Sunday, July 24, 2011





Negotiating For The Other Side


Jonathan Cohn of The New Republic has been talking to Administration officials, who told him of the changes to entitlements President Obama had agreed to prior to Speaker Boehner breaking off the recession promotion debt reduction talks. These, as well as more fluid elements, he explains below:

Medicare: Raising the eligibility age, imposing higher premiums for upper income beneficiaries, changing the cost-sharing structure, and shifting Medigap insurance in ways that would likely reduce first-dollar coverage. This was to generate about $250 billion in ten-year savings. This was virtually identical to what Boehner offered.

Medicaid: Significant reductions in the federal contribution along with changes in taxes on providers, resulting in lower spending that would likely curb eligibility or benefits. This was to yield about $110 billion in savings. Boehner had sought more: About $140 billion. But that’s the kind of gap ongoing negotiation could close.

Social Security: Changing the formula for calculating cost-of-living increases in order to reduce future payouts. The idea was to close the long-term solvency gap by one-third, although it likely would have taken more than just this one reform to produce enough savings for that.

Discretionary spending: A cut in discretionary spending equal to $1.2 trillion over ten years, some of them coming in fiscal year 2012. The remaining differences here, over the timing of such cuts, were tiny.

The two sides had also agreed upon a basic structure for the deal. The agreement was to specify the discretionary cuts and implement them right away. But the entitlement cuts and new revenue were to be in the form of instructions to Congress, leaving it committees and eventually each chamber to write the legislative language and enact the changes. To make sure Congress followed through, the agreement was to include a failsafe: If Congress failed to enact the changes and produce the necessary deficit reduction, then automatic reductions to Medicare and Medicaid as well as automatic tax increases (mainly, expiration of the Bush tax cuts for the wealthy) were to take effect.


Cohn notes that the revenue-enhancing proposal of Boehner and that of Obama "were far more tilted towards the Republican position, of seeking to balance the budget primarily if not wholly through spending cuts."

But not only for that reason. The two men agreed to raise revenue, in Cohn's words, "by closing loopholes, broadening the base, and lowering rates overall. " Details are sketchy but in Republican-world, "broadening the base" and "lowering rates overall" means there are too many people in the working class and the middle class who are paying no income tax while the wealthy are paying an excessive rate. ( While increasing revenue to people living in the real world (Democrats) means increasing taxes and/or eliminating deductions, many Republicans maintain, implausibly, that it means lowering tax rates or maintaining those same deductions for "job producers," the lords of the universe). If the partisan roles had reversed, it would be "as if George W. Bush had offered to tax evangelical churches and ban private ownership of handguns in exchange for Democrats agreeing to raise the cap on Social Security." Not likely Bush, who did not negotiate like Barack Obama, would have done so.

Cohn was impressed because, following his televised remarks Friday,the President "described himself as a 'Democratic president'" when he stated "I think this whole episode has indicated the degree to which at least a Democratic President has been willing to make some tough compromises.... A lot of Democrats stepped up in ways that were not advantageous politically. So we’ve shown ourselves willing to do the tough stuff on an issue that Republicans ran on."

Sorry, no. Mr. Obama did not refer to himself as representing the values of a Democratic president, fighting for the middle class while helping raise the standard of living of the poor and maintaining the safety net for children and the elderly. He cynically used his affiliation with the Democratic Party to illustrate that Democrats, too, can cut off the poor and the elderly and disregard a 9.2% unemployment rate. I sold out my constituency- so can't you guys be a little bit reasonable?






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