"Not this time": Obama revises himself

The headline takeaway from Obama's press conference yesterday is that he's talking tough about the debt ceiling. And indeed, he elaborated his case against holding the faith and credit of the nation hostage in new and forceful ways. What also struck me, though, is the extent to which Obama implicitly admitted that the obstacles he is now facing are partly of his own making. In fact, since late in his reelection campaign he has been casting is second term as an edited version of the first.

On the economic front, Obama reiterated three core messages yesterday:1) The debt ceiling is no frame within which to negotiate deficit reduction; 2) deficit reduction is not our chief problem; and 3) Republicans' chief goal is to weaken core government functions and commitments, radically altering the social contract. Each was to some degree a revision of a past stance.

Regarding the debt ceiling, as Ezra Klein pointed out yesterday, Obama has been unequivocal since the election: it is not a negotiating chip in budget battles.  Yesterday he stated this simply, forcefully and repeatedly.  Here is the first iteration, in his opening remarks:

Julianna Goldman questioned Obama's debt ceiling cred to his face. His response...

I noted in a prior post that as the debt ceiling approaches, I'm getting foreboding flashbacks from this familiar process: 1) Obama articulates his position forcefully and with precision; 2) progressives note with glee that he's boxing Republicans in; 3) stalemate sets in as a deadline looms; 4) a flurry of reported Obama concessions augurs a deal; 5) the deal is announced, headlined with those concessions if backloaded with some Obama priorities.

Today's press conference may augur a similar pattern.  At greater length than ever, and with top-of-his-game precision, Obama laid out his case for a clean debt ceiling hike and "balanced" deficit reduction.  When asked why we should believe that this time he would not blink at the brink, however, he was less convincing.

Two lengthy exchanges tell the tale. In the first, challenged on the consistency of his debt ceiling position and the irresponsibility he alleged in Republican conduct, he was precise and masterful, catching Republicans in a rhetorical pincer: Threatening default is extremist and unprecedented. And doing deficit reduction by spending cuts alone is extremist and unprecedented. One threatens to blow up the economy and destroy the nation's privileged position as the world's default currency. The other threatens to sell the nation's public benefits and seed corn to preserve tax breaks for the wealthy. As the TV hosts say, let's listen:

De-deducting your way to $800 billion in new revenue

Available information about Obama's fiscal proposal is surprisingly sketchy, unless I'm missing something.  Forgive me, then, if I get something fundamentally wrong here. But the proposal is said to closely track Obama's 2013 budget, and it seems to me that if you moderately expand a key revenue raising proposal in that budget, it would be possible to raise $800 billion in revenue over ten years by reducing deductions for the wealthy. Maybe not desirable as an opening gambit, but hardly mathematically impossible.

The provision in question, on page 39 of the budget, would reduce the value of itemized deductions and other tax preferences to 28 percent for families with incomes over $250,000 and individuals with incomes over $200,000 (at 2009 levels, to be adjusted for inflation).  That is, suppose you're taxed at a 33% rate and you make $3600 in charitable contributions. At present, deducting that amount would lower your tax bill by $1200.  At a 28 percent deduction level, your bill would be lowered by $1008; you would pay $192 more.  That change, across all deductions, is projected to reduce the deficit by $584 billion over ten years.