• Facebook
  • Twitter
  • Subscribe
  • RSS

Far-Reaching Reform On The Table At Debt Negotiations?

The Washington Post reports that President Obama is pushing for a deal on the budget that goes far beyond anything we’ve seen so far:

President Obama is pressing congressional leaders to consider a far-reaching debt-reduction plan that would force Democrats to accept major changes to Social Security and Medicare in exchange for Republican support for fresh tax revenue.

At a meeting with top House and Senate leaders set for Thursday morning, Obama plans to argue that a rare consensus has emerged about the size and scope of the nation’s budget problems and that policymakers should seize the moment to take dramatic action.

As part of his pitch, Obama is proposing significant reductions in Medicare spending and for the first time is offering to tackle the rising cost of Social Security, according to people in both parties with knowledge of the proposal. The move marks a major shift for the White House and could present a direct challenge to Democratic lawmakers who have vowed to protect health and retirement benefits from the assault on government spending.

“Obviously, there will be some Democrats who don’t believe we need to do entitlement reform. But there seems to be some hunger to do something of some significance,” said a Democratic official familiar with the administration’s thinking. “These moments come along at most once a decade. And it would be a real mistake if we let it pass us by.”

Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

That would represent a major legislative achievement, but it would also put Obama and GOP leaders at odds with major factions of their own parties. While Democrats would be asked to cut social-safety-net programs, Republicans would be asked to raise taxes, perhaps by letting tax breaks for the nation’s wealthiest households expire on schedule at the end of next year.

The administration argues that lawmakers would also get an important victory to sell to voters in 2012. “The fiscal good has to outweigh the pain,” said a Democratic official familiar with the discussions.

The New York Times reports that the proposal grows in part out of what have been, until now, secret discussions between the President and Speaker Boehner:

The president’s renewed efforts follow what knowledgeable officials said was an overture from Mr. Boehner, who met secretly with Mr. Obama last weekend, to consider as much as $1 trillion in unspecified new revenues as part of an overhaul of tax laws in exchange for an agreement that made substantial spending cuts, including in such social programs as Medicare and Medicaid and Social Security — programs that had been off the table.

The intensifying negotiations between the president and the speaker have Congressional Democrats growing anxious, worried they will be asked to accept a deal that is too heavily tilted toward Republican efforts and produces too little new revenue relative to the magnitude of the cuts.

Congressional Democrats said they were caught off guard by the weekend White House visit of Mr. Boehner — a meeting the administration still refused to acknowledge on Wednesday — and Senate Democrats raised concerns at a private party luncheon on Wednesday.

Not surprisingly, the suggestion that entitlement reform is on the table now has Democrats worried:

Democrats are not just worried about the substantial policy issues at stake; they are also concerned about the political implications of any deal as they try to hold control of the Senate next year and win back the House.To the degree that any deal wins bipartisan support on slowing the growth of Medicare, for example, it would deprive Democrats of what has been one of their most potent arguments heading into 2012: their assertion that Republicans would gut the traditional Medicare system and leave older Americans vulnerable to rapidly rising health care costs.

Faced with the prospect that the federal government would default on its credit obligations, Democrats might indeed be cajoled into backing an agreement they did not strongly support. But at the moment, there is substantial private and public grumbling about what looms ahead.

Republicans, meanwhile, are still focused on the “no tax increases” pledge to a degree that one wonders if they would even accept the proposal that Post outlines:

Representative Eric Cantor, the Virginia Republican and majority leader, said Wednesday that he would not accept any net increase in federal revenues, and that any money raised from eliminating tax breaks or loopholes must be offset by cuts elsewhere in the tax code.

“If the president wants to talk loopholes, we’ll be glad to talk loopholes,” Mr. Cantor said. “We have said all along that preferences in the code are not something that helps economic growth over all. But, listen, we are not for any proposal that increases taxes. Any type of discussion should be coupled with offsetting tax cuts somewhere else.”

