Friday, May 27, 2011

Did Tom Coburn just quadruple the debt ceiling ransom?

Tom Coburn, who recently withdrew from the Senate Gang of Six that was purporting to negotiate a comprehensive tax reform/deficit reduction deal along the lines of Bowles-Simpson, deserves some kudos for saying with increasing clarity that any such deal will have to include increasing tax revenue -- a point the GOP leadership and over 90% of the rank-and-file are unwilling to concede.

In an interview with the WSJ's Jerry Seib posted today, however (below), Coburn also sets the bar for a deal to raise the debt ceiling at $4 trillion in deficit reduction -- that is, a deal on the scale of President Obama's proposal, albeit obviously tilted far more to the right. The working media assumption, prompted by an intimation from Joe Biden, has been that a debt ceiling deal might block out about $1 trillion in cuts over ten years, and/or institute triggers mandating cuts if reductions don't hit targets at various points. 



At about 14:25, Seib asks whether a debt ceiling deal can take the country "some way down the path" toward deficit reduction.  Coburn's response (my emphasis):
"Some way down the path doesn't cut it. You can't move some way down the path. You have to reassure the international community, if you're going to raise this debt limit, that you've put in motion the things to solve our financial problems. Can we buy some time? Yeah. But one billion -- I mean one trillion or two trillion dollars doesn't do that.  The grand bargain has to be greater than $4 trillion dollars over the next ten years to give us the time to get the next four trillion dollars out over the remaining, what's left of that ten years. Because there's no way you can figure out a way to get out of this if interest rates rise, and we're at real risk for that, because the plan right now, and this goes back to the revenue issue...which way would you rather have revenues raised on you in this country? Would you rather know it? Or would you rather have net negative interest earnings on every asset that you have, and deflation -- inflation of your assets with declining purchasing power which will wipe out the middle class, markedly harm the poor people in this country, and also hurt the those that are well to do  but not to the same extent, so, which would you rather have? Would you rather know what's coming, or have the government steal it from you through inflation?

Striking massive bipartisan tax reform and deficit reduction deals has historically been a mutli-year enterprise.  Coburn seems to be suggesting that the job has to be done before the federal government hits the point of default in July -- all in the name of dodging some massive inflation sword of Damocles hanging by the slenderest of threads. That is playing Russian Roulette with the nation's solvency -- in the name of preserving the nation's solvency. Or, as Jonathan Chait put it, "the notion that it's worth precipitating a crisis now to prevent a  possible crisis somewhere in the future is utterly daft, like burning  down your house to get rid of hazardous electrical wiring."

Seib is a good columnist, but I was disappointed by his lack of pushback in this interview. He didn't challenge Coburn's assertion that raising seniors' share of their Medicare costs, apparently radically, would magically bring health care costs down. He didn't challenge Coburn's claims that 25-30% of federal government costs could be cut be eliminating waste, fraud and abuse, and ditto for Medicare, or ask him how to do that.  He didn't challenge the insinuation that Democrats who point out that the Ryan plan ends Medicare as we know it are demagoguing the issue, or suggest that Democrats might have different methods of controlling Medicare costs, or ask if he supports the cuts to Medicare in the ACA.  Finally, he didn't ask for clarification on the final apparent assertion that a debt ceiling deal has to encompass $4 trillion in cuts and revenue, or the claim that there will be rampant inflation if we don't cut a deal of that scale immediately. Indeed, Seib seemed to subvocalize agreement every fifteen seconds or so, with no pushback at all.

Related posts
Writhing out of Norquist's embrace, Part IV
Forget Ryan - watch Coburn and Chambliss
Writhing out of Norquist's embrace, Part III
Chambliss Seizes the freedom to acknowledge that 2+2=4
Chambliss, Coburn, Crapo to Norquist: Kowtow or brush-off?

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