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The Boehner Fiscal Offer

By: Daniel Horowitz (Diary)  |  December 3rd, 2012 at 05:00 PM  | 

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Here are two things to keep in mind with regards to Boehner’s budget offer.  First, when you begin negotiations agreeing to 60% of the demands of the other side and fail to offer a bold contrast on the other 40%, you are headed for an outcome that is 80-90% favorable to your opponent.  Second, when you need to outsource your budget plan and entire view of government to Democrat Erskine Bowles, you are relegating yourself and your party to irrelevancy.

John Boehner and other House GOP leaders have offered Obama a plan to raise $800 billion in revenue through “tax reform.”  I’m not sure how you raise revenue in a static framework without raising taxes, but let’s put that aside for a moment.  The $1.4 trillion in savings from the spending side is the real problem.  Once again, they fail to offer a bold contrast concerning their view of the role of government.

When you cut through the illusory narrative generated by the media reports of “trillion in cuts,” you’ll realize that not a single program or agency is eliminated, at least not without the creation of a new one in its place.  They have not put on the table a plan to eliminate even a few of the 2,184 assistance programs.  They certainly have not demanded repeal of Obamacare as a condition of raising taxes.

And speaking of Obamacare, why are Republicans not demanding that the Obamacare tax hikes, the worst part of the fiscal cliff, be terminated as a part of the compromise?  While all the focus is on which tax cuts are slated to expire, Republicans have largely failed to communicate to the public that 5 of the 18 Obamacare tax hikes are expected to go into effect at the beginning of 2013.  The new taxes include a cap on the Medical Itemized Deduction, a cap on private flexible savings accounts, a 2.3% excise tax on medical devices, a 3.8% surtax on investment income for those earning more than 200k, and a .9% increase in the Medicare payroll tax for the rich.  Any willingness of Republicans to deal with Democrats without demanding repeal of the Obamacare taxes is suicidal.

The entire premise behind the negotiations thus far has been 180 degrees antithetical to reality.  Instead of putting Democrats on defense for the impending Obamacare tax hikes and for the lack of spending cuts, they have backed themselves into a corner by agreeing to tax increases.  Moreover, if they are hell-bent on raising taxes on the top 2%, who already pay almost half the income taxes, why not demand something transformational in return, such as Obamacare repeal or Cut, Cap, and Balance.  There are some vague references to a federalist approach to Medicaid reform in Boehner’s plan, as well as a nameless reference to Medicare premium support, there is nothing transformational in this deal that would justify the cave on taxes.

Or…how about the Clinton-era spending rates?  Republicans are evidently cowed by the Democrat messaging on returning tax rates to the Clinton-era levels, so why not make a commensurate demand to return to the Clinton-era spending levels?  That would necessitate cutting spending from $3.7 trillion to $1.7 trillion.  Even adjusting for inflation, the budget would be closer to $2.4 trillion.  Instead, the GOP proposal would delay the growth of the federal budget to $4 trillion over the next few years by a year or two.

Why throw your pledge under the bus for mere crumbs?  It is clear that Obama will pocket the preemptive surrender on taxes, while pushing for more revenue and jettisoning the spending cuts.

At this point, House Republicans should pass another clean extension of all the Bush tax cuts with two additions.  They should permanently repeal the Death Tax and they should extend the payroll tax cut.  Let’s face it, Social Security is already bankrupt and the connection between the payroll tax and the program has long been severed.  Why not obviate Obama’s class warfare by passing a tax cut that will benefit the very people he is targeting in addition to everyone else?

This is more about smart negotiating than it is about ideology.  It’s about the Stupid Part living up to its reputation.

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COMMENTS

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  • tngal

    Does Boehner know the white flag he hoisted has the words charmin and 2-ply printed on the bottom in tiny letters? Maybe its just the picture Daniel put up. But it does really say a lot about the process of these negotiations.

  • Viet71

    Just remember to cheer when both sides reach a deal.

