Woodward is peddling a nonsense conclusion. Why?

For who knows what reason, Bob Woodward is blowing smoke on the sequester deal.

In an article published yesterday, he makes an allegation about the sequester and the grand bargain it was supposed to stimulate that is so absurd no one even noticed what he now says he meant:

In fact, the final deal reached between Vice President Biden and Senate Minority Leader Mitch McConnell (R-Ky.) in 2011 included an agreement that there would be no tax increases in the sequester in exchange for what the president was insisting on: an agreement that the nation’s debt ceiling would be increased for 18 months, so Obama would not have to go through another such negotiation in 2012, when he was running for reelection.

So when the president asks that a substitute for the sequester include not just spending cuts but also new revenue, he is moving the goal posts. His call for a balanced approach is reasonable, and he makes a strong case that those in the top income brackets could and should pay more. But that was not the deal he made.

There is a major sleight-of-hand embedded here. Woodward is saying, first, that the sequester includes no revenue -- which is plain fact -- but also that it was therefore understood initially that the replacement for the sequester would also include no revenue.

That is palpable nonsense, as I demonstrated yesterday: before the deal was signed, Obama said that the supercommittee would be charged with striking a deal that would include revenue.  The White House elaborated the point that most parties expected the supercommittee to consider a mix of tax hikes and spending cuts from the start.

Now Woodward is back with an email to Politico's Mike Allen spelling out his initial  point, which no one noticed because it was so absurd:

McConnell clears the way for more revenue hikes

Annoying as it is to hear Mitch McConnell declare that Republicans will not agree to any further revenue increases, I am pleased to note him intoning this party line regarding the fiscal cliff deal:

Look, this was not a tax increase,

That's true, insofar as at the time the deal was enacted, the Bush tax cuts had expired, and the deal reinstated about 85% of the cuts. If restoring a portion of the foregone revenue was not a tax increase, then neither is restoring more of it. If you accept all negotiations this year as an adjustment within the frame of the Bush tax cut expiration (which, okay, McConnell and co. don't), that gives Obama and the Democrats another two trillion-plus over ten years in running room for future negotiations.

What I don't get

I was a little shocked by the two-month sequester postponement in last night's fiscal cliff deal. That sounds to me like debt ceiling squared.  Where does Obama think he's going to get the leverage to demand that spending cuts be paired with further tax hikes?  Yesterday he was talking like a man with platinum coins in his pocket. Is there something we don't know, or is he just blowing Choon smoke?

P.S. tweets like this set me thinking/remembering a little:

@AlecMacGillis House R demands for cuts now MIGHT suggest a smidgen of awareness that debt-ceiling hijack won't fly as well the 2nd time.

Last time around, in summer 2011, perhaps even the GOP House would have backed off the brink if Obama had not embraced the debt ceiling deadline as a "unique opportunity to do something big."  Perhaps this time, simply insisting that he won't treat it as a deadline will be enough.  But I can also imagine stories leaking out as the deadline approaches that he's offered this and that in exchange for that and this...making it impossible to step back and insist, "no, I want a clean raise."

The dangers of last-minute dealing

Greg Sargent is salivating at the prospect of Obama daring the Senate GOP to veto a stripped-down fiscal cliff bill that would raise marginal rates on the top two brackets and extend unemployment benefits, the Earned Income Tax Credit and the child tax credit.  Jonathan Cohn, while acknowledging the dangers of going over the cliff, is cautiously optimistic that if we do so Obama will be able to a) impose a better deal, and b) blame Republicans for the deadlock:

And then there are the polls, which suggest that the public overwhelmingly blames Republicans, rather than Obama, for inaction. Polls don’t always predict how people will react to actual political developments in real time. But chances are good that, the longer it takes for a deal, the more pressure Republicans will feel from the voters—not to mention their supporters in the business community—to abandon their opposition to tax increases and determination to cut entitlements.

Obama: Reagan "could not get through a Republican primary today"

Well, I'm late to the party today, and there's not much I can say that hasn't already been said about Obama's crystal clear contrast between his budget priorities and the Ryan Republicans' today in his speech at the Associated Press lunch. See Greg Sargent on core messages (especially on defending government activism as essential to sustainable growth), Ezra Klein on making the Ryan cuts concrete, Jamelle Bouie on highlighting the current GOP's extremism.

I will content myself with the encore: a remarkable little pocket brief that Obama delivered in response to the first question. The subject was Republican extremism, and the false equivalence that locates the reasonable center at the midpoint between two parties. Claiming the center, Obama reeled off a syllogism:  a) deficit reduction entails a common sense mix of revenue hikes and spending cuts; b) all the Republican presidential candidates ruled out any revenue hikes; c) Ronald Reagan accepted the budgeting realities that the current GOP denies; d) Democrats were willing to accept tough entitlements cuts, but Republicans wouldn't budge on revenue; therefore e) the press indulges in false equivalence when it portrays both sides as equally unable to compromise.  Here's the disquisition:

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.

Obama girds for 1993...

Responding to my close reading of Obama's outline of the nation's fiscal challenges in the Peter Baker interview, a reader protests that based on my quote selection, "it seems as if obama will cut nothing. which means a MASSIVE tax increase on everyone. which will kill him politically, deservedly."

Well, if "massive" means the fiscal equivalent of rolling tax rates back to those of the Clinton era, which would take care of most of our budget woes, the reader is probably right. Here's how I read Obama's read:


The single most important "cut" is to get control of medical inflation. Obama devoted the first two years of his presidency to doing that and went to the mat for significant cost controls in the PPA (cf. Larry Summers). Next up on that front: a strong public option.  Government control of healthcare prices is the only way to keep a lid on them. Every other wealthy country gives the government that power. You'll never get that from the Republicans.

Next is defense spending. Gates is doing all that is humanly possible in the US today to keep a lid on growth,  more than anyone else could do. Obama has gotten creative trying to wind down our wars. We don't know whether he'll succeed, but but there will be no serious force reduction -- personnel counts for the bulk of military spending -- until our commitments in Afghanistan and Iraq are greatly reduced. Long-term, the U.S. needs to gradually divest its hegemon role.

Social security is a relative bite on the ass. It's not in terrible shape. A sane result from the deficit commission would be to tweak it a bit, raising the FICA cap, maybe trimming the COLA formula (though big reductions there would drastically reduce its ability to provide a comfortable retirement to most Americans). Kevin Drum outlines the options nicely: