anything, other than getting elected. 2010 persuaded them that maximum obtruction was the path to victory. Afer Tuesday, maximum obstruction may not be looking quite as good–although, unfortunately, the House Republicans (with a couple of exceptions) were not the ones who got punished.

      • catclub says:

        well, 2010 could have taught them that obstructing as much as a rump minority can, gets them big wins in 2010, but actually obstructing with a majority gets them losses in 2012, but I doubt they see it that way.

        • NonyNony says:

          You mean that the lesson that they should have learned is that when you are the opposition party you should act like an opposition party, and when you are a governing party you should act like a governing party?

          Yeah – the modern GOP is incapable of learning this lesson because they don’t believe that the government should actually govern.

          Much like the Democrats seemed incapable of learning this lesson from the opposite side when the Republicans had power.

  6. …or at least, credibly threaten to to let the Bush tax cuts expire and use that leverage to get something favorable to liberal interests.

    The Republicans proved in the 2010 lame duck budget deal that they’re willing to sell their mommas to get the upper-income tax cuts extended for a measly two years.

    What should we want more? Two years of higher taxes for rich people? Or their mommas?

  7. Larry Lennhoff says:

    If I thought Obama actually did not want to cut Social Security and Medicare I’d be feeling a lot better. But I suspect he both wants the ‘Grand Bargain’ as a legacy issue and may even actually believe that long term deficit reduction has to come about through Medicare benefit reductions.

    • JKTHs says:

      The Trustees show that after baby boom generation dies off, if they stick to the IPAB guns, Medicare spending is basically flat as a percent of GDP. It isn’t as big an issue as everyone thinks

      • Steve LaBonne says:

        This. And anyway the real problem is with the health care financing system as a whole (of which Medicare is without a doubt the most efficient part). I’m so sick of the blatant lies about this stuff, and even sicker of the way so many Democrats parrot them.

        • Chatham says:

          Yeah, and it’s the biggest long term problem with our debt. If we can get single-payer in the next couple of decades (which should be doable if we push hard for it at the state level), it shouldn’t be an issue. Getting out of the recession, higher taxes on the rich, and greater inflation should take care of the rest.

          Of course, remember that in 2001 when we were running surpluses, we were warned that the problem was we were paying off the debt too fast.

          • Bill Murray says:

            There has been some recent work that indicates CBO projections of future deficits from Medicare are a) likely not very accurate or well understood and b) likely way overestimate the debt.

            http://www.bancaditalia.it/studiricerche/convegni/atti/fiscal_sustainability/session_3/Follette%20Sheiner.pdf

            Follette and Scheiner are members of the Fed fiscal analysis group. I think Follette’s the head of that group.

            • jefft452 says:

              “There has been some recent work that indicates CBO projections of future deficits from Medicare are a) likely not very accurate or well understood and b) likely way overestimate the debt”
              Nonsense!,
              Medicare is just 5 years away from bankruptcy!
              Paul Ryan says so, just like Gingrich predicted 20 yrs ago and Jack Kemp predicted 40 years ago

              Still, its better off than Social Security, that been 5 years away from bankruptcy for 75 years now

  8. Steve LaBonne says:

    Harry Reid is saying the Senate won’t touch Social Security. That’s a start.

    Personally I think he should just send the lame duck Senate home. They can do no good but could do quite a bit of harm. Safer to just shut the lame duck session down and let Boehner pound sand.

    • LosGatosCA says:

      That would be excellent.

      But the lobbyists love to work with power that has no accountability. One last chance for all the Senate folks leaving (Lieberman, Brown, Conrad, et al) to cast their last few votes in favor of their future employers.

  9. Jesse Levine says:

    My God, I thought you folks who believed that the President’s re-election was man’s last, best, hope would wait at least a week before you advocated preemptive surrender. “…get something favorable to liberal interests”. Now there’s a battle cry of freedom.

    • DrDick says:

      Reading comprehension, you doesn’t has it.

    • JKTHs says:

      I, for one, would have Obama hold out until Boehner comes begging at his feet willing to give him single payer, a stiff carbon tax, and a 70% top rate.

      • rea says:

        You are not thinking clearly about the consequences.

        • Steve LaBonne says:

          I LIKE the consequence of letting ALL the Bush tax cuts expire for good. They never should have been passed in the first place. Even the “middle class” portion of the package has benefits that are heavily tilted toward the very affluent.

          • rea says:

            (1) The government needs more revenue in the middle run, not now. Focus on the economy, not the deficit.
            (2) fucking around the affluent is not a sound policy goal, although I don’t care particularly if the affluent get hurt en route to accomplishing something significant.
            (2) across-the-board spending cuts in the present state of the economy are a very, very bad idea.

            • Steve LaBonne says:

              Can’t always time everything perfectly in politics. This is the window of opportunity to deep-six those tax cuts for good. And that is absolutely essential in the long run to be able to pursue progressive policy goals.

              • rea says:

                We aren’t going to be doing much in the way of pursuing progressive policy goals if we send the economy back into recession, and have unemployment go back up over 10%.

                • Steve LaBonne says:

                  I’m not impressed by this kind of scare talk.

                • Steve LaBonne says:

                  And by the way, the tax hikes by themselves won’t have close to that kind of effect. It’s the spending cuts that might, and there’s leverage there because the defense sequester is unacceptable to Republicans- those defense contractor fatcats are their constituents.

                • Steve LaBonne says:
                  November 9, 2012 at 10:43 am
                  I’m not impressed by this kind of scare talk.

                  Good for you.

                  Some of us are Keynesians.

                • Incontinentia Buttocks says:

                  Keynesians don’t think letting all these tax cuts expire will add more than two percent to unemployment. Read Krugman from December 2010, when he supported doing this. His estimate at the time (in a weaker economy) was that it would add shy of one percent unemployment. The Keynesian worst case scenario would thus probably be just under 9% unemployment.

              • Incontinentia Buttocks says:

                This. Obama should have done this two years ago. Better late than never.

                • Scott Lemieux says:

                  I don’t agree. Anti-stimulus at that point almost certainly hands the election to Romney, which means that the Bush tax cuts or worse would be reinstated anyway.

                  Now, 4 years from a presidential election, is a different story.

            • Anonymous says:

              I don’t think letting the tax cuts expire would be very harmful in the short run. While the middle and lower bracket increases certainly cause harm, the upper bracket increases are harmless in the current circumstances.

              The general problem with upper bracket tax increases is that they transfer money from investment opportunities to government. But right now, we have an overabundance of cash chasing too few investment opportunities. That excess investment money is going to the government anyway as treasuries with low returns. It would be more efficient for it to go to the government as taxation.

              In times of economic weakness, it is usually better to borrow and spend than to tax and spend, but the taxes in question here are predominantly from a pool of funds which the government is borrowing anyway. The negative impact to people like me – beneficiaries of the middle class portion of the tax cuts – is minimal.

              • JKTHs says:

                Agreed. The payroll tax cut is more important than the Bush tax cuts overall and would mostly make up for the lack of middle-class tax cuts.

              • bradP says:

                In times of economic weakness, it is usually better to borrow and spend than to tax and spend, but the taxes in question here are predominantly from a pool of funds which the government is borrowing anyway.

                Why do you think there exists such a pool of funds for the government to borrow from?

                What do you think would be the effect if that fund was taken from the holders, rather than borrowed with promise of future payments?

                • rea says:

                  Why do you think there exists such a pool of funds for the government to borrow from?

                  The market is telling is that, Brad. People are still buying all the debt the US government wants to sell, even though interest rates are as low as they can go.

                • bradP says:

                  The market is telling is that, Brad. People are still buying all the debt the US government wants to sell, even though interest rates are as low as they can go.

                  Yes. And I suppose they are gobbling them up because of the relative safety.

                  I think we both know what we could expect to happen if we raided portfolios of their safest investments and turned it into tax revenue.

                • njorl says:

                  Why do you think there exists such a pool of funds for the government to borrow from?

                  Because it is being done and rates are staying incredibly low and there is no significant inflation.

                  What do you think would be the effect if that fund was taken from the holders, rather than borrowed with promise of future payments?

                  Virtually nothing, since they are demonstrably willing to invest the money with returns below inflation rates.

              • rea says:

                Well, yeah–getting rid of the upper class tax cuts is not the antistimilus part of doing nothing. It’s the spending cuts that are the problem. If we can elminate the domestic spending cuts, cut defense, and repeal the tax cuts, great. Ponies for everyone would be great, too–a nice stimulative effect.

                • Steve LaBonne says:

                  “No deal on taxes- the cuts expire. Now, wanna talk about spending? OK, nice military-industrial-Republican complex you got there. Shame if anything happened to it.”

                • njorl says:

                  There are many things on the table:
                  -Military spending
                  -Domestic discretionary spending
                  -tax cuts for the poor and middle class
                  -tax cuts for the rich

                  All of those are stimulative except for tax cuts for the rich. Those provide no stimulus in the current economic conditions, and add to the debt. They are economically foolish. Any negotiations must either reject those tax cuts, or put the Republicans in the position of paying a political price for them.

                  Only when Republicans have manifestly demonstrated to all that they are willing to inflict greater harm to the nation is it politically sensible to give in to their demand for tax cuts for the rich. That’s not going to happen before January 1st.

              • Cheap Wino says:

                The general problem with upper bracket tax increases is that they transfer money from investment opportunities to government

                Everything I’ve read says that even the most conservative analysis say upper bracket tax increases only start affecting investment opportunities at about a 70% tax rate (and there are some that think the number is more like 90%).

                It’s safe to say we’re are unlikely to see this situation again for a long time. Tax away, baby!

                • njorl says:

                  I think that cut-off changes depending on the economy, but clearly, we don’t need to worry about it now.

              • JazzBumpa says:

                The general problem with upper bracket tax increases is that they transfer money from investment totally non-value-added bubble inflating speculative opportunities to government.

                Fixed that for you.

            • spencer says:

              The government needs more revenue in the middle run, not now. Focus on the economy, not the deficit.

              So why wouldn’t raising the highest tax rates back to pre-Bush numbers generate new revenue? Or I guess my point is, why should we look at that only as a deficit-related move, instead of a move to provide revenue to fund actual stimulative government spending?

        • Timb says:

          Yes, he is. There is little downside here, especially if WE don’t panic

      • mark f says:

        It’s just a matter of backbone! Perhaps the president should give some speeches, maybe ask Eric Cantor to watch him take a leak. You can have it if you really want it!

    • rea says:

      “…get something favorable to liberal interests”. Now there’s a battle cry of freedom.

      Well, shit–what do you want, if not something favorable to liberal interests? Doing nothing gets us across-the-board tax increases and a European-style austerity program–is that the result you want?

      I want Obama and the congressional leadership to take the cards they have been dealt and use them to get the best result they can.

    • Walt says:

      So we shouldn’t want to get something favorable to liberal interests? Is this a trick question? Are you a Jedi, and this is some mind trick?

    • My God, I thought you folks who believed that the President’s re-election was man’s last, best, hope would wait at least a week before you advocated preemptive surrender. “…get something favorable to liberal interests”. Now there’s a battle cry of freedom.

      So, your argument is that the unusual leverage provided by the expiring Bush tax cuts should, ipso facto, be leveraged into nothing? (Why do I also fear that you’re one of those guys who thinks that if Obama really Understood Negotiating he would have come out for single payer, which would have given Ben Nelson no choice but to vote for a robust public option?)

    • What the hell are you talking about?

  10. Dave Anderson says:

    How about this for medical cost cuts (scored over roughly 10 years:)

    * Implement the public option (save ~150 billion or so)

    * Allow the VA to offer their formulary as a Medicare Part D option or allow Medicare to offer a public option on Part D with Medicare allowed to directly negoatiate (save ~200 billion)

    * Allow Medicare to directly negoatiate for regional Durable Medical Equipment preferred suppliers (~20 to ~30 billion over 10 years)

    Most liberals should be able to get behind cuts of $400 billion dollars that mainly squeeze economic rentiers.

    • rea says:

      Designing programs is the easy part–how do you propose to enact them?

      • One possibility: by offering to extend the Bush tax cuts for 2 more years if the Republicans sign on.

        They proved last time that they’d sell their mommas for 2 years of the Bush tax cuts.

        • Sherm says:

          One possibility: by offering to extend the Bush tax cuts for 2 more years if the Republicans sign on.

          Better off going over the cliff and starting from scratch with a smaller and more targeted tax cut plan. Any contraction caused by the fiscal cliff will be temporary in nature and can be ameliorated through subsequent legislative action.

          • While that probably would result in a better tax/budget bill, it would mean saying good-bye to the possibility of trading the tax cut extension for other goodies, like those in Dave Anderson’s comment.

            • Sherm says:

              You barter with a new tax cut plan which focuses on the middle class and the working poor rather than the wealthy.

              • And you think the Republicans would be willing to agree to goodies like these in exchange for that?

                Why? Look at December 2010 – they were so disinterested in middle and working class tax cuts that they actively blocked them, but so interested in upper-tax cuts that they gave in on a bunch of other issues.

                • Sherm says:

                  I don’t believe that the republicans would go for any expansion of medicare, let alone the public option. And I also believe that the Bush tax cuts need to go. I doubt that anything which the the republicans will be willing offer in exchange for an extension of the Bush tax cuts will be worth the extension. Let them expire and start from scratch.

                • I think the Bush tax cuts need to go, too. I don’t think they need to go right now, so I’d be willing to see a deal that keeps them – if it was a good enough deal.

                  Maybe you’re right about how much they’d be willing to give up. I don’t know. They sure do seem to worship the current tax rates, though. I don’t see any harm in testing the waters, and seeing how many ponies they’re willing to part with. As July 2011 showed, Obama can do this in a manner that leaves him the option of walking away with a political win, which could only help in January negotiations.

              • NonyNony says:

                Republicans do not care about tax cuts for the working poor. They do not believe that the working poor exist.

                Republicans do not care about tax cuts for what Democrats would call the middle class. Their definition of middle class says anyone making under $500K a year is middle class. (Their unspoken definition of middle class is that anyone who collects a paycheck for work performed is “middle class” – “upper class” is reserved for those who make money solely from investments and by inheriting it).

                Offering to exchange them tax cuts for people making under $250K per year in exchange for expanding health care coverage is like offering a liberal to increase military spending by 10% in exchange for a cut in the capital gains tax.

                If a Republican made that offer you’d look at them like they’d grown a second head, but to them they’re giving you increased “government spending” (which it is obvious that liberals want) in exchange for tax cuts (something they want). Just like the conservative caricature of a liberal is someone who wants more government spending, the liberal caricature of a conservative is someone who wants lower taxes. It’s just not true – they only care about lower taxes for the “right” people – they use lower taxes for everyone else as a negotiation tactic to get lower taxes for the group of people they care about.

        • rea says:

          Or the Angus King plan–tax cuts extended to sunset when economic metrics improve to a certain level.

    • JKTHs says:

      No no. Don’t you get it? Cuts aren’t real unless you’re hurting beneficiaries, at least according to the WaPo editorial board and their ilk.

  11. bradP says:

    The best way to play the budget negotiations is to let the Bush tax cuts expire and use the resulting leverage to get something relatively favorable to liberal interests.

    1. How much leverage do you suppose letting the tax cuts expire would provide? Republicans seem far more interested to the rhetoric of tax cuts than the principle of tax cuts. I wouldn’t be surprised if Republicans were fine with having Obama preside over the tax increases and their results, as long as they can keep griping about it.

    If Republicans are mostly worried about upper-class taxes, are you saying that democrats should try and get something they want in exchange for an upper-class tax cut of some sort?

    2) What might be on the table for democrats to gain with what leverage they have?

    • catclub says:

      Is the 15% cap gains on the chopping block on dec 31? Or is that separate from the Bush tax cuts?

    • njorl says:

      Republicans seem far more interested to the rhetoric of tax cuts than the principle of tax cuts.

      No, Republicans are interested in the effect of tax cuts. They want more money in rich people’s pockets. Rhetoric is a distant second, and principle is irrelevant except as a part of rhetoric.

      If the Bush tax cuts expire, there will still be leverage to reintroduce the middle and lower class tax cuts. While it’s true that Republicans don’t care about lesser earners getting a tax cut, even those cuts give some money to rich people. The question then becomes, is a few percent of $250,000 for everyone earning more than that enough leverage.

      • bradP says:

        No, Republicans are interested in the effect of tax cuts. They want more money in rich people’s pockets.

        That kinda happens with or without tax cuts, but I get what you are saying.

        However, I sincerely hope the tax cuts don’t expire just to result in more across the board tax cuts combined with more entitlement spending.

      • laslo says:

        The question then becomes, is a few percent of $250,000 for everyone earning more than that enough leverage.

        The Dems will immediately bump that up to several million. then negotiate up from that

    • Republicans seem far more interested to the rhetoric of tax cuts than the principle of tax cuts.

      If the last time they controlled the government their centerpiece legislation was two massive upper-class tax cuts, and they didn’t greatly increase Obama’s chances of re-election to preserve them, this wouldn’t be ridiculous on its face.

      • bradP says:

        I guess we shall see.

        • Scott Lemieux says:

          Well, why do you think that the Republicans don’t care about upper-class tax cuts? The evidence refuting this is unambiguous.

          • bradP says:

            Well, why do you think that the Republicans don’t care about upper-class tax cuts?

            I think they do care, I just don’t think they care that much, especially when they have the out of a democractically controlled presidency and senate to blame the economy on.

            I think if given the choice between providing upper-class tax cuts and having another recession during Obama’s second term, they may have no preference or even prefer the latter.

            Ultimately they are career politicians and bureaucrats first, and their collective career prospects took a big tumble despite massive Wall Street and industry backing.

            • Murc says:

              This, I think, is accurate:

              I think if given the choice between providing upper-class tax cuts and having another recession during Obama’s second term, they may have no preference or even prefer the latter.

              But that AND this can’t be true at the same time:

              Ultimately they are career politicians and bureaucrats first

              Career politicians like it when things are good, dude. They want the voters to be fat and happy so they can claim credit and get re-elected.

              There are still a fair number of elected Republicans who are like that, but none of the people who WANT a recession are. The Republican Caucus these days has a whole lot of true believers, guys who genuinely do not give a fuck about getting re-elected if it advances their ideological interests.

              I respect this in the abstract and wish we had more Democrats who felt the same way, but basically ‘career politician’ and ‘crazy fire-breather’ really don’t mix. Career politicians tend to be cautious, or at least establishmentarian.

              • Anonymous says:

                Career politicians like it when things are good, dude. They want the voters to be fat and happy so they can claim credit and get re-elected.

                There are still a fair number of elected Republicans who are like that, but none of the people who WANT a recession are. The Republican Caucus these days has a whole lot of true believers, guys who genuinely do not give a fuck about getting re-elected if it advances their ideological interests.

                I think this is mistaken. I think most of the people you think you’re describing there know that the people who will turn out for them during the midterms are as batshit crazy as they are, and will blame a bad economy on the muslim negro in the WHITE house shoveling money at his homies. So a shitty economy is just proof that they were right. Higher taxes is proof that the negro in the WHITE house wants to take from good hard working people and give to the shiftless lazy welfare queens and strapping young bucks, so you have to vote in your local teatard in order to try to stop this.

                • Holden Pattern says:

                  ‘Twas me. Dunno where the cookie went.

                • Murc says:

                  most of the people you think you’re describing there know that the people who will turn out for them during the midterms are as batshit crazy as they are

                  Isn’t this sort of implicit acknowledgement of my point? I mean, if they’re batshit crazy (and they are) maybe they don’t care if their electorate is as crazy as they are; they regard it as a benefit but it doesn’t control their behavior.

            • I think they do care, I just don’t think they care that much, especially when they have the out of a democractically controlled presidency and senate to blame the economy on.

              I disagree. Look at the 2010 lame duck session.

