On more than one occasion, I have found myself lying awake at night wishing that either the Republicans would find some actual morals(as opposed to the ones they so stridently feign), or at the very least stumble upon the epiphany that it’s ok not to hate their fellow Americans, even if they are poor.
Since the chances of either happening is about as likely as Grover Norquist growing a conscience, I’m forced to simply revel in the fact that Republicans have been so smug in their obstructionism that they failed to see that they were being outflanked by smarter people who were actually paying attention. Almost inexplicably, the Republicans have seemingly and unknowingly painted themselves into a corner AND have passively agreed to $3.00 in tax increases for every $1.00 in spending cuts.
It gets better. Most of the spending cuts will take place at the Pentagon without a single penny being cut from Social Security, Medicare or even Medicaid.
Essentially, the Republicans have snatched defeat out of the mouth of victory. I know, right? That’s usually the Democrats’ style.
But back in August, while they were threatening to default on the debts incurred under the past 5 presidents, Republicans scored what they thought was a big win by persuading Democrats to accept a trigger that consisted only of spending cuts.
The cost of “their big win” was:
· Concentrating the cuts on the Pentagon while exempting Social Security, Medicaid and Medicare beneficiaries, and
· Delaying the cuts until January 1, 2013.
Naturally, Republicans figured they had won a big victory over the Democrats because they avoided tax increases, and thus, left their ridiculous pledge to little Grover Norquist intact. Unfortunately, history, except the kind they re-write so well, is not a Republican strong suit, (see Palin / Paul Revere, Bachman / the Founding Fathers’ eradication of slavery, et al).
They apparently forgot that 12 years earlier, George W. Bush had set a trigger of his own; and in order to pass his tax cuts using the 51-vote budget reconciliation process, he had agreed to let them sunset in 2010. Then, a last-minute between with Obama/Boehner extended them until the end of 2012.
The result? Now there are two triggers.
· An extremely progressive spending trigger worth $1.2 trillion that goes off on January 1, 2013. and,
· An extremely progressive tax trigger worth $3.8 trillion that goes off on yes, January 1, 2013.
If you include a reduction in interest payments, these two policies by themselves would reduce future deficits by about $6 trillion; far more than anything the supercommittee , or any other committee, ever would have dreamt possible. And the real kicker is that for these two occurrences to happen, the Democrats have to, well, simply wait.
The Republicans need Senate Democrats and President Obama to join them in passing an alternative, or they need House and Senate Democrats to join them in overturning President Obama’s veto of their alternative. So the only way for Republicans to avoid this dual-trigger nightmare is to somehow convince Democrats to bail them out.
Now, given the Democrats’ propensity to shoot themselves in their own collective feet, it’s not entirely out of the question; and Republicans have two points of leverage.
1. Democrats don’t want to raise $3.8 trillion in taxes, much of which would on the backs of the already struggling middle-class households. Democrats have said that their preference is to make the Bush-era tax cuts for income under $250,000 permanent. That means making 80 percent of them permanent.
2. This deficit-reduction plan could be devastating for the overall economy. Instead of phasing it in slowly over the course of the next decade, it would all hit at once; quite possibly causing another economic downturn at the time it would be the most destructive.
But the Democrats are definitely in the cat-bird’s seat. Gridlock gained them a deficit deal the likes of which they could have only imagined. Normal negotiating tactics would suggest that whatever the Republicans offer must be better than that. Wouldn’t the White House prefer to see the spending trigger replaced with a bigger, more thoughtful deficit-reduction plan?
Letting the Bush tax cuts expires is not a popular policy. Nor is automatic across-the-board cuts. But if they happen due to Republican obstructionism, that’s fine, right? If they happen because Democrats don’t want to make an alternative deal, that’s quite another.
But the White House economists can run the numbers like everyone else. Surely, they know that the revenue levels they’re talking about are insufficient to deal with the retirement of the Baby Boomers without some sort of adjustments or change in calculation. And if they try their hardest to come to a deal with the Republicans-but like so many other deals over the last year, it falls apart at the last minute because the GOP won’t break their tax pledge, and the upper-income cuts expire-I have to wonder if they really think that would be a bad outcome?
Or is it actually what they were attempting all along? Hmmm.