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Just Say No

[ 77 ] December 18, 2012 |

Another deal is being floated. Let’s think this through (with the caveat that the details could change):

  • The chained-CPI Social Security cuts are terrible, terrible public policy.
  • Now, yes, to avert the bad aspects of the gradual fiscal incline Republicans will have to be given something, so the tradeoffs have to be evaluated; that chained-CPI is terrible in itself does not inherently make the deal bad.  But…
  • I still don’t see what Republicans are giving up that could possibly justify Social Security cuts.   The increased revenues can’t really be considered a concession, since they happen automatically on January 1st if Obama does nothing, increasing his leverage.   The rest of the concessions seem piddlyshit, and the fact that the deal apparently doesn’t even involve extending the payroll tax cut is remarkable.   (The latter also undermines the most compelling reason to give up something to make a deal: a time of weak economic growth and mass unemployment is the wrong time for austerity.)
  • In addition, it’s worth noting that trading cuts to the already threadbare American welfare state for tax hikes is always a dubious proposition.    Again, the key dynamic here is that today’s Congress cannot bind future Congresses. And while social programs that benefit the middle class have a certain level of political protection even during partisan shifts in government, under the current partisan configuration upper-class tax cuts are inevitable anytime the Republicans control the White House, the House, and 45 or so Senate seats.  As long as the Republican Party is strongly committed to upper-class tax cuts and completely indifferent about deficits, “responsible” Grand Bargains are a sucker’s game.
  • So, I’m with DeLong: “This deal would still be on the table in January. And odds are Obama could get a much better deal than this come January.”  Yup.  Unless it’s a lot better than what Ezra is describing, pass.   This would be a terrible deal, squandering very rare leverage.

Comments (77)

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  1. somethingblue says:

    Also, um, debt ceiling?

    • Murc says:

      This.

      ANy deal that doesn’t include the debt ceiling being raised should be DOA in the White House. The Republicans can and will shoot that hostage. They’re eager to shoot that hostage.

      Right now Obama has leverage. If he gives it up for any deal that doesn’t include the debt ceiling, he will either have to resort to abnormal methods of questionable legality to keep the government funded (which would go against his nature) or watch as the lights go out.

    • Lev says:

      Supposedly, there would be a large enough debt ceiling increase to last a year or two, sources differ.

      A pretty crappy deal overall, if you ask me. But I expected something like this. Pres. Obama’s overwhelming preference for good-faith negotiation, rationality and cooperation always wins out, he’ll always take a deal if it’s achievable.

      • Marc says:

        You know, that particular mantra had some evidence a year or so ago. It has little or nothing to do with the tactics and attitude that he’s been using. If you’re still chanting it you’re just being intellectually lazy.

        Since the election Obama has been doing precisely what his critics on the left thought that he should be doing. Pretending that nothing has changes smells of bad faith arguing.

        • Steve LaBonne says:

          This pile of shit is exactly what his critics on the left think he should be doing? What color is the sky on your world? And did you actually read the post you’re commenting on? Even Lemieux, who usually gives Obama the benefit of the doubt, rightly excoriates this deal.

          If you want to see intellectual laziness, I direct you to the nearest mirror.

          • Marc says:

            Just repeating the same criticism of Obama without acknowledging that he has changed his tactics is lazy.

            Acting like the bloody sky is falling based on incomplete reports of a partial deal is lazy.

            And you can excuse me for not paying attention to people who have shouted wolf about Obama wrongly, and repeatedly.

            • Steve LaBonne says:

              He has not changed his tactics. He (very briefly) changed his lip service, but now he’s gone right back and opened up the same old pre-compromise stand.

          • janastas359 says:

            Damn the President for signing off on this deal!

            Wait, you mean nothing has been agreed to yet?

            • Cody says:

              Yes, I’m confused here. People are upset with Obama accepting this deal…

              That Republicans proposed and he didn’t agree to?

    • DrDick says:

      There should be no deal on the deficit that does not include elimination of the debt ceiling. Period. It is pure fecklessness to allow the Republican minority to retain a choke hold on government.

      • janastas359 says:

        Absolutely. The second worst thing about this potential deal is that the Dems seem to think that pushing the ceiling back 2 years is okay. Why do you think the fight will go better then?

      • Dana says:

        I doubt this will happen. Too many Democrats remember (and enjoyed) nettling Bush over increasing the debt ceiling. And really if it’s managed better (i.e., increased whenever a budget deal is struck, as it generally has been in the past) the debt ceiling is not usually such a problem.

        • liberal says:

          Dems nettled Bush; did they ever seriously threaten to not pass it?

          “And really if it’s managed better…”

          Have you ever heard of the (modern) Republican Party?

        • Anon21 says:

          The debt ceiling is “not usually” a problem because it was never weaponized before 2011. Once it’s been used to extract policy concessions once, the precedent is far too dangerous to leave intact. The best solution is to make the ceiling increase automatically, with Congress able to pass a resolution of disapproval that the President can then veto. All the “benefits” of out-party griping opportunities, without the risk of actually impairing the country’s credit.

      • somethingblue says:

        Yglesias (often glib and annoying, but not always wrong):

        There are two reasonable ways to handle the debt ceiling. One is to achieve a permanent solution as part of the resolution of the fiscal cliff. The other is to completely ignore it in the resolution of the fiscal cliff, and then have the president wage and win a total victory on a separate debt ceiling battle. Delaying the debt ceiling crisis until some time in 2015 as part of a larger bargain merely institutionalizes the idea that the debt ceiling is a bargaining chip and entrenches the idea that the president will cave.

        • Anon21 says:

          but not always wrong

          I’d go so far as to say often right. I’m not super-clear on why he got a reputation as a neoliberal sellout; his positions on most issues are either orthodox liberal (more redistributive economic policies) or there’s no clear liberal position either way (lifting zoning restrictions, relaxing or eliminating occupational licensing). It seems like the liberal distaste for him has more to do with tone than substance.

          • joel hanes says:

            Much of my own distaste for Yglesias has to do with his consistently uninformed opinions about “reform” of public education.

            Other factors, which seem to me to telegraph a contempt for his readers: 1.) I’ve never seen him engage with his commentariat, or do an adequate job of administering comments 2.) he’s extremely sloppy about proofreading his posts

            Disclaimer: I quit reading Yglesias almost two years ago. Perhaps these things that bothered me have changed.

          • liberal says:

            He claims that taxing capital gains is more distortionary than taxing wage income, a claim for which the empirical evidence is weak at best.

  2. Murc says:

    under the current partisan configuration tax increases are inevitable anytime the Republicans control the White House, the House, and 45 or so Senate seats.

    Increases should read cuts.

  3. Jeremy says:

    I’m still going with my theory that Obama isn’t giving up enough to keep Eric Cantor from scuttling the deal, letting him bask in the glow of approval by the Very Serious People while the final deal hovers out of reach. Meanwhile, lefty agitation about about the fact that this is a Social Security benefit cut for all retirees starts to seep into the mainstream and cool off the enthusiasm. Then it’s back to the drawing board.

    I’d like some evidence to back up the idea that this isn’t semi-delusional wishful thinking on my part, though.

    • shah8 says:

      Fine:

      By and large, one of the fundamental animating policy aims that has salience to Obama is the regressiveness of the tax code. This is what’s driving this whole thing about $250k tax cuts. They’re also trying to package in on some other issues like unemployment insurance.

      Ultimately, I do think people like Megan McArdle is kinda serious in their sentiment, and that the Republicans do have a serious wish to take pounds of flesh from what they see as Obama’s constituency of moochers. While there is rather massive pressure on Obama to give concessions to Republicans by private interests, I fail to see Obama agreeing to anything that the Republicans will actually vote for.

      Lastly, events will determine the policy, and I don’t think there simply any other way to address a fundamental demand crisis other than with determined fiscal transfers. Let the Republicans make the cuts along the lines of the proposals. Then let them defend them. I do think that the Republicans are in grave danger of getting crushed in 2014, despite the gerrymandering. If they don’t take the deal, and I suspect it will take massive pressure on Republicans to get them to take the deal, Obama will just keep smelling roses.