              For a measly two years of extended tax cuts, they agreed to let DADT repeal, a nuclear reduction treaty with Russia, a massive program of regulation the food industry, and a bunch of stimulus spending go into effect.

              Lots of people say they care about something, but when I see someone give up things they value in order to get something, then I believe they really care.

              • Murc says:

                This, I will note, is the one thing that gives me SOME hope that the Republicans will deal.

                It’s problematic long-term, as it means we’ll never be able to actually RAISE taxes without holding all three branches again, but there’s room to maneuver at least.

              • mds says:

                The problem is, taxes have to go back up someday, or there’s no revenue to do anything else progressive with. The problem with “Cut a deal for another two year extension in exchange for some good stuff” is that the argument will apply again two years from now. A lame-duck Congress in 2014 is still going to have a GOP House. So we negotiate another 2-year extension. And thanks to gerrymandering and a distressingly high floor for electoral stupidity, there’s a fair chance this has to continue until anywhere from 2018 to 2022. We’re already talking trillions in lost revenue, and at some point, it has to stop.

                And as others have observed, the President has tools with which to moderate the recessionary effects of the “cliff” even if House Republicans shoot the hostage by loudly refusing to pass “The Middle Class Tax Relief and Adorable Puppies Act of 2013.”

                • Murc says:

                  Well, to play devils advocate here, at some point the Democrats will want higher revenue more than they want other things.

                  In practical terms, we may very well have to control all three branches of government again, a la Clinton, in order to make it happen. That’s not ideal, but, well, if YOU have a secret plan to get rid of Republican elected officials short of beating them, I’d like to hear it.

                • That is all true.

                  From where I’m sitting, the Republicans would have to throw some serious sweeteners into the pot to make a deal worthwhile.

          • patrick II says:

            They may play the long game. Hold fast and let Obama raise the tax rate now during a weak economy and blame the resultant slowdown on raised taxes. It would be an argument we would be hearing for years.

  12. actor212 says:

    I could not agree more, Scott. Let the Republicans come hat in hand on the tax cuts, rather than try to change the status quo now.

    It’s only a fiscal cliff if no one does anything about it (and I’m not sure it’s a cliff even then)

  13. synykyl says:

    So, Boehner is for increasing taxes (i.e. allowing for “new revenue”), but against increasing the tax rate? Who thinks that is anything other than complete bullshit?

    • Murc says:

      Closing loopholes!

      Wastefraudandabuse!

    • rea says:

      I heard the newly elected senator from Arizona on NPR the other day. He explained that by “new revenue” they meant the additional revenue that would result from cutting the capital gains tax . . .

    • Uh, we just had an election where one candidate said he had a plan to do just that, by lowering rates and closing loopholes. He wouldn’t lie. And he almost got half the vote, so there’s clearly a mandate for that plan.

      Sheesh, I thought people around here paid attention to politics.

      • synykyl says:

        You are right. We got bogged down in an argument about whether Romney’s detail free plan could work and never asked the question I am asking now: What difference does it make if you take more money from people by eliminating loopholes instead of by raising rates?

        Would restricting ourselves to tax code changes prevent us from raising the same amount of new revenue we could get by a moderate increase in rates? Would it prevent us from focusing the increases on wealthier Americans? Or, is it just a semantic thing that would allow Republicans to more plausibly claim that taxes did not increase, even though they did?

  14. Murc says:

    I’d like to note that it’s very possible that the Republicans think THEY are the ones with leverage here.

    I’ve said it before and will again: there is tremendous, tremendous power and freedom in not caring, in just not giving a fuck. If a sufficient number of Republicans just want to burn things down if they don’t get their way, well, we may simply be screwed.

    • Steve LaBonne says:

      Well, I for one don’t give a fuck about extending the so-called “middle class” portion of the Bush tax cuts. Elected Democrats really shouldn’t, either.

    • JKTHs says:

      Yep. That’s why all negotiations in the past few years have been asymmetric. It’s easy for Boehner to gain leverage if he goes to Obama and say “Half my caucus legitimately does not give a fuck if we shut down the government/default on the debt”

  15. bobbyp says:

    allowing the bush tax cuts expire would enable the dems to actually negotiate rather than feebly flailing against naked political blackmail. the house would also have to negotiate to get what they want-i see not much, if any, downside to this.

