The paradox of power, immigration reform edition

It's pretty amusing that Republicans are lambasting Obama for daring to stick his oar into the immigration reform process:

...Republicans quickly condemned the reports of a new administration plan, calling it “dead on arrival” and “very counterproductive”...

On Sunday, Representative Paul D. Ryan of Wisconsin, another Republican calling for immigration changes, said on “This Week” that the president’s efforts to develop his own legislation would undermine efforts on Capitol Hill and were taking “things in the wrong direction.” 

No one is more aware than Obama that he, as president "remains a polarizing figure," as the Times' Michael Shear and Julia Preston put it.  The last time Congress was huffing and puffing in the early stages of a Grand Bargain, almost exactly two years ago (2/15/11), over deficit reduction,  Obama explained why he had not unveiled a detailed plan:

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.”

Taxes or trigger!

Nancy Pelosi was not entirely clear when she said that Democrats negotiating (if such a thing is possible) with the GOP on the bipartisan supercommittee charged with putting forward a deficit reduction plan should be "as forceful as possible and as unified as possible," but that they should not rule out reforms to entitlement programs. She raised a lot of Democratic eyebrows by declaring "you won't see me drawing lines in the sand."  But if I understand her right, she's right. 

There is confusion about the kind of line in the sand Democrats on the supercommittee must draw. They will have to resist Republican intransigence, not mirror it. That is, they have to hold the line on taxes, not entitlements.

Could ending the AMT square the circle?

A clue here, I think, to why the sudden revival of the Senate Gang of Six's deficit reduction plan, modeled on Bowles-Simpson, won a "surprise jolt of bipartisan support" when presented to 50-odd Senators:

A key question remains whether the plan might receive any support in the House, where Republicans have strongly resisted any new proposal that could bring in new taxes. The gang's plan would bring in $1 trillion in new tax revenue over 10 years by narrowing several tax breaks. But Mr. Conrad said it would also lower tax rates and end the alternative minimum tax. He said the combination of tax changes would be viewed by budget experts as a $1.5 trillion tax cut (my emphasis).

Ending the AMT allows Republicans to wriggle out of Grover Norquist's no-new-taxes-ever straitjacket, as Jonathan Chait explained with regard to a somewhat smaller package that also proposed to offset modest tax and fee hikes by ending the AMT:

Studied ambiguity in tax reform negotiations

There is a good deal of confusion and obfuscation on both sides of the debate over tax reform  -- at least, over the kind of centrist tax reform outlined in the Bowles-Simpson plan and being negotiated by the Senate Gang of Six.
The basic premise is to vastly reduce targeted tax breaks both personal and corporate while simultaneously reducing marginal tax rates.  The battlegrounds are presumably how much to reduce which tax breaks and how much of the resulting revenue to devote to lowering rates as opposed to deficit reduction.

For Republicans, the taboo is to "raise taxes."  Their potential cover is to lower marginal rates while raising the government's net income, most easily measured as a percent of GDP.  That's the point of obfuscation -- will they or won't they?  Can Coburn/Chambliss/Crapo sell Republicans on raising more revenue in any given year than the current tax code would bring in? Will they try?

For Democrats, the loaded phrase is to raise taxes on the wealthy, which they are sworn to do.  The problem is that that goal is generally equated with (or let's say mainly symbolized by) letting the Bush cut in the marginal rate for the wealthiest 2% expire. Comprehensive tax reform of the sort envisioned by Bowles-Simpson would render debate over the Bush tax cuts moot -- all marginal rates would be lowered (while in Bowles-Simpson capital gains would be taxed at ordinary income rates -- a major hike on the rich). Can Obama and the Democratic leadership in Congress get behind a plan that will reduce the top marginal income tax rate on the wealthy? Will they try?

Red meat, with a dash of bipartisanship

Jonathan Bernstein points out that Obama today delivered red meat to some very anemic-feeling progressives:

Liberals like to think of themselves as the grown-ups of the budget debate? Obama gave both a budget history lesson and some facts about the composition of the budget that positioned himself -- and liberals -- as serious, compared to those who talk about waste, abuse, and foreign aid.

True dat, but by way of counterpoint: while Obama quite pointedly blamed Bush for the enormous deficits and debt of today...

But after Democrats and Republicans committed to fiscal discipline during the 1990s, we lost our way in the decade that followed. We increased spending dramatically for two wars and an expensive prescription drug program -– but we didn't pay for any of this new spending. Instead, we made the problem worse with trillions of dollars in unpaid-for tax cuts -– tax cuts that went to every millionaire and billionaire in the country; tax cuts that will force us to borrow an average of $500 billion every year over the next decade.

He also biparti-parceled the credit for deficit reduction in the decade preceding:

our leaders came together three times during the 1990s to reduce our nation's deficit -- three times. They forged historic agreements that required tough decisions made by the first President Bush, then made by President Clinton, by Democratic Congresses and by a Republican Congress. All three agreements asked for shared responsibility and shared sacrifice. But they largely protected the middle class; they largely protected our commitment to seniors; they protected our key investments in our future.