      • janastas359 says:

        While there is rather massive pressure on Obama to give concessions to Republicans by private interests, I fail to see Obama agreeing to anything that the Republicans will actually vote for.

        I’m with you on this – I don’t see any evidence that the House leadership is going be able to bring in enough votes for the current plan.

    • I’d like some evidence to back up the idea that this isn’t semi-delusional wishful thinking on my part, though.

      How about, we just watched him do exactly that in July 2011? (Well, sort of – the Very Serious People didn’t give him a tongue bath, but they beat the living snot out of the Congressional Republicans, which is the same thing).

      Or how about, we just watched him respond to Malaki’s proposal to extend the SOFA by saying “Give American troops legal immunity, and we can talk,” – that is, conditioning his agreement on something that they will never, ever agree to.

  4. I am not nearly as bright or learned as Brad DeLong, but on the day after the election I said, “Obama will get a better deal when the new congress comes in.”

    Is it possible that the president does not see this?

    It’s not like there is any real urgency and despite constant apocalyptic press/media hyping of the “cliff” it doesn’t look like businesses or people with lots of money are acting like there is any urgency.

    Is it possible that the president does not see this?

  5. Desperado says:

    And as usual, the only mention of Defense is avoiding the sequester cuts. Same old, same old.

  6. Marc says:

    Krugman is not as negative as you are, and he is not an apologist in any sense.

    • NonyNony says:

      Krugman is still negative. He just is waiting to see more.

      I think that’s fair. Krugman has built up a lot of credibility towards being skeptical of what the Dems are coming to the table with in these kinds of negotiations. So by saying he’s against it, but he’d need to see what Republicans are really giving up for it, he’s got plenty of room to move to the outraged NO! camp when/if he needs to.

      • JKTHs says:

        It doesn’t sound like much. “Infrastructure” (unless it’s in the hundreds of billions, who cares) and unemployment insurance aren’t much in exchange for giving up many of the tax increases plus chained CPI plus likely Medicare non-provider cuts next year.

        • NonyNony says:

          Krugman’s point is that it’s infrastructure, unemployment, AND more revenue from the top earners than would be gotten if the tax cuts just expire while preserving the current rates for the middle class. And he even says in his update that if he’s wrong about the last bit then he goes from “negative but considering it” to “Hell No” territory.

          Basically Krugman is only positive because he considers this to be the outermost edge of unacceptability, and it may be less unacceptable than just going over the cliff. That’s where he’s coming from – he admits he doesn’t know how the politics of going over the cliff would fall out.

          I’m much more negative than Krugman because while I don’t understand the economics nearly as well, I think I understand the politics quite well. And ANY cut to benefits for Social Security recipients on a Democratic watch is stupid. It’s heartless, it’s pointless to the overall budget, and it’s bad short-term AND long-term politics. If there’s a hill for Democratic politicians to die on, it’s Social Security/Medicare. And even proposed cuts to those programs should only come from Republicans – it should never come from Democrats.

          The fact that Democrats have not learned this lesson even after the Bush privatization fiasco just kills me. How the hell can they have such a poor read on the electoral politics of this?

  7. Derelict says:

    I’m still trying to figure out exactly how not spending money that doesn’t come from the general fund years from now (Social Security benefits) will have any kind of effect on present-day deficits.

    But, then, I’m not blessed with a political brain.

    • c u n d gulag says:

      Thankfully, most people aren’t “blessed” with one either – if by that you mean “cursed.”

      And I think most, if not all, of our Conservative politicians are “blessed” with brains that evolved from T-Rex’s walnut-sized one.
      The dinosaur, I mean, and not the band or blog.

  8. max says:

    This would be a terrible deal, squandering very rare leverage.

    I genuinely like the man, but he’s spent the time since the election (actually, the time since the first debate) saying a lot of stuff and then running around apparently trying to give away the store. I vaguely remember the Clinton administration being like this, and I know the Bush administration was – the various White Houses seem to spend a lot of time doing their damndest to shove their heads up their own asses. No idea why.

    {baseball stadium announcer) ‘Now pinch-hitting for the Harding-Coolidge administration… Barack Obama.’

    max
    ['No, I don't understand it.']

