Monday, July 25, 2011

Kiss them goodbye...  

The Bush tax cuts, that is.  One of the curious developments in the debt-limit crisis has been the strategy of forcing the Democrats to capitulation without regard to what happens down the road.
That brings us to where we are now. John Boehner is proposing a deal with about $1 trillion in spending cuts and a short-term increase in the debt ceiling and a bipartisan congressional committee charged with developing a large deficit reduction package that would be immune to amendments and filibusters and would be the price of the next increase in the debt ceiling. Harry Reid is developing a package of spending cuts that Democrats could accept and would reach Boehner's $2.4 trillion mark.
If you take the Republicans' goals as avoiding a deal in which they have to vote for tax increases and denying Obama a political victory, it looks like they have succeeded. That success has come with costs -- they've done themselves political damage, are risking a crisis that could do the economy tremendous harm, and have left the Bush tax cuts unresolved, which means they might end up watching taxes rise much higher than if they'd taken Obama's offer -- but it's still been a success.
The question is, what happens if they don't stop pushing?
Late last week, pollster Mark Blumenthal summarized the "consistent findings" from the polling on the debt ceiling. First, he said, "Americans prefer a deal featuring a mix of tax hikes and spending cuts to a deal featuring just spending cuts." Second, "most of the surveys find strong sentiment in favor of compromise, especially among Democrats and independents." Finally, "the surveys all show Americans expressing significantly more confidence and trust in President Obama's handling of the issue than of either the Republican or Democratic leadership in Congress."
Republicans have leverage because the debt ceiling needs to be raised and it can't be raised without their support. But they don't have popular support behind their position or their leadership. They can push this up to the brink and win, because Democrats really, really, really don't want a debt-ceiling crisis that could set back the economy. But if they push it over the brink, they're likely to lose, as the public really, really doesn't want Congress to create an economic crisis that will set back the economy, and they're primed to blame the GOP if one does in fact come to pass. [More]
It is this omission of the Bush tax cuts that puzzles me. Having perfected the art of intransigence by a minority, I am sure Democrats will happily mimic their behavior (filibusters, holds, absolute demands, etc.) when the time comes to try to prevent them from expiring. Getting things passed is now next to impossible. Not doing anything is easy, and that's all that has to happen for those budget busting cuts to expire.
Once again, things fall apart in the debt ceiling talks. The way clear of this seems to me to be something like:
— Debt ceiling hiked by $2 trillion and paired with $2 trillion in spending cuts.
— House passes full extension of the Bush tax cuts.
— Harry Reid tries to bring extension of the middle class Bush tax cuts to the floor, but GOP filibusters.
— Bush tax cuts expire in 2012.
— Obama and GOP nominee fight it out in 2012.
This seems to me to achieve a substantive outcome better for progressives than the deal Obama is pushing for. At the same time in political terms achieves congressional republicans’ goal of avoiding an affirmative vote in favor of tax increases, and avoiding letting Obama play the Grand Bipartisan Dealmaker. [More]
The thing to watch now is how the cuts are spread around. The economic contraction resulting from the layoffs, smaller checks, etc. will start to be felt rapidly, and forecasting how the economy will absorb an anti-stimulus is not even close to easy.

The debate posture for the right has created a new normal for Congressional action, I think. It will be hard to move on from dysfunction especially unless centrist Republicans do well in the primaries and the TP grip is loosened on the right.

Hence, the whole of the Bush tax cuts are toast, it seems at this point.


VADAVE said...

John you have to be careful about the taste to the Murdoch kool-ade. The whole article from the Washington Post (owned by Murdoch) is pushing the far left agenda and is labeled "what if they stop pushing". While I do not disagree with what is in this article it's premise is that there can't be spending cuts only revenue increases. If we read what the more conservative news outlets are saying we hear a constant demand for spending cuts and some revenue increases.
So I expect we'll see dramatic spending cuts, the Bush "tax cuts" will be gone and we'll see tax rates adjusted. I also expect we'll see other tax loopholes closed. I also expect we'll see an admission that we are experiencing inflation at some rate above 2%.
What does that mean? A lower standard of living for all working individuals, including farmers. No more Cruises sir.

Anonymous said...

John I just got a call from the RNC asking for more $. I told them I'd send them 2 Grants after the vote and if they held the line on Obama, otherwise they get nothin from me. I helped put them there last year to get spending under control w/o jacking up taxes. If they can't do what they promised then they can get their money from the moderate liberals like you.

Anonymous said...

Gosh, where were all you conservatives when Bush took a $600 B. surplus and turned it into a Trillion $ defecit. We gave the wealthy hugh tax cuts, started two wars & instituted a seniors prescription drug program without paying for any of it. Just how did you guys expect this to work? Social Security revenue has been making up for low income taxes since the middle 1980"s.
Corporations now only contribute 4% of the governments revenue while Social Security and individual income taxes each contribute 25%. Most of the rest (40%) is borrowed because we haven't been paying the income taxes necessary since the 1980's.
Social programs, including USDA, unemployment & health research consume 21% of the outlays. All this can be found on page 97 of the 2010, 1040 Instructions. Kick all those out and your still 19% short. I guess the next thing to do is stop paying the military and reduce the Soc. Sec. payments of all those retired farmers collecting $300 cash rent on their land. Of course that income is not taxed for Soc. Sec.

Anonymous said...

We conservatives mean "cut spending" period. That means accross the board, including USDA! More revenue has never solved governments problems. They are about like most farmers, take in a new dollar and spend 2. It has to stop now.