Skip to comments.Report: Fiscal cliff deal emerging — including one-year debt-ceiling increase; Update: ...
Posted on 12/17/2012 10:07:19 PM PST by Ernest_at_the_Beach
Change of plans: Now the GOPs going to agree to raise the ceiling for another year, right up front. Wait, what?
Boehner offered to let tax rates rise for income over $1 million. The White House wanted to let tax rates rise for income over $250,000. The compromise will likely be somewhere in between. More revenue will come from limiting deductions, likely using some variant of the White Houses oft-proposed, oft-rejected idea for limiting itemized deductions to 28 percent. The total revenue raised by the two policies will likely be a bit north of $1 trillion. Congress will get instructions to use this new baseline to embark on tax reform next year. Importantly, if tax reform never happens, the revenue will already be locked in.
On the spending side, the Democrats headline concession will be accepting chained-CPI, which is to say, accepting a cut to Social Security benefits. Beyond that, the negotiators will agree to targets for spending cuts. Expect the final number here, too, to be in the neighborhood of $1 trillion, but also expect it to lack many specifics. Whether the cuts come from Medicare or Medicaid, whether they include raising the Medicare age, and many of the other contentious issues in the talks will be left up to Congress
As for the debt ceiling, that will likely be lifted for a year, at least. In contrast to a week or so ago, when the White House was very intent on finishing the debt ceiling fight now, theyre sounding considerably less committed to securing a long-term increase in these negotiations. The argument winning converts, Im told, is that since the White House wont negotiate on the debt ceiling now and wont negotiate on it later, theres little reason to make it the sine qua non of a deal.
So in exchange for a tweak to Social Securitys benefit formula, Boehners agreeing to tax hikes on the rich and limits on deductions and a mere promise of future spending cuts and a debt-ceiling increase that would formally abandon the live-to-fight-another-day strategy? Note the at least part, too. Matt Yglesias is entirely right about this:
Punting 12 months on the debt ceiling so it comes in the middle of a congressional campaign seems like a recipe for disaster.
If youre a House Republican, youre much more apt to drive a hard bargain next spring than you are in early 2014, when election day will be less than a year away. In fact, if the economy starts to pick up and revenue increases next year, then the next debt-ceiling might be delayed by months which could mean a showdown right before the midterms. No Republican facing reelection in a purplish district will go to the mat under those circumstances and Boehner knows it, so I assume the one-year deal will quickly become a two-year deal. Will, er, House conservatives who are already irritated at Boehners offer on tax hikes go along with that? Or is Boehner now prepared to write them off and govern with a coalition of Democrats plus a small group of moderate Republicans? If Im Pelosi and JB comes back to the House with the sort of deal described above, Id instruct my troops to vote no (at least on the first pass) just to watch Boehner be humiliated as waves of conservatives vote no too and the bill fails.
But maybe this is just a trial balloon. Heres what his spokesman said about raising the debt ceiling:
Boehners offer signals that he expects a big deal with sufficient savings to meet his demand that any debt limit increase be paired dollar for dollar with spending cuts. That would permit him to keep a key vow to his party and head off a potentially nasty debt-limit fight at least until the end of next year.
Our position has not changed, Boehner spokesman Michael Steel said Sunday. Any debt limit increase would require cuts and reforms of a greater amount.
A Boehner aide told CNN the same thing no debt-ceiling hike without an equivalent amount of cuts. Now that theyve drawn that line publicly, they cant cave without Boehner losing whatever remaining credibility he has with the House. So maybe this is just a tactic to pressure Obama on cuts by wringing a little positive PR from the negotiations for the GOP, with Boehner angling to come off as the responsible, compromise-minded side of the table whos willing to give O what he wants in exchange for a little fiscal responsibility in return. If I were Obama, though, Id call his bluff. Given how the polling worked out for the GOP after the last debt-ceiling standoff, Boehner will have tremendous difficulty holding the caucus together if/when theres a new standoff in the spring. Why would O give him the cuts he wants now when he could try to split the House by forcing another debt-ceiling showdown a few months from now?
Update: I wonder what this concession bought from Boehner:
President Barack Obama has proposed a deficit-reduction package to House Speaker John Boehner (BAY-nur) that would increase the top tax rates on taxpayers earning more than $400,000, cut more spending from health care programs and add $200 billion more in spending cuts over 10 years to his earlier offer.
Boehner had proposed an earnings threshold of $1 million for higher rates. Obama dropped his demand that individuals making more than $200,000 pay higher rates.
A higher threshold for the top bracket means less revenue raised once the new rate goes into effect, which in turn means less deficit reduction. But the tax part about this has never been about deficit reduction. If Obama cared about that, hed have a serious entitlement reform plan on the table. This is about fairness, in all its arbitrary glory. The new threshold for whats fair: More taxes from people who makes $400,000 or more.
Why have a debt ceiling if all we do is increase it? Do away with the debt ceiling all together ... nobody pays any attention to it anyhow.
I don’t agree with that at all.
The Fail is strong with these two. We are so Effed
I think I saw/heard something today about Obama going up to $400,000. Sounds like negotiating has begun.
Agreeing or disagreeing with me is no big thing ... giving a reason means much toward a civil discussion.
It does get Headlines and the Media can't ignore it.
And they are a BIG player....unfortunately ,...as the 2012 election showed us.
Isn’t anyone interested in stopping these people?
And how do you stop the spending....most of it is Medicare and such....
What will the headlines be....that is the problem....No One seems to have noticed the problems in Europe and especially in Greece.
Does the house get any say in this? or are they elected to just follow the whips...
It’s pretty hard to grasp and embrace the concept of tipping point, especially for conservatives, but the story here is simply that there are some problems that cannot be solved.
We cannot cut taxes and cut the deficit. That raises the deficit — because we are past the tipping point. We can’t grow the economy anymore, regardless of tax rates. Taxes aren’t decisive anymore.
We cannot cut spending and cut the deficit for the extrapolated reason. Government spending is such a big part of GDP now that cutting spending would cut GDP and that would cut tax revenue and presto, bigger deficit.
This is what it means to be past the tipping point. There is no solution.
But a step past all that for a moment — these chained CPI adjustments to SS. Let’s make DAMN SURE it applies to ALL government retirement pensions, too, including Congress and Presidents and Judges and any other bureaucrat.
Won't be an easy vote either.
The media will be printing nasty headlines,....every chance they get.
Signing off here.
You’ll never stop any spending with these guys in charge.
Guys a majority of Americans (the “people” I referenced) voted for.
And Greece and the rest of Europe could fall into a crack in the Earth tomorrow from the weight of their debt and it still wouldn’t change what we’re doing over here.
The only hope is to replace all 535 plus 2 plus 9.
So the only hope is no hope?
ALL debt ceiling atrocities are for ONE YEAR. These people think we are stupid because 53% of those of us that voted ARE THAT STUPID!
Not a single person in congress right now is demanding the elimination of even one department. It doesn’t even get discussed here much anymore because we all know it won’t happen. But I would think at least one tea party member would be jumping up and down, demanding the department of education be eliminated.
Anything bipartisan moves left. Shame on Boehner and anyone who votes for increasing taxes and spending in ANY way.
The “deal” is that Obama will get the praise for raising taxes on the rich, while Republicans get the blame for “cutting” Social Security.
“Government spending is such a big part of GDP now that cutting spending would cut GDP and that would cut tax revenue and presto, bigger deficit.”
So, you’re a Keynesian?