  9. TT says:

    Boehner’s already rejected this latest (overly generous, in my view) Obama offer. Which means that, against all odds, the GOP has taken control of this game. Now that Obama has quickly caved on his two major non-negotiables (raising rates on those making more than 250K, and refusing to deal on the debt ceiling) they smell blood in the water.

    The GOP’s still negotiating as if it’s 2011. The problem–which probably doesn’t surprise them in the least–is that Obama is, too.

    • Marc says:

      Will you acknowledge it if you’re, you know, wrong?

    • Cody says:

      Where’s the link to Obama giving these things away?

      Last I heard he hadn’t agreed to any deal.

      P.S.: It seems like he’s playing the same brinksmanship game as before – keep making offers that sound overly generous to the public knowing that Republicans will never accept, then blame Republicans.

      • janastas359 says:

        Agreed. Remember – last time Obama and Boehner made a big show of negotiating with each other, only it fell apart because Boehner couldn’t sell his caucus on it.

  10. janastas359 says:

    Last week, EK said that “Smart people in Washington” all thought the final deal would increase the Medicare age, with the Republicans offering no higher rates on anyone, just ephemeral “Loophole fixes.” Many teeth were gnashed about what a terrible deal this was and how could Obama do this to us, etc.

    This week, EK reports about a (still very bad) deal that is nonetheless better than last weeks deal for progressive interests.

    We are doing the right thing – pushing against bad deals and aspects of the deal that we don’t agree with. This is the way to get a good deal for progressive interests. I appreciate particularly how level headed the LGM posters are about this. But it sure is getting tiring hearing “OMG OBAMA SOLD US OUT” every time some details gets leaked.

    • Aaron Morrow says:

      THIS:

      “We are doing the right thing – pushing against bad deals and aspects of the deal that we don’t agree with. This is the way to get a good deal for progressive interests.”

      What do we I want? More stimulus!
      What are we am I unwilling to sacrifice? The elderly and the sick!
      Where are we am I willing to compromise? Increased revenue!

      P.S. What’s dumber policy and politics than messing with Medicare benefits? Messing with Social Security benefits. There’s no chance of demanding House Republicans vote on entitlement cuts first, right?

    • JKTHs says:

      I don’t think the Medicare age plus 37% was any actual proposal, just speculation on where something would end up. There was no indication the Administration had accepted it at any point in the negotiations.

  11. david mizner says:

    But Obama could not have offered this deal, because he doesn’t support cuts in Social Security — that’s what I kept hearing at LG&M.

    At least we can kill that Zombie lie now. RIP.

    • Anonymous says:

      Please to be providing evidence for this assertion.

    • JKTHs says:

      KILL IT WITH A DRONE.

      Honestly, if anyone believed that was true, I’ve got a basketball team in Baltimore to sell you.

    • janastas359 says:

      Yeah, I mean what with all of the SS cuts he signed into law.

      Wait, you mean didn’t sign any?

    • JKTHs says:

      I figured chained CPI would be in there for the right price. Well, at least “right price” by the Administration’s definition. I think it’s almost surely in there now if there will be a deal.

    • Scott Lemieux says:

      So, David, you believe that Congressional Republicans favor upper-class tax increases?

      • david mizner says:

        I was wrong: even the birth certificate won’t do it…

        …why you’d write a blog post entitled “Just Say No” if there’s no chance of this going anywhere?

        Who’s supposed to Just Say No?

        • Jesse Levine says:

          David, give it up. Just because Obama offered the chained CPI doesn’t mean he wants it to be part of a deal. After all, there’s no “evidence” that he really means it. And when he puts Medicare eligibility back on the table, he won’t mean that either. Scott’s post is right on, let’s hope the GOP is really that dumb.

        • Scott Lemieux says:

          You’re missing my point. Being willing to make a concession to get something else doesn’t mean you favor that thing per se. There would be zero chance of Republicans voting for any tax increase if a Republican controlled the White House, and oddly enough given what you assert is his strong inherent preference for Social Security cuts none passed when Democrats controlled both houses of Congress under Obama (not to mention after.)

          Now, whether he’s getting enough for such a concession is a different question, and based on what we know I’d say “no way.” But offering something to get something doesn’t mean that you favor it per se.

          • david mizner says:

            No one ever claimed that he wants to cut Social Security in a vacuum. He’s always wanted to cut Social Security within the context of a Grand Bargain.

            Wants to, willing to, whatever. He’s proposing to do it.

            • Wants to, willing to, whatever. He’s proposing to do it.

              Or maybe he’s making really dumb people think this is the case.

              Like last time.

              • I take that back – it was possible to be fooled last time without being a really dumb person.

                But you’ve used up your mulligan.

                • JKTHs says:

                  I find your extreme prevalence of faith disturbing.

                • Jeremy says:

                  Yeah. I think I’m pretty much in agreement with Joe as to what Obama’s trying to do here, but it’s certainly not plainly obvious that that’s what he’s trying to do. For one thing, if only “really dumb people” are fooled by Obama’s gambit, it wouldn’t really work (unless the entirety of the Republican leadership and the people they listen to are really dumb, which is possible).

                  But I do think that Obama’s basically shielding programs that help the poor, which are much easier to get people to agree to cut, and letting the enormous unpopularity of SS and Medicare cuts keep those programs safe. Meanwhile, we have a press corps so divorced from the American populace that they don’t realize that people don’t actually want a Grand Bargain that cuts their SS or Medicare benefits.

      • david mizner says:

        But to answer your question, yes out best hope is that Republican loons can’t take yes for an answer; their extremism is saving Social Security from Obama.

        • janastas359 says:

          This is an absolutely insane way to read this, and ridiculously uncharitable.

          The way this deal seems to be shaping up is Obama gives up SS cuts (among other things) in exchange for Boehner giving up tax hikes (among other things). The rational way to read this would be “Both sides are giving up on something they don’t want to in order to secure something they can’t otherwise get.” You are apparently interpreting this to mean “Republicans are only conceding because they’re forced to; Obama is conceding because he hates SS.”

          Why would Obama even need a deal here, then? Why not find 5-10 senate dems (and I’m sure we both agree there are 5-10 dems who want to cut SS) and arrange a separate deal to cut SS, if he wants it so badly? He doesn’t even have to worry about reelection at this point. There is literally no rational reason why Obama, if he were so intent on cutting SS benefits because he is in love with the idea, would do it in such a way as to make it contingent on Republicans capitulating on the one thing they have refused to capitulate on for the last 20 years.

          I don’t agree with this deal as it’s been laid out, and it’s true that we need to fight for a more favorable deal. Your bizarre insistence that every rumor or story about Obama is a perfect reflection of his principles does not at all help the matter, especially because you apparently believe that this principle only applies to Obama.

          • Murc says:

            The rational way to read this would be “Both sides are giving up on something they don’t want to in order to secure something they can’t otherwise get.”

            Obama doesn’t have to give up a god-damn thing to get increased revenue and quite a lot of it. Why should he offer the Republicans thing one for higher rates? Those are going to happen pretty definitely. The Republicans get to offer HIM things to get what THEY want.

            • brewmn says:

              I’m guessing that the administration really believes that either the fiscal cliff will have serious short-term economic consequences, and/or really wants the political win of higher taxes on the wealthy and tax cuts for the middles class.

            • janastas359 says:

              Obama doesn’t have to give up a god-damn thing to get increased revenue and quite a lot of it. Why should he offer the Republicans thing one for higher rates?

              I’m not as versed in the numbers, but Krugman said that the revenue generated if this deal were agreed to would be higher than letting the cuts expire and then passing a middle-class only tax cut.

              There is also other stuff the Dems are seeking – stimulus, debt ceiling, etc. I’m also willing to bet that Dems are worried that they won’t be able to convince Republicans to pass a middle class only cut if we start down the fiscal incline. Whether this is all worth it or not is another story. I think I would need to see more before agreeing to a deal, but it’s not quite black and white.

              • Richard says:

                And increased unemployment insurance payments. There is no way of getting that unless there is a deal.

                And more stimulus spending. No way of getting that unless there’s a deal.

                I’m reserving judgment until I find out all the terms of the proposed offer.

