Clyburn, in a separate “Political Capital” interview airing on the same program, said a large deal approaching $4 trillion isn’t likely. He said he sees a chance of a smaller package as long as Republicans agree to revenue increases.That is a pretty staggering lack of faith in the team leader, and you can't call it unjustified. Putting lipstick on the Aug. 1 debt deal pig, the White House did voice a rather weak Obama promise -- not even really a promise, more like a statement of capability -- to veto any legislation that extends the Bush tax cuts for the wealthiest:
“I’ve kind of given up on big and bold, but I’m never going to give up on balance,” said Clyburn, of South Carolina.
If Republicans insist on extending Bush tax cuts for the wealthy “then we probably won’t get a deal,” he said.
Clyburn, the third-ranking House Democrat, said he hopes President Barack Obama won’t relent as he did last year and allow the tax cuts of his predecessor to continue again.
“I have no idea whether he will or not,” Clyburn said. “I hold out hope that the president will hold fast.”
The Enforcement Mechanism Complements the Forcing Event Already In Law – the Expiration of the Bush Tax Cuts – To Create Pressure for a Balanced Deal: The Bush tax cuts expire as of 1/1/2013, the same date that the spending sequester would go into effect. These two events together will force balanced deficit reduction. Absent a balanced deal, it would enable the President to use his veto pen to ensure nearly $1 trillion in additional deficit reduction by not extending the high-income tax cuts.This statement of vague intent begs the question: what is a "balanced" deal? Sunsetting the Bush tax cuts for the wealthiest 2% while leaving the rest of the cuts intact would raise an estimated $800 billion over ten years compared to current tax rates. Letting all the Bush cuts expire would raise $3.6 trillion over ten years. Bowles-Simpson, a right-of-center plan, would close or reduce various targeted tax breaks, lower marginal rates, and raise approximately $2 trillion over ten years. Obama's September plan purports to raise $1.5 trillion by sunsetting the Bush tax cut for the wealthiest 2%, returning the estate tax to 2009 levels, and reducing "tax expenditures" mostly in the corporate tax code and in a few arcane dodges available mainly to the wealthy. Over the summer, though, Obama was reportedly ready to sign off on a deal that would also close loopholes, lower rates and yield just $800 billion -- roughly the same amount as would be gained by leaving the current structure alone but ending the Bush top marginal rate cut for the wealthiest. Democrats rebelled at that, forcing him to raise the ante to $1.2 trillion, which supposedly induced Boehner to bolt -- though Obama implied that if Boehner had balked at the additional revenue, he would have gone along with the lower figure.
Would Obama have touted that terrible deal as a functional equivalent of sunsetting the Bush marginal rate cut for the top bracket? If so, it's possible to imagine the Republicans getting him to go along with a further weakening now. Republicans' favored counting category is not "tax increases" but "revenue raisers" -- and on that side of the ledger they include measures such as increasing government employees' pension contributions. Suppose "raising revenue" by, say, $600-700 billion over ten years while reducing marginal rates was their best offer, and half that revenue was not tax revenue? Would Obama get behind such a deal? That, I think, is the fear.
As a footnote, re that implied promise to "use his veto pen" to avoid extending the high-end tax cuts: he can only do that negatively, by vetoing legislation that sunsets all the cuts without offsetting revenue raisers. He can't veto the Bush cut for the top 2% -- that is, the top marginal income tax rate -- by itself. It's part of a bill that sets marginal rates at all income levels.
Enjoying catching up on your blog after a work-related hiatus.
ReplyDeleteI think what frustrates a lot of Obama sympaticos (and Obama opponents alike) is that he almost always holds his cards very close to his chest.
He is not a political flag wearer like Howard Dean, Al Gore, or George W. Bush. You always understood where they "stood" (this always seems to be an obsession of the media by the way).
People seem to like line-in-the-sand, chest-thumping variety of politicians because it validates their own biases... or gives them something to feel self-righteous indignation about. Both these feelings give them an emotional rush.
But that doesn't necessarily mean that Obama is without conviction. He rolled the dice on healthcare and risked his presidency on it. Despite what public option-deadenders will tell you, this was a major accomplishment that eluded numerous presidents. His quiet maneuvering and ultimate accomplishment in repealing DADT came after lots of ambiguous statements about when he would fight for it. In fact, the repeal took a lot of pro-repeal folks by surprise (see Andrew Sullivan).
In regards specifically to the debt issue, I believe that Obama sees the long-term structural deficit as a major problem for this country. In that sense, I agree with Kevin Drum that Obama is a lot more conservative than most liberals when it comes to fiscal matters.
The Bush Tax Cuts are a lot more valuable to Obama in the upcoming election cycle (and post governance, should he get the opportunity) than they were in the past (he is a politician). He is in for an election with tough economic numbers and growing income inequality. He also knows that breaking out the 2% from the rest would be extremely hard to accomplish, yet politically popular.
Ultimately, *all* of the tax cuts expiring would be better for the fiscal future of this nation. And because the Republicans will fight tooth and nail to preserve the top 2%, Obama will have political cover for letting them all expire while scoring points for having "fought for the middle class".