Editore"s Note
Tilting at Windmills

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February 17, 2011

WHAT A 'GRAND BARGAIN' MIGHT LOOK LIKE.... Informal, bipartisan talks began in December over some kind of "grand bargain" on the budget. Elizabeth Drew wrote this week that such talks are progressing towards "a sweeping deal that could include entitlements and tax reforms as well as budget reduction."

I found it hard to believe these talks would gain any real traction, at least anytime soon, but I may have underestimated matters. The Wall Street Journal has a front-page piece today suggesting the "grand bargain" is getting closer to a reality.

A bipartisan group of senators is considering legislation that would trigger new taxes and budget cuts if Congress fails to meet a set of mandatory spending targets and other fiscal goals aimed at reducing federal deficits.

The plan would break the task of deficit reduction into four pieces: a tax code overhaul; discretionary spending cuts; changes to Medicare, Medicaid and other entitlements; and changes to Social Security, aides said. The Social Security system is on firmer financial footing than other major entitlement programs and raises political sensitivities that lawmakers want to deal with separately.

The exact details, not surprisingly, are still a little vague, but the WSJ reports that the overall plan would include separate caps on security and non-security spending, with deep automatic cuts in the event budget targets are missed. On entitlements, Social Security would be treated differently, but other entitlements "would also have to meet fixed targets," or face automatic penalties.

Taxes are part of the mix: "The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates. The committees would be given a target for additional revenues to be raised by the new code. The deficit commission's version of tax reform would net $180 billion in additional revenues over 10 years."

The negotiations, according to the article, are being spearheaded in the Senate by Democrats Mark Warner (Va.), Kent Conrad (N.D.), and Majority Whip Dick Durbin (Ill.), and Republicans Saxby Chambliss (Ga.), Mike Crapo (Idaho), and Tom Coburn (Okla.).

Durbin told the WSJ, "We're getting close. We understand that if we're going to do something that's important, it has to be timely." He said the group hopes to reach agreement "in a matter of weeks, or months."

I can't speak to whether the article is correct. There are obviously talks underway, but whether the outline presented by the Wall Street Journal is accurate is entirely unclear.

But if the article is even close to being right, and the leak is some kind of trial balloon to gauge public reactions, let me be clear: I'm reaching for the slingshot. Indeed, I had the same reaction to this as Jon Chait:

This is actually hard to believe. According to this story, the deal calls for nearly ten times as much spending cuts ($1.7 trillion) as higher revenue ($180 billion.) Do you know how little $180 billion over ten years is? It's essentially nothing. It's one-quarter as much as the cost of extending the Bush tax cuts only on income over $250,000. [...]

The worst possible course of action would be to agree to the token $180 billion/ten year revenue hike instead of the partial or complete repeal of the Bush tax cuts. Democrats would be better off negotiating a deal that consists entirely of spending cuts, and leave themselves the flexibility to use the expiration of the Bush tax cuts as leverage. Giving up the $700 billion of revenue from the Bush tax cuts for the rich, and quite likely the $3.9 trillion from the total expiration of the tax cuts, in return for $180 billion would be nuts.

It's so nuts I'm tempted to assume this story couldn't possibly be correct.

I can only hope it's not.

Steve Benen 10:45 AM Permalink | Trackbacks | Comments (28)

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Comments

Right-wing Democrats are far more dangerous than Republicans, above all when one of them is in the White House. They can get away with stuff that would trigger massive protest if Republicans tried to do it without political cover from across the aisle. Steve seems to be beginning to catch on to this.

Posted by: Steve LaBonne on February 17, 2011 at 10:49 AM | PERMALINK

Warner and Chambliss were on NPR this morning talking about how good for us their plan is -- you can listen here, if you can stand it.