It’s hard to know where this proposal will go until we know the details of whats in it and how the GOP reacts to it. In a rational universe, assuming that the Post description is what the proposal turns out to be, it seems like a no-brainer. In fact, much like December’s deal that extended the Bush tax cuts, it seems like a deal that’s more likely to bother Democrats than Republicans since it puts Medicare and Social Security on the table, and potentially depriving Democrats of a 2012 campaign issue that could work to their benefit in House and Senate races. For Republicans, while its not a perfect plan, it would surely seem to be pretty darn goo. The question for Republicans is whether they’ll let the perfect be the enemy of the good, and whether they’ll let themselves continue to be held hostage by the likes of Grover Norquist and Jim DeMint, who seem to forget that the GOP only controls one House of Congress. Democrats, meanwhile, have to give up the illusion that entitlement reform is out of the question, as well as the idea that we can continue pretending that there isn’t a long-term debt problem that  can only dealt with by cutting spending.

This sounds like it could be the beginning of a real solution to the impasse, but only  if everyone on both sides of the table agrees to act like an adult.

Related Posts:

About Doug Mataconis
Doug holds a B.A. in Political Science from Rutgers University and J.D. from George Mason University School of Law. He joined the staff of OTB in May, 2010 and also writes at Below The Beltway. Follow Doug on Twitter | Facebook

Comments

  1. hey norm says:

    The moderate President…pissing off both sides of the aisle…but getting a lot of stuff done in the process. That’s why I voted for him. And why I probably will again.

    Like or Dislike: Thumb up 3 Thumb down 0

  2. Boyd says:

    At the risk of sounding contentious, Doug, you talk about Republicans…

    … who seem to forget that the GOP only controls one House of Congress.

    On the other hand, your criticisms on this subject sometimes make it seem as though you forget that the GOP does control one House of Congress. They’re using that reality to leverage their desired result. At what point do they abandon their leverage to make a deal? Was it months ago when you cajoled them to “act like adults,” and before they had gotten any concessions out of Democrats?

    I’m not happy that we’re as close to the August deadline as we are, but negotiations such as these aren’t comfortable if both sides have competent negotiators. Now it seems as though the GOP is getting some concessions they wouldn’t have extracted from the Democrats if they hadn’t pushed us this close to the brink. We’ll see how it all shakes out, but this development tends to support the view that they would have been wrong (meaning, not have achieved as many of their desired results) to wimp out as you’ve been advocating in the past.

    Like or Dislike: Thumb up 0 Thumb down 0

  3. michael reynolds says:

    The GOP has more to worry about than just the Tea Party. If they do this Obama wins re-election.

    Like or Dislike: Thumb up 0 Thumb down 0

  4. Boyd says:

    @michael reynolds: Getting the best result out of these negotiations certainly runs the risk of making the President’s reelection easier. But as much as I would dislike that result, I’m not sure it’s worth crashing the system.

    But I believe the GOP still needs to try and get the most that they can for the American people out of this opportunity, even if it makes Obama’s reelection more likely.

    Like or Dislike: Thumb up 0 Thumb down 0

  5. Just curious, but are you laboring under the impression that massive, choking debt doesn’t have far reaching effects?

    Like or Dislike: Thumb up 1 Thumb down 0

  6. @Boyd:

    Now it seems as though the GOP is getting some concessions they wouldn’t have extracted from the Democrats if they hadn’t pushed us this close to the brink.

    The question is that when the final deal comes, will it be able to pass the house? Most of them don’t seem to have left themselves a way to walk back from their negotiating position to an actual compromise.

    Like or Dislike: Thumb up 1 Thumb down 0

  7. Moosebreath says:

    Doug, in order to look evenhanded, continues to fight the straw version of Democrats, not the real ones:

    “Democrats, meanwhile, have to give up the illusion that entitlement reform is out of the question, as well as the idea that we can continue pretending that there isn’t a long-term debt problem that can only dealt with by cutting spending.”

    Funny, but every version of the negotiations I have seen to date has included Medicare and Medicaid in where the cuts to spending come from. So does Doug disbelieve all of the prior reports? Does he think that they aren’t entitlements? Does he think cutting them does not constitute cutting spending? Inquiring mionds want to know.

    Like or Dislike: Thumb up 0 Thumb down 0

  8. @ Charles Austin — you would have a valid point if and only if US Treasury interest rates on the 10 and/or 30 year bonds were at 8% or 9% or 10% instead of 3.2%. Your concern would be valid if projected long term inflation trends (as measured by the TIPS spread) was more than 2%.

    Having large debts when the carrying costs are miniscule is not that much of a problem unless the problem is you don’t like some policies that don’t favor the rentier class and you want to use the debt as a club to enact your policy preferences.