As a result of these bipartisan efforts, America's finances were in great shape by the year 2000. We went from deficit to surplus. America was actually on track to becoming completely debt free, and we were prepared for the retirement of the Baby Boomers.

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:

Is Obama his own Grover Norquist?

As David Brooks noted in the midst of the 2008 campaign, Obama has put himself in a box on taxes. Here's David Plouffe on Meet the Press today:

DAVID GREGORY:
--bring up taxes, though. Is-- in the President's plan as he envisions tackling the deficit, do taxes have to go up? Does that have to be part of this equation across the board?

DAVID PLOUFFE:
Well, this is part of his budget for next year. He has said he believes-- taxes on the higher income, people over $250,000-- should eventually go up.

Can a president reduce partisan division?

Repetition, repetition, repetition.  In trying to discern Obama's intentions and strategy regarding long term tax/budget reform, I have referred repeatedly (1, 2, 3, 4, 5) to Frances E. Lee's demonstration that presidential advocacy on a given issue, particularly when put forward in the SOTU, increases partisan division on that issue.  While the theory makes intuitive sense, and is demonstrated in Lee's Beyond Ideology: Politics, Principles and Parisanship in the U.S. Senate by thorough statistical analysis of roll-call votes from 1981--2004, one caveat is in order. Tax policy is already so polarized by party that there's not that much room for a President to worsen the division:

Presidential involvement has little influence on partisanship on votes dealing with social issues and the distribution of the tax burden...These are clearly party-defining issues regardless of whether a president demands action on them. Generally speaking, taxes and abortion sparked partisan division in the Senate at approximately the same levels regardless of their presidential agenda status (p. 83).

According to Lee's tabulations, party division on Senate roll call votes from 1981-2004 concerning distribution of the tax burden was 66 overall, and 71 on tax legislation in which "presidential leadership" was exerted. That's in contrast to nonideological issues, where party differences are relatively small until a president advocates a specific policy, at which point the parties usually divide. Partisan division on votes concerning space, science and technology, for example, averages 30.5 points higher on votes over legislation on which the president has exerted leadership than on votes on which he has not.

One might conclude that in the pre-polarized tax/spending arena, the president has little to lose by drawing the battle lines clearly and fighting it out in the arena of public opinion.  Why shouldn't Obama lay out a tax/deficit plan somewhere left of the Bowles-Simpson plan and throw his energy into hammering the devastation to be wrought by the GOP's wholly unnecessary cuts to discretionary domestic spending -- and to the decimation of Medicare and Social Security required by the "no new taxes" pledge that over 90% of Congressional Republicans have signed? What's he got to lose?

The art of grilling a tax/budget deal

A dozen or more years ago, I wrote a press release announcing the opening in Manhattan of the Greek seafood restaurant Milos Estiatorio.  The owner, Costas Spiliadis, explained to me that in cooking fish, timing is everything. At Milos they keep it simple, and concentrate on getting it off the grill at the right instant.*

Perhaps that is the Obama theory of bipartisan budget negotiation? The WSJ's Damian Paletta and Naftali Bendavid, reporting on progress in Senate bipartisan "Gang of Six" negotiations toward a comprehensive tax/budget reform deal, has this to say about the White House posture:

 The success of the senators' efforts will depend on whether it is endorsed at some point by President Barack Obama. White House officials have been briefed on progress but have mostly stayed on the sidelines, people familiar with the matter said.

 White House budget director Jacob Lew said, "We think it's a good thing to have members looking for bipartisan conversations where they are exploring ideas."

Saxby Chambliss seizes the freedom to acknowledge that 2+2 = 4

When the Wall Street Journal reported that a new Senate gang of six was beginning negotiations toward a comprehensive tax/budget reform deal, Grover Norquist put the screws to the Republican half of the gang, publicly reminding Saxby Chambliss, Tom Coburn, and Mike Crapo of their pledge not to raise taxes.  I noted at the time that the trio's carefully worded response letter seemed to leave the door open to tax reform that, lowering marginal rates while closing loopholes, would raise revenues as a percentage of GDP:

Chambliss et al may defend me as a "taxpayer" while clobbering me as a "special interest" (mortgagee, donor).

Now Chambliss has embarked on a bipartisan roadshow with Sen. Mark Warner of Virginia. According to the New York Times, he is unequivocal: taxes must be raised.

While Republicans are adamantly antitax, Mr. Chambliss said, “We’ve got to close the revenue gap.” 

And, breaking another GOP taboo:

A questioner pointed out the importance of military spending in Virginia, home to the Pentagon, bases and shipbuilding, but Mr. Warner and Mr. Chambliss agreed that it must be cut, too.