  16. Predictably, the people who spent the last two years damning Barack Obama for being insufficiently Keynesian are the same ones now damning him for wanting to avoid a big tax increase and big spending cuts.

    Because they’re so much more principled in their beliefs, you see.

    • JKTHs says:

      It’s not THAT he wants to avoid it, it’s how it may be done

      • No, it’s not.

        If it was about “how” it may be done, this thread would be full of comments about what should, and should not, be in a deal.

        It’s not. It’s full of the comments from the usual suspects insisting that no deal happen, and that a huge anti-Keynesian program go into effect in two months.

        Which is a fine argument that could be made in a principled manner – but not by people who spent the last two years pledging their allegiance to Keynesianism.

        • JKTHs says:

          Sure there’s some of that, but it’s a lot of people who are saying that negotiating becomes a lot easier in January. That’s a lot different than just letting it all happen without looking back

          • bobbyp says:

            that’s how I see it. Both sides would have incentives to reach a deal-repubs to get tax cuts and dems to blunt spending cuts…the Chiat article lays this out pretty well.

            the deal is made after the tax cuts expire.

          • That’s a much better point.

            You know what else would make January negotiations easier? The Republicans taking a drubbing for being unreasonable vis-a-vis a President who makes a big show of demonstrating how reasonable he is. You know, like what happened last July.

            If the Democrats decide to go over the “cliff,” for the purpose of getting a more favorable negotiating situation in January, then the Republicans need to be seen as the ones who sent us over the cliff.

            • JKTHs says:

              You know what else would make January negotiations easier? The Republicans taking a drubbing for being unreasonable vis-a-vis a President who makes a big show of demonstrating how reasonable he is. You know, like what happened last July.

              I don’t sense that’s what happened. Boehner has already said he will use the debt ceiling as a hostage again.

            • bobbyp says:

              there is no fiscal cliff

              I would posit that the House would bargain meaningfully for a 25% roll back of the cap gains tax rate….if it turns out they won’t, then their agenda is revealed for all to see in its greedy nakedness.

              as it stands now, the gop does not appear to be paying a big political price (still control the house, can filibuster in the Senate)….and they certainly have been remarkable in their ability to largely avoid the blame for the impasse. so I don’t quite know who would administer this “drubbing” that-I would agree with you-they so richly deserve.

              • When it comes to the political consequences, the perception that there is a fiscal cliff is all that matters.

                Hence the phrasing, “seen as” the ones who sent us over the fiscal cliff.

                as it stands now, the gop does not appear to be paying a big political price (still control the house, can filibuster in the Senate)….and they certainly have been remarkable in their ability to largely avoid the blame for the impasse. so I don’t quite know who would administer this “drubbing” that-I would agree with you-they so richly deserve.

                I don’t understand how you can possible say this, after the debt ceiling talks destroyed the Republicans politically, brought their brief control of the national political agenda to an end, and arguably cost them the White House and control of the Senate.

                • JKTHs says:

                  I don’t think so. After the debt ceiling they had no more hostages to take and they had already gotten most of the spending cuts they wanted so need to force a shutdown.

                • That is so removed from reality I don’t even know where to start.

                  “Most of the spending cuts they wanted” consists of big military cuts and domestic spending growing slightly?

                • JKTHs says:

                  I was referring to the caps that have been kept in place. The sequester’s a different matter. My point is they got discretionary spending (sans sequester) down close to levels they wanted.

                • bobbyp says:

                  The debt ceiling fiasco was a wound, but not political armageddon. Obama was helped greatly by a (slowly) improving economy, and the bat shit crazy that lunatic tea party candidates exposed to full public view. On the eave of nov. 6, the debt ceiling showdown was ancient history.

                  The agenda? Well, buying in to the cliff scare meme and arguing for cuts to ‘unsustainable entitlements’ fits perfectly with the gop agenda….so why are democrats/liberals spouting such nonsense?

