Details Of Debt Deal Emerging
Throughout the day today we will see a lot of analysis of the debt deal. Here is the Whitehouse fact sheet on the deal.
Here are some interesting details that I’m reading:
- The deal assumes expiration of the Bush tax cuts at the end of 2012. In order to extend them, they would have to find >$4T in extra cuts.
- This makes the ratio of cuts to revenue 2:1 – better than the 4:1 “grand bargain” discussed with Boehner.
- No cuts to Social Security or Medicaid, Medicare cuts on the supplier side.
- Social Security, Medicaid, Medicare and programs for the poor are exempted from the across-the-board cuts in the trigger.
- $350B in cuts come from the Pentagon.
- Most of the cuts are backloaded not to start until 2013.
Tags: Debt Ceiling
It will also be interesting to see how the appropriations bills play out. My agency hasn’t had a clean appropriation for 2 fiscal years. We’re supposedly looking at a 30% cut. Only way to achieve that is letting people go, and the ones they want to let go are the ones making the biggest salaries. The only way to get them out of the door is to offer them early retirement along with a buyout. Saves money in the long run.
The deal assumes expiration of the Bush tax cuts… This makes the ratio of cuts to revenue 2:1
Um… There is no revenue in this deal. The expiration is happening anyway by current law.
Counting the expiration as a Republican revenue concession is a steaming load of bullshit.
Not really, Puck. The Bush tax cuts won’t be reauthorized, so tax rates will go up, thus generating more revenue.
You are missing the point. The expiration deal was made last December. It is not part of this deal. It is no concession for Republicans to agree to expiration, because their consent is not needed. Listing it as part of this deal is dishonest. When you are playing poker you have to bet your own chips, not the other guy’s.
Does anyone here think that the Republicans are now satisfied? Does anyone doubt that they will take the economy hostage again in order to preserve the Bush tax cuts?
The deal is bullshit. All Obama has done is remind Republicans that he will fold when push comes to shove.
Obama does have a club behind his back that I am sure he will never use – full expiration of the Bush tax cuts, including dividends.
When the tax cuts expire, everything resets to the Clinton rates. But Obama never supported that, not even in 2008.
Under Clinton, dividends were taxed as regular income at 39% and capital gains at 20%. Bush cut both capital gains and dividends back to 15%.
But Obama’s campaign proposal was to increase tax on dividends only to 20%, not to the Clinton rates of 39%. So Obama had already started with a compromise position back in 2008.
I have not yet seen the dividend rates accounted for in descriptions of the current deal.
Dividends are the perfect hostage for Democrats. The only person who can stop Obama from increasing the rate for dividends to 39% is Obama.
Paul Krugman: “The President Surrenders”
http://www.nytimes.com/2011/08/01/opinion/the-president-surrenders-on-debt-ceiling.html
Obama 2011 = Hoover 1931
Jason asked:
Dude, President Obama bragged that the full expiration of the 2001/2003 tax cuts is called for in the White House Fact Sheet! We will remind the voters, come next year, that that is exactly what President Obama wants and that is exactly what the Democrats have fought for: higher taxes, on everybody.
I was surprised that the Democrats in the eleventy-first Congress didn’t bring up a tax cut extension that excluded the top producers before the 2010 elections; that’s what y’all said you wanted, and it would (probably) have been a winning issue for you. Instead, the Democrats waited until after the election to address the issue. Could you have been more stupid?
Now, y’all are hanging your political hats on tax increases for everybody; how do you think that’s going to help you in the 2012 elections?
“No cuts to Social Security or Medicaid, Medicare cuts on the supplier side.”
The supplier side. This is one of the few working class of folks who are still spending money. Ultimately, it lowers the quality of care of health care in the US and brings back to a banana economy. “Would you like a gallbladder operation with that triple bypass, sir?” . Lower middle class, move back two steps.
Puck wrote:
And we hope that he goes into the 2012 elections brandishing that club, because we’ll beat him upside the head with it. 🙂
All tax legislation must originate in the House of Representatives. Sometime around October of 2012, we’ll be pushing through a permanent extension of all of the 2001/2003 tax rates; you guys want to go into the election fighting against that, with your “backup” plan being that all tax rates will increase?
Obama’s response, which will never happen of course, should be “Sure I’ll cut taxes. Send me a clean middle class tax cut bill, and I’ll let you have 20% on dividends. Or else say hello to 39% dividend tax.”
Have you asked yourselves what “Medicare cuts on the supplier side” means? It means that the US will reduce payments to doctors and hospitals for treating Medicare patients. Now, that means that either more doctors and hospitals will decline to accept Medicare patients — an increasing number of them do so already — or that Medicare supplemental insurance will get more expensive.
Or, it could mean that private health insurance for everybody else gets more expensive. Private pay patients already subsidize Medicare and Medicaid patients, because the government does not pay 100% of the costs of treating those patients. If the government then reduces payments, “on the supplier side,” then the costs those patients generate will have to be subsidized from somewhere else. Your taxes go up, in 2013, and sha-zamm! your now-mandatory health insurance premiums are increased as well.
If Democrats could suddenly double their IQs, they might make it all the way up to idiots.
Elimination of Medicare Part D, and drug price negotiation, would be awesome supplier-side cuts that every Democrat should support.
It boggles the mind that when Repubs demand spending cuts, Dems don’t respond with Dem spending cuts like those. Those cuts aren’t even on the table.
“Now, that means that either more doctors and hospitals will decline to accept Medicare patients ”
Which hopefully will be one of the two-by-fours voters need to get hit by to finally reject Republican demands for entitlement cuts.
I don’t think that would happen though. Doctors and hospitals will continue to compete for Medicare money. It’s not like there will be a lot of self-pay patients under the new austerity. And if you are a physician you aren’t really inclined to switch careers. Most of them could stand to tighten their belts a few notches anyway.
Shorter Dana: Republican demands forced Democrats to build an absurd, gerry-rigged health care machine, which Republicans will now criticize for being absurd and gerry-rigged.
No worries. I’m sure that Obama will find a way to keep the Bush tax cuts in place, just like he did before. After all, his new austerity program is certainly keep unemployment growing and he’ll probably be begging to extend unemployment benefits again and keep the defunding of Social Security ongoing.
And, as we all know, high unemployment means low pressure on wage growth which means higher profits for corporations, which is mission accomplished for Obama and his neoliberal supporters.
A1: Please list all his “neoliberal supporters” who prioritize corporate profits.
Plouffe is all over the media trying to put lipstick on this pig. Amazingly, some of the journos are on to him and are calling him out on his shady language on “revenue,” “tax reform,” and the nature of the cuts to the safety net.
Dana P.-
I am loathe to respond to you directly, but your side has vanquished us in grand style, so I’ll make this exception to pay you tribute.
All Democratic politics is now “faith based.” We have to pray that you nominate Bachmann and then we have to pray that the narrow electoral college strategy squeeks out a win, AND even then we have to pray that Obama version 2008 is revived and somehow kills off Obama version 2011. It is ghost-dance time for Democrats.
Jesus, Skydad, or the Great Pumpkin might intervene to prevent President Bachmann, but I’m not optimistic about ancestor spirits reviving BHO v.2008.
Geezer, the easier question to answer is “who isn’t a neoliberal among Obama’s top economic advisors?”
And if you don’t think that they put corporate profits and Wall Street ahead of jobs and Main Street, just look at the results of their policies. And with this new austerity plan, it is only going to get worse.
The term neoliberal is stupid. Stop using it.
I don’t disagree. I thought you were going to tag some of the Obama supporters here as what you call “neoliberals,” though I think that’s an inaccurate term. What you actually mean is business-friendly Democrats in the Clinton-Carper mode.
I would classify the Obama supporters here as naifs who think that someday Obama will show a liberalism that, it’s clear to most, he doesn’t possess.