Posted by: Steve M. on February 17, 2011 at 10:50 AM | PERMALINK

While I'm an unabashed Bernie fan, I think this interview with Hon. Sen. Sanders is refreshing:

"The deficit primarily has been caused by two wars unfunded, huge tax breaks to people who don't need it, an insurance-company-written Medicare Part D prescription drug program, and the bailout of Wall Street.

The cause of it is not hungry children in this country or people who are sleeping out on the street."

http://www.pbs.org/newshour/bb/politics/jan-june11/berniesanders_02-16.html

Posted by: jhm on February 17, 2011 at 10:58 AM | PERMALINK

CHAIT:It's so nuts...

Completely nuts.

Obama has ALL the leverage here, because only the Taliban Republicans want to shut the government down. The country club Republicans know they will all go down in flames.


Posted by: Joe Friday on February 17, 2011 at 11:01 AM | PERMALINK

Prior to its acquisition by Rupert Murdoch, the WSJ was a reliable source of straight news. Now, not so much.

And it's a lot easier for politicians and pundits to gin up excitement over a "grand bargain" than it is for them to just do their fucking jobs.

Posted by: hells littlest angel on February 17, 2011 at 11:03 AM | PERMALINK

The Democrats are congenitally incapable of seeing and then seizing political opportunities. They should be smelling blood in the water and pressing their advantage: the GOP is flailing in the water as they lurch toward unpopular and extremist positions. They should be provoked to go even further and then ruthlessly attacked, mocked, and caricatured.

Controlling "spending" is a Tea Party issue--it is NOT ours, and I have no idea why we should give a rat's ass about helping them satisfy their base. The prudent measures necessary to tackle long-term debt can be taken on a purely partisan basis, say by refusing to reauthorize the Bush tax cuts after the 2012 election. If places where switched, there's no way the GOP would be cutting the Dems this much political slack on what is basically a bogus issue.

Posted by: RMcD on February 17, 2011 at 11:03 AM | PERMALINK

Let's see. Just 2 months ago, Republicans managed to strongarm Democrats into extending the Bush cuts. Why would anyone think that in 2 short months, the freshly-minted Republican majority or the Democrats who enabled them 2 months ago would suddenly be willing to do the responsible thing and expire the Bush tax cuts after all?

Why would anyone think that Republicans would be willing to consider any tax increase that was anything more than a fig leaf?

Of course any "grand bargain" isn't going to contain anything substantive in the way of tax increases. These kind of "bipartisan compromises" are never anything more than a handful of appeasing, self-serving Democrats providing a bipartisan veneer to whatever the Republican agenda happens to be.

Remember the 'Gang of 12' which successfully preserved the Democrats' right to filibuster Bush's judicial nominees by effectively promising never to use it? This smells exactly like that.

Posted by: David Bailey on February 17, 2011 at 11:04 AM | PERMALINK

Republicans Saxby Chambliss (Ga.), Mike Crapo (Idaho), and Tom Coburn (Okla.).

Now that there's a Murderer's Row of Stupid!

I told you what the "Grand Bargain" was yesterday:
It's to kill the Pawns, so that the Kings, Queens, Knights, Rooks and Bishops can continue to live on in the lifestyle to which they've grown accustomed.

Posted by: c u n d gulag on February 17, 2011 at 11:16 AM | PERMALINK

I have to agree with the sentiment of all the previous comments, especially Mr. Bailey's. My immediate question when I read "180 billion over ten years" was, you got to be kidding! That's peanuts! Let's have a real tax hike by not only going back to Clinton era income tax rates, but even further back to Reagan era income tax rates. And then shut down the loopholes that allow the off shoring of corporate income to raise even more. Then let's bring the troops home from Afghanistan and Iraq before more of them get hurt and require lifelong medical expenses.

Posted by: Texas Aggie on February 17, 2011 at 11:16 AM | PERMALINK

Why are they always called 'entitlements' when we PAID for them throughout our working lives?

The corporate/business ethos of which the Tea Party is the mouthpiece would call it by a name that sounds as if we were getting something for nothing wouldn't they?