                • bobbyp says:

                  The president put his opening gambit out there today. Of course, the GOP, now that they are, in your words, “destroyed politically” will rush to sign on? I think we both know the answer to that one is ‘not in a million years’.

                  But this will get interesting…no doubt about it.

        • Murc says:

          Well, speaking for myself, I haven’t been thinking too much about what should and shouldn’t be in a deal because I’m not sure a deal is actually possible.

          That said, in terms of “what should we be doing, policy-wise, in a vacuum” I think it’s fairly obvious:

          1)Retain the Bush-era tax cuts on those making less than 250k a year. The top rate clicks back up for everyone else. However, the extension is only good for a short time; you don’t want the lower rates permanently institutionalized. Say another two years.

          2)Big cuts in defense.

          3)Non-defense discretionary spending and entitlements remain flat or grow. (Both relative to inflation.)

          But I don’t think such a deal is possible. I mean, if we could get that done, we could also get ‘we return to the tax structure of the 1950s for the wealthy’ and ‘Stimulus II: This Time It’s Fiscal’ done as well.

          In terms of ‘theoretical compromise if the Republicans were reasonable people’ I think that full extension of the tax cuts for another couple-three years could be bargained away for things like deeper defense cuts, another stimulus, or possibly cultural and/or environmental issues; repealing DOMA, for example, would further legitimate gay marriage in a way that can’t really be ratcheted back, which would be a small price to pay for two more years of reduced revenue.

          Sidebar: I really hate that it’s called the Department of Defense. Terms matter, and saying you want us to have ‘less defense’ puts you inherently on the back foot.

          We should go back to having a War Department. It was good enough for Lincoln and FDR.

          • 2)Big cuts in defense.

            Ideally, even bigger cuts than in the sequester over the long term, but back-load them even more.

            3)Non-defense discretionary spending and entitlements remain flat or grow. (Both relative to inflation.)

            That would mean serious cuts in Medicare compared to projections under current law. Again, back load these, and make sure the ACA does it work to bend the medical cost curve.

            • Murc says:

              Ideally, even bigger cuts than in the sequester over the long term, but back-load them even more.

              Why the back-loading? We could use that money elsewhere, and to better effect, right now, rather than shoveling it into the gaping maw of the DoD.

              That would mean serious cuts in Medicare compared to projections under current law.

              … wait, what?

              How did “remain flat OR GROW” turn into “serious cuts in Medicare compared to projections under

              • JKTHs says:

                Medicare (and Medicaid and Social Security) will grow faster than inflation.

              • Why the back-loading? We could use that money elsewhere, and to better effect, right now, rather than shoveling it into the gaping maw of the DoD.

                Ideally, I’m with you. In practice, big new spending would be yet another item on our wish list.

                How did “remain flat OR GROW” turn into “serious cuts in Medicare compared to projections under

                By looking at the actual projections. Any “OR GROW” that can be paired with “remain flat” in a sentence is a rate of growth well below projected growth rates.

                • Murc says:

                  By looking at the actual projections. Any “OR GROW” that can be paired with “remain flat” in a sentence is a rate of growth well below projected growth rates.

                  … huh?

                  Some non-discretionary spending and/or entitlement spending can remain flat.

                  Others can grow.

                  I don’t see why both can’t be true at the same time.

                  I threw in ‘relative to inflation’ because spending that remains flat or rises slightly in absolute terms can actually be a spending reduction.

                • Bill Murray says:

                  but the projected growth rates are very likely almost as batshit crazy as Republicans. With Elmendorf heading the CBO, I may have just repeated myself

  17. Richard says:

    Slightly off topic question. The analyses I’ve been reading says that Obama doubled his margin of victory with Asian American voters (and that his margin was greater than his margin among Hispanics). Of course, I understand why his margin with Hispanics increased but why did his margin with Asian Americans increase? Was there one issue, like immigration, that struck a chord with these voters or was it a combination of things?

  18. курс туринабола 10 мг

    In Case It Wasn’t Already Obvious – Lawyers, Guns & Money : Lawyers, Guns & Money

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