“would classify the Obama supporters here as naifs who think that someday Obama will show a liberalism”
I don’t see it that way. I think they are mostly social liberals who don’t really care one way or the other about Obama’s Republican economic agenda (or may not even understand the consequences), because they know they will personally be fine either way.
If Obama turns pro-life or seriously anti-gay they’ll bail on him in a heartbeat.
Let me fix that. I would classify the Obama supporters here as naifs who think that Obama never presented himself as a liberal, so it is wrong to hold him to that standard. And they may have a point. I’m tired of that pointless argument.
However, Obama did present himself as a Democrat. I think we can all agree to that much.
I think most Americans, regardless of party label or ideology, are naif about economics. Even so, it should be clear that the idea that we are going back to spending levels equivalent to the Eisenhower days, even though the population of the U.S. has almost doubled since then, should be nothing to brag about. Yet, that is exactly what Obama did.
Many Americans are going to be facing some really hard times, and I don’t see any stop to the downward economic spiral of fewer jobs, lower GDPs, lower tax revenues, and decreased prosperity.
I hope I am wrong, but I am pretty despairing right now.
“Obama did present himself as a Democrat.”
I suppose he is, in a “Hey, I’m not as bad as a Teabagger!” way.
However, Obama did present himself as a Democrat. I think we can all agree to that much.
Yes, yes he did. check out this comment about Obama from a Time writer and tell me if there isn’t something wrong with what she writes:
does she know he’s a democrat?
http://swampland.time.com/2011/08/01/with-debt-deal-reached-can-congress-swallow-its-own-bitter-medicine/
The hilarious thing about that passage is that the writer assumes being viewed as a “fiscal conservative” inoculates Obama against Republican attacks.
Jason wrote:
Don’t be loathe, be engaged! 🙂
However, I can assure you that we don’t see ourselves as having vanquished you in grand style. In fact, I’d say that we gave up too much: the calculations based on the tax cuts expiring, and the utterly ridiculous notion that the Congress will actually agree to spending cuts of a trillion dollars over the next two years.
It was just last spring, with a government shutdown looming, that we went from an initial $100 billion spending cut to a $61 billion spending cut — that was the Republicans negotiating among themselves, before they ever got to the Democrats — to a $38 billion spending cut, which, once passed, the CBO estimated would cut the deficit by something like $252 million (not billion; million). Y’all fought tooth and nail for continued government funding for NPR, which might be a nice thing, but would survive on its own without the government subsidy, and we couldn’t even get that cut. The idea that we agreed to cut $1 trillion over two years without having actually made those cuts yet is laughable.
One good thing about the deal is if the house swings back and senate stays as is, then all of his can be ignored through passing superceeding legislation, since there are no amendments we’re talking about here…
So, as it was in 2010, and will be again in 2012, you get the to government you fight for, and deserve.
Sorry but it is a looser for Democrats and a winner for the oountry. Republicans come out ahead. They will take the Senate next year picking up 4 of these FL, MI, WI, OH, FL, MT, and MO. The House will stay about the same based upon this dynamic plus or minus 10 seats. This reaffirmed the Republican narrative that the deficit is hurting the economy. Democrats accepted it, but then showed they are unwilling to deal with it. That means they lose. Once you accept the premise, you have to act like you care.
Blind (closeted) squirrel finds nut: “This reaffirmed the Republican narrative that the deficit is hurting the economy.”
Complete nonsense as we know, but now confirmed nonsense. Thanks Obama!
Here is another thing Obama wants us Democrats to believe – tax cuts are good for the economy. Reaganomics ubber alles.
I love the ‘Obama has a club behind his back’ stuff.
When it comes to the Bush tax cuts, he’s clubbed himself with it twice so far. He’s fast becoming the baby seal of presidents.
The more apt analogy is the Charlie Brown/Lucy analogy. Obama as Lucy, we as Charlie Brown. Yeah, next time he WON’T pull the football away. Wanna put money on it?
Remember this last week from Carney?
Now, today, you have to admire Carney’s ability to hold that thought, but also work in the competing and contradictory thought in the same exchange with the reporter:
Carney is incorrigible.
Lots of other good quotes in that article from the Delaware delegation all expressing concerns about the deal (Spoiler Alert: They are all going to vote for it).
If the country can survive 8 years of Bush followed by 4 years of Obama followed by 8 years of Bachamnn – it can survive anything..
See, david is worried, and so are the nimrods at the Legion of Tard known as Red State. They’re up in arms over there.
David seemed a lot of things in that comment. Smug. Closeted. Self-satisfied. He didn’t seem worried to me.
This economy crash has been a double-edged sword for Obama. It’s what got him elected, and it’s what will get him not-re-elected. It was just too big. And as a junior Senator 4 years into his first term, he had no guilt in the making of it. But everybody is going to blame him for not turning things around, even though no one could possibly turn this mess around in just a few years. If it sounds like I feel a little sorry for him, it’s because I do. Even though I have good selfish reasons not to (his spanking of the bondholders in the GM bankruptcy for the sake of repaying his union debts, for one). Maybe Jimmy Carter can offer him some consoling words. Misery loves company.
Pelosi is now a Yes, thereby giving up her claim to the title of “Best Democrat In America,” which she was in the running for after Obama gave up all claim to it (by dropping his insistence on revenue). Pelosi now is the top candidate for the “Edith Bunker” award.
Sorry, Nancy, you spin a nice yarn but three times is enough (public option, tax cut extension, now this), executing the judge-pleasing ‘triple cave.”
Maybe not but he knows this ain’t set in stone, hence the reassurance from him that the GOP will be our benevolent corpo-masters for some time to come, so he says…
The only thing this deal assures is that the debt limit won’t be an issue until after 2012, unless I’m mistaken.
Jason is right. I am satisfied. It may not be my ideal but the Democrats have finally bought in hook, line, and sinker to the intellectual and moral superiority of the Republican narative. Tax cuts are good and spending is bad. Debt is dangerous. Government should be scaled back. Once they try to operate from our narrative, but refuse to act accordingly, they lose.
Democrats cannot offer new programs because of the deficit. They can’t raise taxes because of the economy. They will demoralize their base. The business community will choose the real Republicans over the fake ones and they will hurt in the financial category. Their social agenda will write off huge portions of the country and they will lose VA, NC, MO, OH, and FL and put at risk WI, MI, and the upper midwest. Even PA is in play.
It is hard to win when on one side you abandon your base and the other side you do not draw people from the otherside. We win not because of the brillance of our side but because Democrats have boxed themselves in. You cannot say those Republicans are dangerous and adopt their premise. If I seem smug, it is because for the first time, I think the odds of a total sweep have shifted in our favor.
Bully for you then.
Just wonder if that narrative will hold up through the election season.
Gabby Giffords was on the floor of the House for the first time since the assassination attempt to vote in favor of the bill.
Ok, now I’m skipping though a lot of responses, so forgive me if something is covered. The problem I see with higher taxes, is the fact that there is no way to actually make sure the right people/businesses pay it. I wish that there was a simpler way to increase taxes that was fair. It just seems that even if taxes are increased, the really fat cats, and large businesses will find a way out of paying, while leaving small businesses holding the bag.
Tell me if I’m wrong, but the leading republican theory is that taxes destroy jobs right? The democrat theory is that tax revenue used can stimulate the economy to create jobs. The problem with both of these theories is that they are too broad in either respect.
Unfortunately, I don’t have a middle of the road plan that would find a common ground that would work.
Any ideas?
Here is how the Bush tax cuts for the rich will be extended. This debt-ceiling “deal” unbelievably excluded an extension of unemployment benifits. But the Dems can TRY to get them extended by separate legislation. But what will be the bargaining chip for.extending them? The Bush tax cuts once again. And Obama’s promise not to agree to extend the Bush tax cuts again has as much meaning as his promise not to agree to a debt ceiling deal that didn’t include revenue enhancements. That’s how it will happen.
Dana G is right. The Republicans have already said that this is the new template for budget and debt ceiling negotiations. This administration is toast.