Intransigence got them the win. Intransigence keeps them from taking it.

Brian Beutler has an intricate and well-sourced account of how the Obama administration scopes out the task of creating a "permission structure" for Republicans to compromise on a budgetary grand bargain. Broadly, it's Gang of Six II, a new attempt to jump off the presidential shadow by staying in the shadows, averting what Ezra Klein called the paradox of power: "If you take a strong position, the other side will immediately take the opposite position."

So once again, as Beutler puts it, "Obama’s putative absence is key to creating the political space Senate Republicans need to negotiate in good faith." But the master hurdle is in the House, where the GOP majority is way more recalcitrant than the five-odd GOP senators who would be needed to get a bill through the Senate.  And there, Beutler's framing caught my eye, because it illustrates a second paradox:

Writhing out of Norquist's embrace, Part V

Here we go again: Senator Saxby Chambliss, R-Georgia, one of the Quixotes of the Senate Gang of Six, is writhing out of Grover Norquist's embrace, almost exactly as in March 2011 when the Gang first got in gear to try to reincarnate, or rather fully incarnate, Bowles-Simpson.*  In this iteration, Chambliss says, "I care more about my country than I do about a 20 year-old pledge"; Norquist shoots back that Chambliss's oath is to the people of Georgia, not to him. Then Norquist revives a nonsense claim from the prior round:

Norquist also highlighted a letter Chambliss signed with fellow Gang of Six members Mike Crapo of Idaho and Tom Coburn of Oklahoma where the three said they hoped for a plan with “lower individual and corporate tax rates for all Americans.”

Whither Obama on taxes?

David Weigel notes that he tax stance that served Obama well in his town hall debate with McCain in 2008 will not serve four years later:

Obama had miraculous success in 2008 by promising to raise taxes on the wealthy as a way to be fair and close the deficit. It simply isn't working as well in 2012, when Obama owns four $1 trillion deficits. He can correct plenty of his staging problems in a town hall, compared to a back-and-forth podium debate. But he needs a bigger argument on taxes.

I'm not exactly sure why we should credit this, since Obama has not yet been able to put over his proposed restoration of Clinton era income tax rates on the top 2% and other modest tax increases for the wealthy, and the broad principle of "asking the wealthy to pay a little more" has broad popular support. But allowing that the tax proposals in Obama's proposed ten year deficit reduction plan are a bit lightweight, a few thoughts below about where we are and where we need to head:

Mitt Romney, taxer of muni bonds?

Oh, the distortions, sleights of hand and outright falsehoods in the Wall Street Journal editorial board's ridiculous attempt to take down the Brookings/Urban League Tax Policy Center finding that the Romney tax plan would cut taxes for the wealthiest 5% and raise them for everyone else.  The falsehoods are macro, micro and legion.

Let's start with the premises on which the TPC analysis of Romney's purposefully vague tax plan (p. 38 ff) are based. Because Romney does not specify what tax deductions he would reduce or eliminate, or for whom, TPC extrapolates from broad principles he's laid out:

Why is Bowles-Simpson more progressive than Romney's "very similar" plan?

Yesterday, the New York Times' Jackie Calmes provided a bracing model of how to reality-check a politician's ridiculous claim:

Mr. Romney said “my plan is very similar to the Simpson-Bowles plan.” The Romney proposal, however, has little in common with that bipartisan deficit-reduction proposal from a majority on the fiscal commission that Mr. Obama created in 2010. The Simpson-Bowles plan called for reduced income tax rates, but it would have raised about $2 trillion more in tax revenues over 10 years, mostly from high-income taxpayers, and cut spending to reduce the federal debt.

This discrepancy raises a more fundamental question.  Because Bowles-Simpson raises new revenue and Romney's plan doesn't, it should be easier, not harder, for Romney to make his cut-rates-and-reduce-loopholes plan more progressive than Bowles-Simpson. According to the Brookings/Urban Institute Tax Policy Center, the opposite is true. Why?

Pulping the bully approach to presidential leadership, cont.

Not for the first time, Ezra Klein laments the Obama administration's loss of control over the deficit debate from early 2011 to the present:

The problem the White House has on the deficits issue is that their coolness towards Simpson-Bowles lost them a lot of credibility on this issue. Most Americans may not know what they want to do about the deficit. But they tend to know they want to do something. And Simpson-Bowles, rightly or wrongly, became the symbol for doing something. When the Obama administration didn't follow up on it, and then Ryan and the Republicans were first out the door with a major deficit-reduction plan, it created the sense that, deep down, the White House didn't really want to do anything on deficits, that they were just doing the least necessary to check the box.

It may be true that Obama lost credibility on deficit reduction in 2011. But Klein is omitting a fact he was well aware of at the time: in early 2011, Obama faced a choice. He could "lead" by embracing Bowles-Simpson or some variant, prompting Republicans to excoriate it, and thus setting the stage for competing plans to frame the 2012 election -- or he could "lead" by actually cutting a deal with Republicans, which would require some caginess about his own position. That's because, as Klein is well aware and as Obama himself openly avowed, presidential advocacy polarizes.

Ezra Klein, what about that Paradox of Power?

It's not often that I feel impelled to dispute a conclusion with Ezra Klein, but today is one of those occasions.

Noting the irony inherent in the fact-set that a) Republicans continue to make sympathetic noises about the Bowles-Simpson plan, b) Obama has floated plans that are both less substantive and to the right of Bowles-Simpson, and c) Republicans reflexively reject -- nay, demonize -- anything with Obama's stamp on it, Klein makes a case that Obama should press "reset" and throw his weight behind the plan:

Either way, there’s no reason Democrats should be rejecting Simpson-Bowles on behalf of the Republicans. And, to be fair, that’s not all that’s going on here: The Obama administration doesn’t like the defense cuts or Social Security reforms in Simpson-Bowles, and they’re skeptical that the tax reform process could really generate as much revenue as the document promises. So their thinking was that they could work off of the Simpson-Bowles proposal and come out with something better.

That’s pretty much what they tried to do in April. But because that plan had Obama’s name on it, it was dismissed as a liberal nonstarter. Their strategy, in other words, was a huge failure, and over the past year, they’ve watched the deficit debate move far, far, far to the right.

Let's leave aside for the moment the question of whether Obama stands to gain now by embracing Bowles-Simpson.  I think Klein misconstrues the cause of Obama's "huge failure" in the spring and summer of this year. The failure lay not in the composition of his plan nor in his abstention from wholehearted advocacy of Bowles-Simpson.  It stemmed from his agreement to negotiate under the debt ceiling deadline, which he not only accepted but embraced as "a unique opportunity to do something big."

A core problem for Democrats?

James Clyburn, third-ranking House Democrat and Supercommittee member, indirectly points up what may be Obama's greatest failing:

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.

“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.”

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:

Running on hope and fear

As he has for nearly a year, Andrew Sullivan exhorts Obama to make a crusade of deficit reduction/tax reform:

I think a lot of the criticism of this president is piffle. I think he's done an extraordinary job in foreign policy and has kept this country afloat economically in times as perilous as the 1930s. But his refusal to back a specific plan to save our finances, and to do so before the crisis deepens, in order to reverse a potentially devastating confidence collapse in Europe ... this is failure of an historic kind. I understand why, politically, this is difficult. But this is a moment for transcending political constraints. This is a "Yes We Can" moment. This is why we supported him - because he seemed someone who could at times transcend politics, for the greater good.

He still can. The super-committee will almost certainly fail. Once that happens, the US will be telling the world it is less capable of grappling with its debt than Greece or Italy. Then what? If Obama seeks re-election just by not being a scary Republican, he will deserve to lose. We need him to campaign for Bowles-Simpson (or his variation thereof) and radical tax reform, and promise he will work with any Republican prepared to help finalize the deal - but that he will do it with Democrats alone if needs be. If that means ceding Medicare as an electoral advantage, so be it. We did not elect him to be a reactive defender of the Democratic machine. We elected him precisely because he said he wasn't that.

I worry that he is going to run on fear. He must run on hope - and a plan that entails risk but promise. This is the moment that will make his presidency. It is no time to think small.

Andrew is prone to apocalyptic thinking about the deficit.  But at least from April on, I'm not sure what he's expected Obama to do about it that he hasn't done. I could certainly see hitting Obama for negotiating badly --  but that's not Sullivan's point; he wants a crusade. Some questions:

GOP will damn the polls and maintain tax intransigence

Andrew Sullivan, who wanted Obama to come out strong for Bowles-Simpson and make a crusade of deficit reduction in his State of the Union address, now suggests that Obama do the same with tax reform, a linchpin of any viable deficit reduction plan. (That is, a revamping of the tax code that shrinks loopholes, lowers rates, and nets substantial new revenue.) In support, Sullivan cites a compendium of polls from Bruce Bartlett:

They all show heavy majorities (most in the mid-60s) in favor of raising taxes on the wealthy as part of a deficit reduction plan. Yet this is the one issue on which Republicans seem determined to take a stand. If the Democrats cannot marshall 2 - 1 support for their policies into actual legislation, they really need to pack it in as a viable party (although one could argue they packed it in years ago).