The corporate vision is now very clear: reduce working people to virtual slaves without rights and with less than living wage. This is what the Tea Party made possible.

Now how do the poor idiots that AFP paid to shout, "Keep your government hands off my Medicare" feel now?

Just remember the police state wolf is coming at us in the sheep's clothing of libertarian/Tea Party figures.

Posted by: jjm on February 17, 2011 at 11:16 AM | PERMALINK

"The tax-writing committees would be given two years to overhaul both the individual and corporate tax codes, with general instructions to close tax breaks and minimize or eliminate tax deductions while lowering tax rates."

Cuts now, taxes in two years....

If Democrats are really this stupid I will officially move from a pragmatist to a Ralph Nader supporter.

Posted by: sven on February 17, 2011 at 11:19 AM | PERMALINK

I have a very hard time believing anything with Tom Coburn involved would result in any type of reforms or measures that would reflect "bipartisan" work or any conclusion benefitting anyone but hardcore GOPers . In fact, the mere presence of him in these discussions make me doubt any good can come of it. Sort of like having Alan Simpson run that "committee" Obama put together and then swept under the rug. And to be "fair", I don't like Conrad a bit, either.

Posted by: T2 on February 17, 2011 at 11:20 AM | PERMALINK

Expiration of the top end Bush tax cuts should be the starting point for any "Grand Bargain". And if the GOP wants to touch Medicare and Medicaid, total expiration of the tax cuts should be the price of admission.

Nobody is serious about the deficit who doesn't start from the premise that the tax rates for personal income tax have to go back to Clinton era levels. That was the last time there was anything resembling a balanced budget, so to not go back there to start out is crazy.

If the GOP wants to lower some tax rates, let them lower the top corporate rate to 20% and close loopholes to make sure that all corporations that turn a profit are actually paying taxes.

Posted by: majun on February 17, 2011 at 11:22 AM | PERMALINK

I say the best thing is to just let ALL of the Bush tax cuts expire which will generate $4 trillion over the next decade. Then focus on decreasing medicare/medicaid/health care costs more forcefully then the health care reform bill has done. Then cut defense by $100 billion each year from where it is now.

By doing this we can get our deficits under control.

I suspect that Obama doesn't appear to be sweating it because he knows that he can simply just allow the Bush tax cuts to expire on everybody on January 1st 2013 which will really help the budget. He doesn't have to accept the cat food commission proposals at all for that proposal also cut the deficit by $4 trillion.

Posted by: Maritza on February 17, 2011 at 11:24 AM | PERMALINK

The DLC may be defunct, but the 3rd way neolibs are alive and kicking the middle and lower classes where it hurts. I loathe all politicians (except for Senator Sanders).

Also, second what Steve LaBonne and RDcD wrote.

Posted by: CDW on February 17, 2011 at 11:27 AM | PERMALINK

Only $180 billion over ten years is indeed nuts. I trust Dick Durbin, so the story must be incorrect. Calm down, progressives.

Posted by: t case on February 17, 2011 at 11:28 AM | PERMALINK

It is always safest to assume that Senate Democrats will do the venal, morally wrong and politically brain-dead thing whenever they have the opportunity. So this is going to happen, and then Obama will wonder why he didn't get re-elected.

Posted by: JMG on February 17, 2011 at 11:30 AM | PERMALINK

With a name like Crapo on the bargain, it's going to be great. Get ready for the Obama/Reid "Hot Apple Bend-over"! The R-tard party is going to shoot it's wad all over us!

Hooray...

Get mad progressives, calming down has done 0.

Posted by: Trollop on February 17, 2011 at 11:39 AM | PERMALINK

It's so nuts I'm tempted to assume this story couldn't possibly be correct.

Given that Warner and Conrad are neqotiating for the dems - believe it.

Posted by: Stetson Kennedy on February 17, 2011 at 11:39 AM | PERMALINK

Durbin's involvement signals that this Grand Bargain is a White House sponsored project.