                Reading Krugman yesterday and today, he went from qualified approval to qualified disapproval but admitted he didn’t know the exact terms of what was offered.

            • Anon21 says:

              Obama doesn’t have to give up a god-damn thing to get increased revenue and quite a lot of it. Why should he offer the Republicans thing one for higher rates? Those are going to happen pretty definitely.

              True so far as it goes, but if putting the rates on the table as a moving part facilitates an extension of the payroll tax cut (which no one on either side seems to be paying attention to), extension of UI, or general stimulus spending, it could certainly be worth it. Hell, I’d be fine with him extending the upper-income tax cuts even longer for the right deal; it’s not as if we need the revenue with government borrowing costs so preposterously low.

              Unfortunately, Obama seems to have bought the Peterson line on this, and appears to hold the exact opposite view: worth giving up stimulus in order to get more revenue. In which case, yes, his obvious course is to go over the cliff and then force through a clean middle-class cut.

              • Murc says:

                Unfortunately, Obama seems to have bought the Peterson line on this, and appears to hold the exact opposite view: worth giving up stimulus in order to get more revenue

                Well, that’s kind of my point. If all Obama wants is revenue, he’s gonna get that pretty definitely. If he wants other things, of course he has to deal with the Republicans, but all these trial balloons I keep seeing seem… oddly focused on things like revenue and debt and the deficit, as opposed to “people got no jobs and no money.”

  12. DrDick Hoplite in Loomis's Myrmidons says:

    If we must deal with the deficit NOW, NOW, NOW (not really necessary at all), then we need to attack the causes of that deficit. Most of the current deficit comes from three sources: the Bush tax cuts, excessive military spending (much from two unnecessary wars), and the aftermath of the financial collapse. The solutions must address those factors, and the bulk of our problem is a lack of revenue from the first and third. Eliminating the upper class tax cuts or, better yet, restoring the Reagan era tax rates would be a good start. A financial transaction tax on Wall Street traders would help pay for the carnage they created and place the burden on those who created the problem. It would have the added benefit of reducing the kinds of speculative trading that contributed to the collapse.

    • Jameson Quinn says:

      Climate change is doing low-12-figures of damage a year now. Some of that damage is stimulative (hurricanes break things) but most is depressive (no crops, no money). Meanwhile, a carbon tax would be hugely stimulative (build better factories and buildings). And, as a tertiary consideration, it might save between 1 and 10 billion lives.

      • DrDick says:

        Not sure I understand the relevance to the current discussion, but I would certainly favor a carbon tax as well (and I have lived most of my life in oil and coal producing states).

    • Steve LaBonne says:

      If we really wanted to deal with the deficit NOW, NOW, NOW (a bad idea, as you say) then we’d just go over the curb and stay there. Phony deficit hawkery is bad enough, but dragging in pointless sadism like SS benefit cuts that have nothing to do with the deficit is criminal. It would be bad enough if the Republicans demanded that and the Dems eventually acceded, but for Obama to lead with that offer is policy and political malpractice. You can be sure it will come up in the 2014 campaign.

  13. Dana says:

    I generally agree with this post, but the problem is we still have a president who uses his preferred policy endpoint as his starting point for negotiation. That doesn’t leave much (like, any) room to deal, and holding firm puts Obama’s reputation as the most reasonable person in the room at risk by making him seem intransigent. If Obama no longer seems the most reasonable player, he risks taking the blame if we go over the cliff. As we saw in the last election, there are few consequences for House Republicans whether or not blame is pinned on them–they control the House handily despite approval ratings in the low teens. So considering this dynamic, I think a 1:1 spending cuts to revenue increases deal is pretty much a victory, especially since we were talking about 4:1 and 5:1 ratios in the negotiations a year ago.

  14. quercus says:

    > Eliminating the upper class tax cuts or, better
    > yet, restoring the Reagan era tax rates would be
    > a good start
    Screw the Reagan tax rates. I say we offer the Republicans the chance to go back to the Eisenhower tax rates that made this country great.

  15. All of the people at the GOS who were completely wrong about the debt ceiling “negotiations” are falling over each other to insist that SEE THIS PROVES I WASN’T WRONG ON THE INTERNET!

    It’s pretty funny.

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