This would be true if we lived in a sane political environment, especially since Republicans will not be able to prevent the Bush tax cuts from expiring if Obama and the Democrats are willing to let them all expire.  Reversion to Clinton-era rates would raise an estimated $3.6 trillion over current rates in ten years -- as opposed to the $1-2 trillion Democrats would be able to extract through tax reform, would Republicans agree to any increase at all.

We do not, however, inhabit in a sane political political environment.  Consider:

Where taxes are always too high

Another day, another deeply misleading screed on taxes by a Wall Street Journal editorialist - in this case, Stephen Moore. Democrats, he warns, are proposing tax increases that will bring us "back to the taxes that prevailed under Jimmy Carter, when the highest tax rate was 70%."  By adding together every tax increase that any Democrat is currently proposing, along with every increase implemented under Bush Sr. and Bill Clinton, he gets to an ill-defined "tax rate" of 62%.  That's hardly 70%, (or the 91% top marginal income tax rate that prevailed under Eisenhower), but what's an extra 8% among scare tacticians?   

Moore would have us believe that federal taxes have been climbing relentlessly since the halcyon days of Reagan's second term, when the top marginal income tax rate was, he says, 28% (it was actually 33% in a bracket below the top bracket).  Never mind that federal tax revenue as a percent of GDP is currently lower than it was at any point in the Reagan years, and is in fact at its lowest point since the early 1950s. To paint this picture, Moore needs almost one distortion per paragraph. A sampling:

An alternative to raising the retirement age for Social Security

Alan Simpson, of Bowles-Simpson fame, is a die-hard for raising the eligibility age for social security, as the Bowles-Simpson plan proposes.  Ryan Grim reports (hat tip: Chait) that Simpson is a tad unreceptive to to information furnished by the Social Security administration to the effect that life expectancy for those who reach age 65 has risen only modestly since 1940 (about five years each for men and women).  Meanwhile, the retirement age for receiving full social security benefits has been raised from 65 to 67 -- so the system is paying people for an average of three more years than it did for retirees in 1940. 

The Bowles-Simpson plan calls for a roughly proportionate rise in early and full retirement ages -- to 68 in 2050 and 69 in 2075 for full retirement, an to 63 and 64 at the same points for early retirement.  Opponents of that change point out that it is implicitly regressive, since lower income people have shorter life expectancy, and those who do manual labor find it harder to work to older ages. Besides, few people want to work deep into their sixties, and there are other ways of making social security solvent. In Bowles-Simpson as in other plans, raising the retirement age is only one in a broad menu of ways to raise further revenue or reduce the growth of benefits.

The social security segment of the deficit reduction plan put forward by the Bipartisan Policy Center does take increased life expectancy into account, but in a different way.  The BPC proposes to index the benefit formula to longevity : "Specifically, the replacement rates used to calculate benefits each year for new beneficiaries will by 99.7 percent of what they were in the previous year -- which offsets about two-thirds of the additional costs associated with estimated longevity increases." This plan treats social security like an annuity, which is calculated on the basis of life expectancy. 

Running behind the Gang of Six

On the theory that presidential advocacy on a given issue polarizes the parties on that issue, I have more than once suggested half-seriously that when Obama decides to put forward a deficit reduction plan, we will know that he's thrown in the towel on a deficit reduction deal. The corollary to date has been that if there's any hope at all for such a deal before the 2012 election, it lies in the negotiations of the Senate Gang of Six, who are using Bowles-Simpson as a baseline. GOP Gang of Six members Saxby Chambliss and Tom Coburn have been bucking GOP orthodoxy by acknowledging that any deficit reduction plan will have to increase Federal revenue.  What they don't need is Barack Obama to make that case for them.

So  now Obama is primed to lay out a plan, and word is that it is to be based (to what extent?) on Bowles-Simpson and the Gang of Six negotiations.  Predictably, the very senators who a month ago were begging for presidential participation are now warning that a presidential endorsement could be the kiss of death:

Forget Ryan -- watch Coburn and Chambliss

For those who believe that Obama has failed a s test of courage by not rolling out a detailed tax reform/deficit reduction plan early this year, a thought experiment: had he done so, would Tom Coburn have said this on the Senate floor? (link is to Greg Sargent; emphasis is his.)