Posted by: Ron Byers on February 17, 2011 at 11:41 AM | PERMALINK

Sight-unseen of course, but looking at the names of those Senators who claim to be negotiating "for" the Democrats, I have no confidence in what they will eventually propose.

Posted by: Big River Bandido on February 17, 2011 at 11:44 AM | PERMALINK

"It's so nuts I'm tempted to assume this story is correct."

Corrected.

Having three "Democrats in name only" negotiating with three of the biggest gargoyles on the Republican side (Draft-dodger-attacks-a-patriot Chambliss??? Crazy Coburn??????? Wingnut Crapo??? F'r Chrissake!!!) is guaranteed failure.

Only the morons masquerading as the "liberal" side of the Corporate Party could think such a defeat as this was a "victory."

It's what happens when the Good Emperor Obummer does his usual "negotiation": run up the white flag of surrender and then offer to negotiate.

This country is soooooooooooooooooo fucked by these people. Moving out is sounding better and better every day, the ship of state is sinking and the "damage control team" wants to blow more holes in it below the water line. When the ultimate result of this moron stupidity comes due for payment in the coming ten years, the entire world is going to be fucked.

Posted by: TCinLA on February 17, 2011 at 11:55 AM | PERMALINK

uhh, but Obama ran on taxing at Clinton rates. And he f'n creamed McCain and Joe the dumass.
Mark Dayton won too, two years later. Same message.
This is not a joke. Unless you think Obama is a big liar. I don't. Also, not a loser. Please try to remember that, at least.

Posted by: m2 on February 17, 2011 at 2:46 PM | PERMALINK

Catfood Commission... version 2.0 (or, with Conrad, version 1126.0) in the corporatists' attempt to take down the New Deal. Conrad should just eat some shit - instead of plotting IN SECRET, YET AGAIN, to dish it out to us rabble - and go home already. Bastards.

Posted by: Analytical Liberal on February 17, 2011 at 2:54 PM | PERMALINK

"a tax code overhaul; discretionary spending cuts; changes to Medicare, Medicaid and other entitlements; and changes to Social Security"

So this is a Grand Bargain between the center-right and the far right? Why am I not surprised?

Posted by: Tom Allen on February 17, 2011 at 4:15 PM | PERMALINK

Given that Warner and Conrad are neqotiating for the dems - believe it.
Posted by: Stetson Kennedy on February 17, 2011 at 11:39 AM

Second Stetson. Conrad was the gum in the works throughout the healthcare debate; there's no reason to think he's changed. Warner is a millionaire first, high-handed executive second, and Dem a distant third. I'm a bit surprised at Durbin being one of the Dem troika but I guess I don't know enough about him to have a strong opinion.

Posted by: exlibra on February 17, 2011 at 5:07 PM | PERMALINK

Crazy numbers are sometimes just mistakes.

When a number seems too crazy to be true, don't just accept it as crazy, think of how it could be a mistake. I took a second to factcheck the number in question and I'm pretty sure the reporting should have beeb more like "$180 in addtional revenue after 8 years."

The WSJ's own reporting from Dec showed in graphic form that the deficit commission's reforms would generate $785 billion from 2012-2020 with a bar graph that shows approximately $180 billion in 2020.

check out the graph http://online.wsj.com/article/SB10001424052748704594804575648503541856136.html

Posted by: MassachusettsLiberalinDC on February 17, 2011 at 6:02 PM | PERMALINK

Getting rid of the tax cuts for those making over $250,000 must be an important part of any agreement. We should not go along with what a few Democrats and Republicans dish up.

We must make a deal similar to what Obama made during the lame duck session, but not with tax cuts for the rich. You Republicans want to cut a program; pay for it by reducing a subsidy or a business "tax expenditure," otherwise known as loophole.

Posted by: Paul Siegel on February 17, 2011 at 6:53 PM | PERMALINK




 

 

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