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Rand Paul: Both Sides Will Have To Compromise To Reach A Budget Deal

The Tea Party movement is typically known for its all-or-nothing approach on budget and spending issues, but one of it’s most prominent backers in the Senate is towing a very different line:

To reach a deal in Congress over the national debt, Republican Sen. Rand Paul of Kentucky said both political parties need to make concessions, excluding higher tax rates.

“The compromise is for conservatives to admit that the military budget’s going to have to be cut,” Paul said Sunday on CNN’s “State of the Union.” “Liberals will have to compromise and will have to cut domestic welfare.”

“The compromise is where we cut, not where we raise taxes,” he added.

I tend to disagree with Paul when it comes to taxes. Not because I want to see taxes go up, because I don’t see how we’re going to be able to reach a comprehensive deal of any kind of tax increases aren’t on the table, especially tax increases for high income earners. Politically, it’s going to be very hard to get all sides to agree to a  deal that includes cuts in programs that channel money to the middle-class and poor if those Bush tax cuts for “the rich” aren’t part of the package somehow. In fact, on that single issue, the public is clearly at odds with the GOP position. Polling during last year’s debate over extending the Bush tax cuts by CBS News,Gallup,Bloomberg, and CNN all showed broad support for the idea of allowing the cuts to expire for those earning more than $250,000 per year. Additionally, the most recent ABC News/Washington Post poll found that 64 percent of Americans are in favor of raising taxes as part of a deficit reduction deal. As I noted last week, the GOP’s “No new taxes” orthodoxy strikes me as a political, and fiscal, mistake. Nonetheless, it’s at least somewhat encouraging that someone on the Tea Party side is recognizing the fact that compromises are going to have to be reached if we’re going to fix our fiscal problems.

Paul also seemed to back down from previous hints that he might try to filibuster a vote on raising the debt ceiling:

When asked about the debt limit, the next major battle in Congress, Paul reiterated his stance that he would only vote for an increase in the $14.3 trillion limit if the legislation is passed with a balanced budget amendment and “say from here on out this is the last time we’re doing it.”

The Tea Party favorite said he was undecided over whether to use the congressional tactic known as a filibuster to delay the vote.

“I think that’s yet to be determined,” Paul told CNN Chief Political Correspondent Candy Crowley. “I think we haven’t yet determined what our strategy will be, but I can tell you that the people of Kentucky elected me to shake things up; they didn’t elect me to raise the debt ceiling.”

I think we’re going to see a deal on the debt ceiling that includes the Democrats agreeing to allow a vote on a Balanced Budget Amendment to the Constitution. That vote will likely fail to achieve the required super-majorities in either the House or the Senate, but it will give the GOP something they can point to as a face saving element when they ultimately vote to raise the debt ceiling, which they will. This is one issue where the only real option is to hold your nose and do the right thing, playing chicken with the international bond markets makes no sense at all. I’m not sure how easy it will be for someone like Senator Paul to swallow a deal like this, but there really is no other option.

 

 

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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. Eric Florack says:

    We are doomed.
    Compromise of principle is how we arrived at this crisis point in the first place.

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  2. What principles are being compromised?

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  3. JKR says:

    I don’t get your conclusion. Failing to raise the debt ceiling doesn’t require we default on bonds. It just enforces an immediate balanced budget until such time as a Congressional deal can be struck. Are you really saying a balanced budget for a few weeks would kill this country?

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  4. Eric Florack says:

    The truth, for one thing. Just because I happen to have these numbers to hand, let’s look at the 2007 federal budget, shall we? 58% of Federal Income is Spent on wealth redistribution Social Security, Income Security, Medicare and Health;. I note with interest that defense only constitutes 20% of the Federal budget. And of these, is the only constitutionally mandated the expenditure. these social redistribution programs came about by ignoring the principles as laid out in the constitution, by our founders. Chile these on equal footing when budget cut time rolls around, is at least hypocrisy

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  5. Eric,

    The problem you have is that these programs you mention are all very politically popular and suggestions that they be cut are very unpopular with the electorate. You either have to find a way to convince the American people that they are wrong, or accept the fact that you’re not going to get 100% of what you want, and neither is the other side.

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  6. JKR,

    There won’t be any way to cut the budget sufficiently in May or June to allow the government to continue to function and, most importantly, to continue making interest payments on existing government debt without floating new bonds, which we won’t have the authority to do if the debt ceiling is not raised. The immediate impact of this would be a crash in the bond markets and skyrocketing interest rates, which would harm the US dollar and the economy as a whole.

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  7. Hey Norm says:

    Compromise…excluding tax hikes. I don’t think that word means what you think it means.

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  8. Eric Florack says:

    They are far less popular than you would make them, Doug. I note a poll in just this week which suggested that only 23% of Americans think the country is on the right track as regards its budgeting. I suggest you that such redistributionist schemes rank high among those negative concerns.

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  9. That poll did not specifically ask about budgeting it asked about the general direction of the country.

    And when you ask people about cutting Social Security or Medicare, or even raising the retirement age, the opposition is typically at least 2-to-1

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  10. Eric Florack says:

    That depends on what exactly ‘cuting’ it means. As an example, if you propose to continue paying out to those already dependent on such programs until the end of their lives, or at least the end of their legibility, while not accepting new participants in the program, the picture changes greatly. I would point out to you that as for the rest, the situation is obviously centered on our fiscal problems. The economy. That is, after all the central argument of our time. What else would they be talking about ?

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  11. matt says:

    Eric Florack : Bullshit defense expenditures account for up to 30% total once you count the supplemental spending and such that are semi off the books.

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  12. Hey Norm says:

    Erik,
    Since November the tea party, after being elected as fiscal saviors, has done nothing but add to the deficit and wage a culture war. Now they want to abolish Medicare. No wonder a lot of people think the thing is headed in the wrong direction.

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  13. reid says:

    Florack is one of the people mentioned in the first sentence of the post: stubborn, resistant to facts, and absolutely certain he’s right. I’m surprised he wasn’t elected to office in 2010.

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  14. anjin-san says:

    I suggest you that such redistributionist schemes rank high among those negative concerns.

    Hmm. I have been paying into social security for 35 years, and I plan on working at least 15 more years. One of these days I would like to get a return for the half century of paying in. That makes me a participant in a “redistributionist scheme”.

    Well, at least according to the tea puppets…

    I don’t know a single Democrat who does not see that we need to do some serious budget cutting. Most seem to understand that public sector pensions are out of control. We have an opportunity to make real progress on this issue. Sadly, the bitheads of the world simply want to spout right wing dogma, and they are the folks the GOP leadership is playing to.

    Let’s take a look at across the board reform. Public pay & pensions. Multi-billion dollar tax breaks to wildly profitable oil companies. Welfare. Defense spending. Farm subsidies. Gold plated heath care plans for members of Congress. And so on. And yes, we are going to have to raise taxes if we want to solve our problems.

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  15. Hey Norm says:

    Redistribution…
    Middle class income is declining, income of the wealthy is skyrocketing. Effective tax rate for the middle class – 22%. The wealthy – 17%. Corporate risk is nationalized. Corporate profits are not. Redistribution is just another dog whistle word that excites the tea baggers even though they seem incapable of understanding the complexity of the issue.

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  16. Dave Schuler says:

    It’s a bit hard for me to see the shape of a potential compromise. Let me use an example I’ve given bvefore. If one group wants to build a bridge across the river and the other group doesn’t, the compromise solution isn’t building a bridge half-way across the river.

    On the one hand we’ve got some folks who are determined not to raise taxes and on the other folks who are equally determined to balance the budget via tax increases and cutting defense spending, leaving fully two-thirds of the budget, various transfer payments, unscathed.

    For the first group even the smallest tax increase is no compromise but a surrender. For the other group any cuts to Social Security or Medicare is a rout.

    Where’s the compromise?

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  17. Guest says:

    refusing to increase the debt ceiling will be an official acknowledgement by the federal government that we are broke. a debt ceiling filibuster also would have the same result as a balanced budget amendment. at this point there is no reason to go further into debt.

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  18. Mike Elliot says:

    Doug,

    You are assuming that Senate Democrats will let the GOP touch entitlement spending when the real budget debate starts. As you have noted in the comment thread, these entitlement programs are extremely popular with Americans. If you were a Senate Democrat and 2012 was around the corner, wouldn’t you play the third-rail aspect to your favor?

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  19. ponce says:

    China’s top tax bracket is 45% on incomes over about $180,000/year and its economy has been growing at a rate of 10+% for over 30 years now.

    America’s economic problem isn’t a tax or spending problem but a low rate of economic growth.

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  20. Tano says:

    If you were a Senate Democrat and 2012 was around the corner, wouldn’t you play the third-rail aspect to your favor?

    Of course they will., But that does not mean they will not compromise and accept some measure of cuts. They will simply have to go to very great lengths to make the point that Republicans are demanding very deep cuts, and Dems will “potect the people” by forcing the cuts to be small.

    Just like the Republicans will have to do with tax increases – they will make lots of loud noises about how they are against them, but will accept some in the end, but only after making the case that the Dems would raise taxes hugely, so the Republicans will work hard to beat that back, accepting small increases in the end.

    Dubin, who is a solid liberal, a member of the leadership, and very close to Obama, has already signed up for Simpson-Bowles. SoI don’t think there will be a fatal reluctance on the Dem side…

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  21. Dave,

    Yes it is hard to see where the ground for compromise would be here, or what incentive either side has to compromise between now and the 2012 election. Which is why I’m not really all that optimistic we’ll see anything other than a replay of the fight over the 2011 budget, and another season of Continuing Resolutions and threatened government shutdowns

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  22. george says:

    I note with interest that defense only constitutes 20% of the Federal budget.

    Yes, by the same founders who didn’t want America getting involved in overseas wars – I suspect they’d be at least as upset by our being the policeman of the world as they would be by spending money on non-mandated items.

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  23. george says:

    Oops, missed the whole quote:

    . I note with interest that defense only constitutes 20% of the Federal budget. And of these, is the only constitutionally mandated the expenditure. these social redistribution programs came about by ignoring the principles as laid out in the constitution, by our founders.

    Sorry.

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  24. anjin-san says:

    George,

    Not sure how far back your experience with bit/eric goes. When Bush was trampling the constitution, one of his favorite sayings was “the constitution is not a suicide pact”.

    He made it very clear that if it somehow increased his personal safety even by a tiny fraction, he was happy to live crawling away from the principles of the founding fathers rather than perhaps die standing for them.

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  25. Chad S says:

    Simple plan: end the Bush tax cuts and reduce the revue gap significantly over the next decade.

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  26. Eric Florack says:

    Bullshit defense expenditures account for up to 30% total once you count the supplemental spending and such that are semi off the books.

    No proof? Oh, wait, you can’ty.. it’s off the books, huh?
    Funny thing. Are you really convinced that defense is the only expenditure off the books? Or is it simply the target the left invariably chooses for cuts?

    Middle class income is declining, income of the wealthy is skyrocketing.

    Funny thing; It waited until the Democrats were in power, to do that.

    Yes, by the same founders who didn’t want America getting involved in overseas wars – I suspect they’d be at least as upset by our being the policeman of the world as they would be by spending money on non-mandated items.

    What you’[re missing is that in those times the chances of being attacked from some country or group half a world away was a bit lower given the transportation logistics of that day.

    He made it very clear that if it somehow increased his personal safety even by a tiny fraction, he was happy to live crawling away from the principles of the founding fathers rather than perhaps die standing for them.

    As usual, Anjin, the truth for you is as it always has been, a relative thing. You wouldn’t know objectivity if it jumped up and bit you, which to me seems likely.

    Simple plan: end the Bush tax cuts and reduce the revue gap significantly over the next decade.

    And who, then, is to fund the investment needed for economic growth, eh?

    China’s top tax bracket is 45% on incomes over about $180,000/year and its economy has been growing at a rate of 10+% for over 30 years now.

    While true, what you’re missing is our federal tax rates are already at that level. And there are no ‘state’ level taxes in China as there are here… that changes the picture rather dramatically. Ponder this for just a moment; our tax rate are higher than China, where the government owns everything.

    Hmm. I have been paying into social security for 35 years, and I plan on working at least 15 more years. One of these days I would like to get a return for the half century of paying in. That makes me a participant in a “redistributionist scheme”.

    Yes, it does. That you actually expect something will actually come back from that forced investment makes you a fool, as well. THey already spent the money, and you’ll never see it. See, that’s the problems with socialism. Eventually, you run out of other people’s money to spend on a given “problem”.

    And yes, we are going to have to raise taxes if we want to solve our problems.

    As shown in the China comparison, above, this is not a problem of not enough taxes. This is an issue of too much spending.

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  27. So Eric is upset that we’ve strayed from principle by creating all manner of welfare spending, and then proposes a solution that punishes the people who stuck to principle (e.g. the people saving for their own retirements who will see their savings largely wiped out by the resulting market crash) and leaves those depending solely on welfare untouched.

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  28. john personna says:

    Rational folk can find a compromise. Almost by definition.

    That isn’t to say actual Americans, at this point in time, are quite that rational.

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  29. ponce says:

    “While true, what you’re missing is our federal tax rates are already at that level. And there are no ‘state’ level taxes in China as there are here… that changes the picture rather dramatically.”

    This story from today shows you are completely wrong about that, Eric.

    “The Internal Revenue Service tracks the tax returns with the 400 highest adjusted gross incomes each year. The average income on those returns in 2007, the latest year for IRS data, was nearly $345 million. Their average federal income tax rate was 17 percent, down from 26 percent in 1992.”

    http://news.yahoo.com/s/ap/20110417/ap_on_re_us/us_no_taxes

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  30. reid says:

    ponce: And I’m curious how Florack can reconcile his claim with Doug’s post titled “Tax Burden At HIstoric Low?”.

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  31. anjin-san says:

    As usual, Anjin, the truth for you is as it always has been, a relative thing. You wouldn’t know objectivity if it jumped up and bit you, which to me seems likely

    Well, my opinion is based on your own repeated statements. They made it very clear that you live in abject fear of Muslims, and that you did not mind bending the Constitution if it made you feel a bit safer.

    I do understand that you might object to being reminded of what can only be described as craven cowardice on your part. Sadly, your dedication to the principals of the founders seems to exist only in so much as it furthers your own political agenda. Well, at least it has been a while since you treated us to a rant about being converted at the point of a sword…

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  32. george says:

    What you’[re missing is that in those times the chances of being attacked from some country or group half a world away was a bit lower given the transportation logistics of that day.

    So what you’re saying is that at least some of the founders beliefs have to be discarded because conditions have changed? I’m sure you can guess where I’m going with this …

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  33. An Interested Party says:

    As an example, if you propose to continue paying out to those already dependent on such programs until the end of their lives, or at least the end of their legibility, while not accepting new participants in the program, the picture changes greatly.

    Except for the fact that not accepting “new participants” would mean cutting off people who are already paying into those programs, you make a great argument…good luck convincing younger people paying FICA taxes that they shouldn’t get those retirement benefits someday “for the good of the country”…

    Funny thing; It waited until the Democrats were in power, to do that.

    That didn’t just start within the last few years…

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  34. ponce says:

    “And I’m curious how Florack can reconcile his claim with Doug’s post titled “Tax Burden At HIstoric Low?”.”

    I think Eric just likes to argue.

    The facts don’t really matter.

    Still, I think the fact that America’s wealthiest citizens have trained millions and millions of Republican WalMart greeters and McDonalds fry cooks to believe that raising taxes on people who make $1 million a year or more is a moral evil on the order of incest is a triumph of propaganda.

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  35. matt says:

    Eric Florack : Well the problem is that reality isn’t black and white like you pretend it is. If you add in the costs associated with the military such as satellites, pensions, veteran’s affairs, defense related costs in the ED, homeland security, interest on the war debt etc you quickly end up with a number much higher then what you’re quoting. Now you’re just going to nitpick with me as to what constitutes defense spending but the reality is we’re on route to spend about a trillion dollars on overall defense related spending in 2012.

    Funny thing; It waited until the Democrats were in power, to do that.

    So wait your earlier post claimed that the Democrats are redistributing the wealth from the rich but now you’re claiming that the Democrats are giving redistributing to the rich. My god man your “logic” makes me dizzy trying to keep up..

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  36. Herb says:

    I saw this segment this morning. It was clear that when Paul meant “compromise” he didn’t really mean, you know, compromise.

    He said it quite clearly, as you quoted:

    “The compromise is where we cut, not where we raise taxes,” he added.

    In other words, no compromise on raising taxes. That may not exactly come off in print, but that’s what he meant.

    PS. The line-up on Crowley’s show this morning was dreadful. Once you finished Rand Paul using reasonable words in unreasonable contexts, Donald Trump got on and started talking about bossing OPEC around. It was like, dude, why didn’t we think of that before???

    2011. Such a joyous time to be a Republican.

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  37. Axel Edgren says:

    Taxes are already at their lowest for several decades. If the Galtian elites don’t want to invest anyway, why not raise their taxes?

    You know what else hurts the economy? Millions of families no longer being able to consume.

    Discretionary spending per claimant is not going up, while taxes per rich person have gone down. Apparently, the parasites are the problem? Holy hell, I really think America needs to go down so as to serve as a warning for future generations.

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  38. Fog says:

    Libertarians, here’s the deal. If you want to turn the economy into a deregulated free-for-all, where shenanigans like those that caused the 2007 crash become more common, then you have to accept the fact that we unwashed masses are going to insist on a social safety net. It doesn’t need to be lavish, just enough so we can stay in our homes, eat, and see a doctor in our old age. But it needs to be written into law, so secure that even the Masters of Wall St can’t screw it up for us (again). That’s the deal.

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  39. Eric Florack says:

    So Eric is upset that we’ve strayed from principle by creating all manner of welfare spending, and then proposes a solution that punishes the people who stuck to principle (e.g. the people saving for their own retirements who will see their savings largely wiped out by the resulting market crash) and leaves those depending solely on welfare untouched.

    So, if tey saved for their own retirement, as opposed to being dependent on government for it, how does cutting spending punish them?

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  40. Eric Florack says:

    Libertarians, here’s the deal. If you want to turn the economy into a deregulated free-for-all, where shenanigans like those that caused the 2007 crash….

    Nice try, but the fact is that the crash you speak of was the direct result of government over-regulation and over taxation, and of course Democrats trying to get loans for people who couldn’t afford it, but who do tend to vote Democrat.

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  41. Davebo says:

    58% of Federal Income is Spent on wealth redistribution Social Security,

    Wow. If only taxpayers were forced to pay some kind of tax in order to receive Social Security!

    Repeat after me Bit. Social Security is not an entitlement. Don’t believe me?

    Ronald Reagan enacted the biggest tax increase in US history to ensure we paid our fair share.

    Hate to be such a buzz killer but facts are pesky things.

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  42. Herb says:

    So, if tey saved for their own retirement, as opposed to being dependent on government for it, how does cutting spending punish them?

    If most people actually saved for retirement, you might have a point. But most people don’t save for retirement, and those who do, do so because of the incentives (tax breaks, matching contributions, interest payments) not because “saving for retirement” is its own reward.

    Some retirement plans are only affordable because of the tax breaks. Awful risky bet hoping those tax breaks will remain in place when the “cutting spending” fairy comes to town…

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  43. Eric Florack says:

    Well, my opinion is based on your own repeated statements.

    No, merely your own fantasy, as usual.

    So wait your earlier post claimed that the Democrats are redistributing the wealth from the rich but now you’re claiming that the Democrats are giving redistributing to the rich. My god man your “logic” makes me dizzy trying to keep up..

    Some recent history: Under Carter, the Rich got richer, and the poor got poorer. This in spite of…. I suggest, because of the redistributionish schemes of the left, Carter himself included.
    History seems to be repeating itself.

    Oh, and isn’t that Rich get Richer” factored into you reading of the fall of the USSR?

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  44. An Interested Party says:

    …because of the redistributionish schemes of the left, Carter himself included.

    Be a dear and provide some evidence to back up this claim, lest we all think you are just talking out of your ass, alas, your usual MO…

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  45. Eric Florack says:

    Oh, hell, that’s easy, man. Look at the stats; Under Carter, the only income group to see any growth in their incomes were the top one percent of earners. This was a time when, remember, Democrats held both the WH and Congress, with a 2-1 Democrat advantage in the house.
    ]

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