    Like or Dislike: Thumb up 1 Thumb down 0

  9. To continue on # Moosebreath —
    Democrats already have cut Medicare in PPACA mainly through the direct elimination of Medicare Advantage subsidies that are above fee for service levels, and indirectly and more importantly over the long term through the use of comparative effective research to inform decisions and analysis by IMAP.

    Democrats have been willing to go at wasteful spending in entitelements and they got hammered for it in 2010.

    Like or Dislike: Thumb up 1 Thumb down 0

  10. hey norm says:

    @ michael…i think obama has head-faked them into a spot where they are damned if they do, damned if they don’t.
    if boehner and moderate republicans agree to revenue increases the tea stains will go crazy and the base will mutiney. bachmann will be a shoe-in for the nomination, with zero chance at the general. boehner may lose his speakership.
    if they don’t agree to revenue increases the normal public sees them as unreasonable, and willing to bankrupt the entire country in order to provide for the wealthiest 10%. between this and the ryan budget…well they may not lose the house, but they may lose a big part of their majority.
    additionally, if they do not agree to revenue increases, then the 14th amendment remedy is probably justified in the eyes of the public.
    obama putting entitlement cuts on the table (which lets face it, is inevitable at some point in the future anyway) is potentially a master stroke – if only for the timing. meep meep?

    Like or Dislike: Thumb up 3 Thumb down 0

  11. ponce says:

    Just curious, but are you laboring under the impression that massive, choking debt doesn’t have far reaching effects?

    I’m under the impression that the Republicans only started caring about “The Debt”‘ on the day Obama won the Presidency.

    Like or Dislike: Thumb up 5 Thumb down 0

  12. Tlaloc says:

    Democrats, meanwhile, have to give up the illusion that entitlement reform is out of the question

    I think dems as a whole would be very open to entitlement reform if it wasn’t the GOP they had to negotiate those reforms with. Given that the GOP has 30+ years of hating on the social safety nets, comparing them to fascism and demanding they be torn to piece, it’s kind of hard to get a good faith feeling from them. And that was before the current crop of almost literally insane teabaggers took over key parts of the party.

    It may be true that “only Nixon could go to China” but you can’t expect the Chinese to have been full of trust and love for the bastard.

    Like or Dislike: Thumb up 1 Thumb down 0

  13. Tlaloc says:

    I’m under the impression that the Republicans only started caring about “The Debt”‘ on the day Obama won the Presidency.

    Even that’s an exaggeration since despite all the “sky is falling” BS the right still won’t support rolling back the bush tax cuts which the GAO says would cause fully a third of the debt to evaporate.

    Like or Dislike: Thumb up 0 Thumb down 0

  14. Boyd says:

    @Stormy Dragon: The “no way out” scenario depends on how realistic the rank-and-file Republicans are. Those who can’t find the right balance between sticking to their principles and compromising with their oppenents are doomed to failure, no matter what.

    Like or Dislike: Thumb up 0 Thumb down 0

  15. Muffler says:

    The GOP decided to undermine everything the President suggested or tried to compromise (in every area) in order to cause “a failed presidency” even at the cost to the nation. Not only that, but they used terms and language to inflame the national discourse even when that terminology and language was not based on any truth.

    Now it seems that it will all backfire on them and and on the nation. If they do the right thing for the nation they will look like the President forced them to knuckle under and thus be seen as weak. If they stand their ground and double down on stupid they will continue to undermine the interests of the nation. Suck it GOP. Vote them all out of office as they are literally not fit to govern.

    Like or Dislike: Thumb up 0 Thumb down 0

  16. john personna says:

    I could see an interesting dynamic, where the Republicans won’t want to accept too many cuts from Obama, because that would make him a moderate ;-)

    They have to blow up the talks, to keep him a socialist.

    Like or Dislike: Thumb up 0 Thumb down 0

  17. Dave Schuler says:

    @Dave Anderson:

    That’s not the only consideration. The research of Rogoff and Reinhart suggests that when a country’s debt-to-GDP ratio goes over 80% the growth rate of GDP takes a 1% hit. In other words if you’ve been expecting 2.5 to 3.5% growth, it will be reduced to 1.5-2.5%.

    Like or Dislike: Thumb up 0 Thumb down 0

  18. john personna says:

    I suspect that is more correlation than causality, Dave.

    When GDP growth slows, debt-to-GDP climbs (update: as we have seen).

    Like or Dislike: Thumb up 0 Thumb down 0

  19. Maxwell James says:

    If this happens my opinion of Obama – and for that matter, Boehner – will go immeasurably up.

    Like or Dislike: Thumb up 0 Thumb down 0

  20. Ben Wolf says:

    @hey norm: If the Democrats agree to major cuts in Social Security, the most successful government program in American history, they permanently lose my vote.

    This is the same corporatist agenda we see replicated over and over again in developing countries. They “liberalize” their economies allowing massive financial speculation and income inequality growth, creating a wealthy elite which siphons off wealth from the greater economy. The increasing concentration of capital in the hands of a few means healthy investment is quickly crowded out, because it can only aborb so much of the capital.

    The wealthy elite, seeking ways to draw greater returns for their excess capital, invent new and increasingly risky investment vehicles (i.e. credit default swaps, synthetic bonds, mortgage securitization). This perverts the existing incentive structure to reward greater and greater acts of malfeasance, resulting in the economic meltdown we experienced beginning in 2008.

    Enter “fiscal austerity”: having made tremendous profits in the process of blowing up the economy and destroying revenue, the elites now demand the middle-class and poor accept cuts to the programs which make their lives bearable. Told they need to sacrifice, to be responsible, to accept the realities of the situation, those with the least power are required to subsidize the same few who became tremendously wealthy through rampant irresponsibility.

    Our government has transferred $14 trillion to the financial industry since 2008. That government is now making loans in the hundreds of billions to that same industry interest free, then borrowing that money back and paying the banks three percent interest, deliberately driving the country further into debt so as to guarantee bank profits. It has already spent $4 trillion fighting useless wars lobbied for by the defense industry. It has locked every last American into involuntary servitude to the same health insurance industry which has been ripping us off for decades, while allowing that industry to continue what is by far its most abusive practice, recission. That same government continues to transfer hundreds of billions to Big Oil and Big Agriculture in tax breaks and direct subsidies.

    But that debt is somehow considered Good Debt. Only Social Security and Medicare are creating Bad Debt, the kind which threatens to destroy the universe as our utterly worthless elected officials tell it.

    Our government and economic elites are looting the country of what is left, and that’s all this deal will be.

    Like or Dislike: Thumb up 7 Thumb down 0

  21. Maxwell James says:

    @michael reynolds:

    I’ll be interested to see if in the coming days the House Republicans add “repeal of Obamacare” to their list of demands. Presumably by doing this Obama is hoping to preserve a commitment to universal insurance even through sharp budget cuts. If a deal can be forged, it may the final step in ensuring that the PPACA endures.

    Like or Dislike: Thumb up 0 Thumb down 0

  22. john personna says:

    Enter “fiscal austerity”

    If true, I get points for seeing it early, and warning here frequently.

    Like or Dislike: Thumb up 0 Thumb down 0

  23. john personna says:

    (I wait to see what kind of Social Security cuts are proposed. Means testing wouldn’t bother me. It doesn’t worry me not to need it, and not to get it. On the other hand, cuts across the board do hit the weakest, and I would be opposed.)

    Like or Dislike: Thumb up 0 Thumb down 0

  24. hey norm says:

    @ Ben…
    While I see your general point, I have to wait and see what form the cuts take. The best example is the cuts made to Medicare as part of the ACA…they cut overpayment and didn’t impact benefits. (As a contributor to Obama’s campaign I am still awaiting appointment to the Death Panel though.)
    Face it…there are smart cuts and there are bad cuts. For instance, I’m OK with means testing. Warren Buffet can pay more and/or receive less than his Secretary. There may be more appropriate ways to index the growth of benefits.
    It also bears mentioning that the White House is pushing back on the idea that there is anything new here.
    From 50,000 feet I have to say that saying “do not touch SS or Medicare” is nothing more than the left’s ideological version of “no tax cuts”. Reagan and Tip O’neil got together and modified SS. At the time there was a great deal of demagoguery by the left, but the deal got SS to the point where it will last for a while still. Clinton raised taxes and the Republicans claimed it would be certain financial ruin for the country….they were as dead-wrong then as they are now.
    Democracy requires compromise. And reasonable people.

    Like or Dislike: Thumb up 2 Thumb down 0

  25. hey norm says:

    @ Maxwell…
    Repealing the ACA increases the debt by a trillion +/-. Kind of hard to make an argument for that. Although some still do.

    Like or Dislike: Thumb up 0 Thumb down 0

  26. mantis says:

    Will Republicans act like adults? Let me refer to Gawker commenter monkeybusiness:

    Let’s say there’s this person called America. Now, there’s a person standing next to America named Gop. Gop is holding a loaded gun to the side of America’s head, and is demanding that you hand over fifty puppies, or he’s going to shoot America in the head.
    Like any sensible person, you hand over fifty puppies, because you don’t want to see America get shot in the head. Gop takes the puppies and America lives.

    Now, a couple months later, Gop and America are at it again. I guess America is Gop’s mistress or something, I don’t really know. The difference is that this time, Gop has put all the puppies in a cage and wired it with explosives.

    Gop is now demanding five hundred puppies. If Gop doesn’t get five hundred puppies, he’s going to shoot America in the head, and blow up the fifty puppies you already gave him.

    Now let’s say you get all five hundred puppies and deliver them to Gop, and tell Gop that in exchange for these five hundred puppies, you would really appreciate it if Gop would hand over the detonator for the fifty puppies wired with explosives, and the gun he’s holding to the head of America.

    Gop refuses. Gop now has a gun against America’s temple, the hammer is cocked, and he has fifty puppies wired with explosives, with an offer for five hundred more if he’ll just put down the gun and detonator.

    The problem is that Gop can’t do that, because Teaparty, his former partner, is holding his wife, Reelection, hostage too. If Gop doesn’t get all the puppies, and keeps the gun and detonator, Teaparty is going to shoot Gop’s wife Reelection in the head.

    Now, for this to untangle itself, someone has to die. Either Gop blows up the puppies and shoots America in the head because you won’t give in to their completely unreasonable demands, or America and the puppies live because Gop gave you the gun and detonator, but Teaparty killed Gop’s wife, Reelection.

    There is a third and fourth way. Gop turns around and shoots Teaparty, sparing his wife, mistress, and puppies, or Gop shoots himself, thus freeing America and the puppies and leaving Teaparty out in the cold.

    So really, it’s a double hostage situation. The Democrats are offering the world to the GOP to keep them from blowing it all up, but the GOP can’t take the deal because if they do, the Tea Party will go fucking nuts and everyone that votes for it will face a primary challenge.

    Basically, no they won’t, because even if they wanted to, the Tea Party has a gun to their heads, and they’d rather see America take the bullet. I hope I’m wrong about them.

    Like or Dislike: Thumb up 0 Thumb down 0

  27. Socrates says:

    “Getting the best result out of these negotiations certainly runs the risk of making the President’s reelection easier. But as much as I would dislike that result, I’m not sure it’s worth crashing the system.”

    Really?

    You’re not sure?

    So you might be in favor of “crashing the system” to defeat Mr. Obama?

    I am… speechless.

    Like or Dislike: Thumb up 1 Thumb down 0

  28. Boyd says:

    @Socrates: “Crashing the system” could take many forms. Many of them could be acceptable to me, regardless of the effect on any politicians. Others wouldn’t be acceptable.

    Open your mind, Socrates. Your absolutism steals your tongue.

    Like or Dislike: Thumb up 0 Thumb down 0

  29. mantis says:

    So you might be in favor of “crashing the system” to defeat Mr. Obama?

    Yeah, that seems to be the current position of the right. Burn the whole place down to save it from ObamaHitlerStalin. They’re nuckin’ futs.

    Like or Dislike: Thumb up 0 Thumb down 0

  30. hey norm says:

    John Personna’s quip; “They have to blow up the talks, to keep him a socialist.” is probably very precient. If you are Paul Ryan, and your goal is to gut the social contract in order to make room for additional tax cuts for the wealthy, then there is no reason to go along with this bargain. It raises tax revenues, the slashing of which is your raison d’etre, and it gives Obama a political win. My guess is that the deal doesn’t get done.

    Meantime some interesting nuggets from a Pew Poll out today:
    - Six in ten Americans said it was more important to leave Social Security and Medicare benefits untouched than to make cuts as a way to reduce the deficit.
    - Sixty-two percent of Republicans earning under $30,000 per year said preserving entitlement benefits should supercede deficit reduction
    - Among Republicans earning more than $75,000, 63% said entitlement cuts should be on the table
    Really? Who’da thunk it…

    Like or Dislike: Thumb up 0 Thumb down 0

  31. Boyd says:

    @mantis: Then I’m sure you’re rushing to urge Democractic leaders to accede to all Republican demands, since, y’know, nothing is worth “crashing the system.”

