Friday, July 15, 2011

Going 'Big'

When the Senate Minority Leader this week made his initial proposal to end the crisis brought about by the refusal of House Republicans to assent to lifting the debt ceiling, the likes of Ed Schultz, Rachel Maddow, and Lawrence O'Donnell were exultant. Prominently displaying a white flag, Rachel Maddow asserted "Mitch McConnell announced his plan to have Republicans surrender on the debt ceiling essentially, to just let Democrats raise the debt ceiling, have the country avoid default and have Republicans really extract nothing in exchange for that." Worse, O'Donnell explained to us liberals who doubted the President that

as the negotiating sessions become less productive, it actually increases the chances that the president will get his original wish, a wish that no one seems to remember anymore—a simple clean bill—that does nothing, nothing, other than raise the debt ceiling. A bill that does not impose draconian spending puts in Medicare and other programs that Democrats cherish, and a bill that does not include any increase in tax revenues that Republicans oppose so relentlessly and irrationally.

But if O'Donnell was smug- as he usually is, sometimes with good cause- Ed Schultz was wondrously naive, gushing

And President Obama tonight, in my opinion, is emerging as the most honest broker maybe Washington has seen in a long, long time. He openly states he‘s willing to put his presidency on the line to bring both sides together to get a deal, and the only way he believes that can be done is if some revenue from the wealthiest Americans comes into the Treasury. And the Republicans won‘t budge.

Schultz was impressed by the modesty of Obama, who "openly states he's willing to put his presidency on the line." As The New York Times reported, though,

with prospects for a broad budget deal having dimmed, Mr. McConnell’s plan would shift both substantive and political responsibility onto Mr. Obama, forcing him to take almost sole ownership of a debt-limit increase and any consequences from not doing more to address the budget deficit.

If it looked like surrender, talked like surrender, and walked like surrender, it was surrender, granting the Democratic President authority to effect a raise in the debt ceiling with none of the cuts in spending demanded for months by the GOP. Except it required that the President, so willing to put his presidency on the line, take responsibility for raising the debt ceiling. Accountability can be discomfiting, it turns out, assuming libertarian-leaning ultra-conservative Larry Kudlow is correct:

As has been reported, McConnell is negotiating now with Sen. Harry Reid for a large-scale package that will allow the debt ceiling to rise unless overturned by a two-thirds vote. If a White House debt-ceiling deal comes through with $1.5 trillion of spending cuts, that will be part of the package. Right now, it’s not completed because enforceable spending caps have not been determined.

The key part of the new McConnell package is a joint committee to review entitlements in a massive deficit-reduction package. Unlike the Bowles-Simpson commission, this committee will be mandated to have a legislative outcome — an actual vote — that will occur early next year. No White House members. Evenly divided between Republicans and Democrats. No outsiders. This will be the first time such a study would have an expedited procedure mandated with no amendments permitted. Also, tax reform could be air-dropped into this committee’s report.

Fortunately,Vice-President Biden reportedly had been pushing the Gang of Five nee Six away from cuts to Social Security and Medicare. Unfortunately, he's not the CEO who, at his press conference today, signaled his support for means-testing Medicare, given that nothing could be better than turning a highly popular health insurance program into a welfare program. The popularity of Medicare, and public opposition to any cut, direct or indirect, in benefits, need not be an obstacle, however. Under the scheme described by Kudlow, program "reforms" would be "expedited" and members of Congress and the president given cover for what otherwise would be unpopular votes damaging to the health of elderly Americans. It would be a heck of a reform from a president who as a candidate pledged to change the way Washington "take(s) care of its business," as he characterized it today.

If Republicans are involved (as they would be), there could be only one outcome to "tax reform", which might be "air-dropped" into the committee's report. Republicans consistently complain- yes, complain- that not enough Americans pay income taxes (sometimes dishonestly termed "taxes"). The income tax base must be flattened, they argue, and tax rates must come down. That is a slightly cryptic way of saying: those deadbeat working-class and middle-class Americans must pay and those currently paying a high rate need to pay less.

President Obama called the Republicans' bluff. When the latter were offered $4 trillion in cuts, they backed down. But President Obama's bluff also was called. Offered an apparently sweet deal, he wouldn't take yes for an answer, instead begging the GOP to accept spending cuts so that he can run next year as the Great Deficit Hawk. He may need a few niggling, relatively inconsequential, tax increases but a wise Republican Party will give them to him, whereupon the lobbyists will swing into action, and the loopholes will be reinstated. Meanwhile, President Obama will have his Grand Bargain, enacting something, anything, "big" that will transform America, somehow.

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