  • WY_Cowboy

    I disagree with you to some extent. First, this offer is
    going to be rejected by the White House out of hand. Boehner knows it and Obama
    knows it. The truth lurking in the shadows in this whole show is that Obama and
    Democrats in Congress want to go over the fiscal cliff. They want tax increases
    for everyone because they know taxing just the top 2% up to the Clinton rates
    gets us nowhere in terms of deficit reduction. If all of the tax rates revert
    back to the Clinton era, the increased revenue is four times that of just
    raising the tax rates on the top 2%.

    The other reason Obama wants to go over the cliff is because
    he thinks he can beat the GOP with a lead pipe saying that Republicans stopped
    tax relief for 98% of taxpayers to try to save tax cuts for the top 2%.
    However, that argument falls apart when Republicans have proposed tax increases
    on the top 2%, provided there are significant spending cuts which would include
    entitlements. So, Boehner publically is trying to be bipartisan and make clear
    that Obama would rather increase taxes on everyone than cut spending in a
    meaningful way. That way, it’s Obama who is partisan, Obama who takes us over
    the cliff, and Obama who gets all of the credit. You can’t accuse Republicans of trying to protect the top 2% when they have already proposed tax increases on them equal
    to what Obama campaigned on.

    If Obama actually agreed to this offer, or if an agreement
    actually came out of this offer, you would be right. We would have been rolled.
    However, it’s not going to happen. It seems to me this offer is the House GOP’s
    last, best offer. There will be no deal. We will go over the cliff. And it will
    be because Obama has said no. This is the right play politically. The thing
    that will hurt Obama the most will be the AMT mess that was not taken care of
    this year. He will regret not getting a deal this year.

  • WY_Cowboy

    The GOP is going to get shovels full of blame no matter what they do, and they know it. With that in mind, I hope they are trying to set the table so that Obama rejects their ‘reasonable’ proposal, takes us over the cliff, claims victory for doing it, and then gets all of the credit. There is no good faith in Washington, and nobody has looked at Obama’s offer as being made in good faith. This is going to be a mess. The GOP is trying to just basically get out of the way of Obama except in one very important way: they want to make sure that if Obama gets the Clinton era tax rates, he gets them all. That way they’ll all share the blame from an uber-pissed American public. The only way to avoid that is to actually get an agreement on entitlement reform which makes all things possible in terms of correcting the fiscal ship. But we all know that is just not going to happen this year. So, it’s over the cliff we go and we just want to make sure it was Obama’s final decision and he shares in the political pain.

  • PubliusII

    I respectfully disagree with you a little and agree with WY_Cowboy.
    Substantively I agree with most of what you said. But this offer is about perception. Our god-king, with the help of the media, has framed the conservative position as: we would rather go over the cliff than raise taxes on the 1%. In Obama’s spin, the Rs care only about Thurston Gecko. Now the falsity of that characterization is irrelevant. What matters is that Obama, with the help of the media, has framed it thus, and there is just enough of a kernal of truth embedded in it that the American people have bought it.
    Obama has so far successfully avoided scrutiny of his own rigid, adamantine refusal to cut spending at all. I think that Boehner offered this plan in order to get Obama’s refusal to any spending whatsoever back into the public consciousness. Obama and his minions have taunted “Where’s the beef?” about how the R plan would raise revenues. By drawing on Simpson-Bowles, there is beef in this proposal, even if we disagree with parts of it.
    As sure as the sun rises tomorrow, Obama will reject this plan as well, because it cuts spending. But that rejection will make Obama’s original argument, i.e. that Republicans won’t really raise revenue, harder to believe. That is the point of the offer. Rs now have better grounds on which to taunt Obama to show beef regarding spending cuts.
    Now even the media should, if they have any integrity at all (I know, they don’t) acknowledge that the R plan offers revenues. I hope that at least some of the media will ask Obama to address spending. Boehner should go on TV to demand that the god-king respond. He won’t, of course, but the point is not to negotiate but to change perceptions.
    I’d like to see the House pass this proposal and then adjourn. Yes, I know that there is much not to like in it. But the point is not to pass the proposal, but to use it to show how rigid the god king is regarding spending. I’ll bet Harry Reid pronounces it DOA in the Senate. But when we go off the cliff, Obama’s claim that it is all the Rs’ fault will ring hollow.