    Like or Dislike: Thumb up 0 Thumb down 0

  32. Steve Verdon says:

    Rather than roughly $2 trillion in savings, the White House is now seeking a plan that would slash more than $4 trillion from annual budget deficits over the next decade, stabilize borrowing, and defuse the biggest budgetary time bombs that are set to explode as the cost of health care rises and the nation’s population ages.

    Meaningless cheap talk without a commitment mechanism in there somewhere.

    Tlaloc,

    Even that’s an exaggeration since despite all the “sky is falling” BS the right still won’t support rolling back the bush tax cuts which the GAO says would cause fully a third of the debt to evaporate.

    I think you need to elaborate a bit or provide a link. Your telling us that rolling back the Bush tax cuts will reduce “the debt”….so you are saying a $4-5 trillion dollar tax increase? Over what time frame? If it is a longer time frame then I’d say the tax increase would likely have to be larger as we will keep adding to the debt.

    That’s not the only consideration. The research of Rogoff and Reinhart suggests that when a country’s debt-to-GDP ratio goes over 80% the growth rate of GDP takes a 1% hit. In other words if you’ve been expecting 2.5 to 3.5% growth, it will be reduced to 1.5-2.5%.

    Exactly right, if the above holds then the cost of the debt is trillions of dollars in lost GDP potential. Some might shrug at that, but lowered GDP means that it will take even longer to bring down the unemployment rate or it might remain stubbornly high for a very long time.

    JP,

    I suspect that is more correlation than causality, Dave.

    When GDP growth slows, debt-to-GDP climbs (update: as we have seen).

    Actually, you’ve just provided the causality right there. Add on that no government is going to sit by and let large firms go down and you have pretty much a solid reason why debt soars and the debt-to-GDP ratio skyrockets. Without the spending that Bush and Obama have undertaken sure our debt-to-GDP ratio would have gone up, but not nearly as much as it has with the spending.

    As for mechanisms that can reduce growth, more and more money goes to servicing the debt…i.e. not being productive. That is at least one reason to expect lower growth. Another is interest rates, right now they are very low, but with rising debt there is the possibility that interest rates will go up meaning that overall investment might go down. That too could reduce growth. I suppose you can trot out an American exceptionalism argument that since we are so big and such that wont happen to us, but not exactly something we should be happy basing policy on, IMO.

    Like or Dislike: Thumb up 2 Thumb down 0

  33. mantis says:

    Then I’m sure you’re rushing to urge Democractic leaders to accede to all Republican demands, since, y’know, nothing is worth “crashing the system.”

    So your opinion is one side should give everything while the other gives nothing, or else the side that will give nothing will crash the system? Thank you for admitting Republicans are no better than terrorists.

    Like or Dislike: Thumb up 0 Thumb down 0

  34. Console says:

    Means testing social security doesn’t save much money because the social security tax is already regressive. The wealthy and the upper middle class pay the same amount. Hell, maybe less in lots of cases because I’m not entirely sure how much a guy like Bill Gates even earns from an actual payroll salary. I can’t really abide by means testing a program with a regressive revenue stream. The payroll tax cap has to disappear and the social security tax has to be changed to be purely progressive, for me to remotely think of signing onto such a measure.

    Like or Dislike: Thumb up 0 Thumb down 0

  35. Boyd says:

    @mantis: You caught me, mantis! I’m a Republican terrorist!

    Except for the fact that I’m not a Republican. Or a terrorist. Nor did I say anything that you said I said.

    Try another lie, that one’s not working.

    Like or Dislike: Thumb up 0 Thumb down 3

  36. mantis says:

    @Boyd:

    Except for the fact that I’m not a Republican.

    Didn’t call you one.

    Or a terrorist.

    Didn’t call you that either.

    Nor did I say anything that you said I said.

    It’s the obvious implication. Democrats should accede all Republican demands, and get nothing in return, or the Republicans will crash the system, which you “maybe” think is worth it.

    Like or Dislike: Thumb up 4 Thumb down 0

  37. hey norm says:

    Short version of an interesting theory by Andrew Leonard at Salon, Jon Chait at New Republic, and Ezra Klein at the Post:
    Obama knows there is no deal possible on revenue increases in the House…so he appears to be the adult willing to negotiate and compromise while making sure that when the debt-ceiling caves in it does so on the Republicans.
    Like I typed above…they are damned if they do and damned if they don’t.
    Meep meep.

    Like or Dislike: Thumb up 0 Thumb down 0

  38. Ben Wolf says:

    @norm,

    Here’s the problem: Social Security isn’t adding to the deficit. It has twenty years before it runs out of funds even if we do nothing. Simply changing the way COLAs are calculated and removing the taxable income cap would put the program on course for long-term sustainability.

    As for Medicare the best thing we could do is remove the legislation forbidding it from negotiating prices, something the Republicans made damned sure was also included in Part D so their provider donors could continue scamming the government for all it was worth. Yet it seems a lot of people in D.C. are really looking forward to taking the route which hurts as many people as possible.

    Like or Dislike: Thumb up 0 Thumb down 0

  39. hey norm says:

    @ Ben…
    Yes – you list several specific and acceptable changes. I just have a problem jumping to the abstract scorched earth conclusion of hurting as many people as possible until I see an actual proposal.
    On the other hand you may be more right than wrong…and I may just be naive.

    Like or Dislike: Thumb up 0 Thumb down 0

  40. Console says:

    To comment on the actual budget negotiations…
    So four trillion over the next ten years. Our debt will be what? 20 trillion instead of 24 or something like that? If we don’t cut that 4 trillion we’re going to fall off a cliff? That’s the straw that’s going to break the camel’s back, that’s worth threatening economic death over? This is the big response to “doing nothing is not an option.” And this is the part where I pretend future congresses are truly bound by the things we do today.

    I hate DC. From the politicians, to the pundits that seriously applaud these things.

    Like or Dislike: Thumb up 0 Thumb down 0

  41. mantis says:

    This is what I was talking about in my first comment.

    Here’s what the chart will show: The Republican Party is dependent, to an extent unprecedented in recent political history, on a single ideological group.

    You know, read the whole thing and all of that.

    Like or Dislike: Thumb up 0 Thumb down 0

  42. ken says:

    The last economic collapse didn’t cause enough pain and suffering for the population to support government programs. About half the population are still republicans We will need about fifteen years of double digit unemployment and a population that sheds billions of pounds of body fat before things like social security and medicare become something worth fighting for and everyone becomes liberal once again. The New Deal programs are victims of their own success.

    Like or Dislike: Thumb up 0 Thumb down 0

  43. Dave Schuler says:

    @Ben Wolf:

    You might want to check the Social Security Trustees’ Report on that. As of this year Social Security is somewhat cashflow negative and is likely to continue to be so for the foreseeable future. Since so much of what we’re spending at the present is borrowed, that means that we are in fact borrowing to pay Social Security, i.e. it’s adding to the debt.

    Like or Dislike: Thumb up 0 Thumb down 0

  44. sam says:

    BTW, here’s something that most of us have never considered (from Felix Salmon):

    What happens on August 3?

    Samuel Beckett’s famous phrase “You must go on, I can’t go on, I’ll go on” is a pretty good summation of what will face Treasury come August 3 if there’s no deal on the debt limit. Reuters has a fantastic story this evening on the impossible quandary facing Treasury officials should the unthinkable come to pass; purely as a practical matter, it’s far from clear that it’s even possible to stop making the 3 million payments that Treasury makes automatically every day. Doing so involves a massive computer-reprogramming effort which I’m sure could not be implemented overnight — and for political reasons nobody is going to get started on such an effort until after all hope is lost for a deal in Congress.

    Realistically, then, the government is likely to breach the current debt ceiling no matter what Congress agrees. A failure to lift it would be a bit like an edict to a steaming supertanker that it had to stop dead: no matter how much force of law that edict has, sheer momentum is going force many basic operations of the public fisc to continue for some period of days or weeks.

    At that point — and no earlier — there would be enormous pressure on the White House to pull out the 14th Amendment and declare the debt ceiling unconstitutional, if only for practical reasons: doing so would be a lot easier than trying to reprogram the computers which are set to send out $49 billion of Social Security checks on August 3. Not to mention that no president ever wants to be the person who stiffed America’s seniors on their guaranteed monthly income: a greater failure of leadership can hardly be imagined. On the other hand, saying “enough of you bickering legislators, I’m sworn to uphold the Constitution and do what’s in the best interest of the country” is much more presidential.

    Like or Dislike: Thumb up 0 Thumb down 0