Well, the message for America today is every program’s going to get hit. The Defense Department’s going to get hit, every program’s going to get hit. My taxes are going to go up. Sorry, they’re going to go up. This country cannot get out of this mess with the behavior that we’re exhibiting in this body, and if we fail to do what is necessary for our country at this critical time in our juncture, history will deem us absolutely incompetent. With that, I yield the floor.Maybe...I admit that the thought experiment yields no clear results.  But if Obama and Dems really do want a tax reform/deficit reduction deal, it's Coburn Chambliss & Crapo who are carrying the ball. Because this can't happen unless Republicans sign on to tax reform that raises revenues.  Which is almost to say that it can't happen, period.

The sine qua non for a bipartisan long-range budget deal is for Republicans to acknowledge that taxes will have to be raised, albeit as part of a deal that lowers marginal rates while drastically reducing targeted tax breaks. The bipartisan Senate Gang of Six currently negotiating the outlines of a deal is allegedly using the Bowles-Simpson plan as a baseline. While Bowles-Simpson was  criticized from the left for achieving too high a percentage of its projected deficit reduction from spending cuts (two thirds) as opposed to taxes (one third), the plan did envision raising Federal revenue by about $1 trillion over nine years.  Grover Norquist, meanwhile, is waving his bloody-sheet "no tax increases" pledge, signed by (he claims) 95% of House and 87% of Senate Republicans.

O Captain! My Captain! Make us all get in the boat together....

Anne Applebaum invites us to imagine "that President Obama had spent the past few weeks denouncing Moammar Gaddafi, using the soaring rhetoric he has deployed in the past." The results would not be pretty:

Had he done all of that, there would certainly be fewer European members of the “coalition of the willing” that has formed, tentatively, to prevent Gaddafi from entering Benghazi: I can’t see the French or the Spanish falling in behind an aggressive-sounding American campaign. There would probably be no Arab coalition members either...

Enthusiasm and soaring rhetoric would also now lock the United States and its allies into an implied set of promises. If we’d compared Gaddafi to Hitler we’d have to eliminate him. If democracy were the only solution in Libya, we’d have to stay in Libya until it was democratic. If Obama had been talking about nothing else for the past three weeks, his entire presidency would be on the line.

Does that mode of "leadership" in response to the Libyan uprising remind you of anything?  Remember all those calls for a Presidential crusade against the structural budget deficit? The urgings that he embrace the Bowles-Simpson plan, or lay out a detailed blueprint of his own in the State of the Union address and/or in his proposed budget? Obama has been quite explicit about why he refrained from doing this:

“If you look at history of how these deals get done, typically it’s not because there’s an Obama plan out there. Its’ because Democrats and Republican are serious about dealing with [these issues] in a serious way,” the president said. “This is not a matter of you go first or I go first,” he said before describing a goal of “everybody…ultimately getting in that boat at the same time so it doesn’t tip over.”

A credulous view of Obama's budget/tax strategy

With regard to the looming budget battle and any concurrent negotiations for a long-term deficit reduction plan: as all kinds of mostly faux budget hawks raise their histrionic moral-equivalent-of-war cries about the deficit, the shape of Obama's strategy, beginning with the SOTU, is clearer to me.

A budget deal, for Obama, is means to an end: preserving the country's capacity to make the investments in education, infrastructure, new industries and health reform that have always been essential to his political program.  As the process begins, rather than "lead" as to the means of budget reduction, Obama chose to lead by keeping the end in mind: enabling sustainable economic growth. That means laying down a marker: spending reductions can't come at the expense of the investments that are his top priority.  The looming war over the current budget can't just be about how much is cut, but whether the cuts crimp prospects for future growth (or the prospects for meaningful cost control, e.g. by defunding implementation of the PPACA).

Pulping the bully approach to presidential leadership, cont.

Once again, Clive Crook combines solid fiscal sense with political obtusity.  Hammering the obvious need for tax reform and tax hikes in response to the U.S. structural deficit, he accuses Obama of a lack of political courage for not endorsing Bowles-Simpson or laying out a revenue-raising plan of his own.  But Crook's argument carries the seeds of its own refutation.

Crook acknowledges the political realities that make it impossible for Obama to get anywhere if he unilaterally proposes the tax hikes the country needs -- even if those hikes come from radically reducing targeted tax breaks while cutting marginal rates: