Friday, November 30, 2012

Obama's terms: Surrender now

Charles Krauthammer points out that discussions of fiscal cliff negotiations shouldn't focus on the revenue side, but the expense side. The Democrats aren't even acknowledging the problem. Dick Durbin has declared that Social Security reforms should not be part of the discussion because it "does not add a penny to our deficit." Krauthammer quickly disposes of that lie.
This is absurd. In 2012, Social Security adds $165 billion to the deficit. Democrats pretend that Social Security is covered through 2033 by its trust fund. Except that the trust fund is a fiction, a mere “bookkeeping” device, as the Office of Management and Budget itself has written. The trust fund’s IOUs “do not consist of real economic assets that can be drawn down in the future to fund benefits.” Future benefits “will have to be financed by raising taxes, borrowing from the public, or reducing benefits or other expenditures.”

And draining the Treasury, as 10,000 baby boomers retire every day. Yet that’s off the table. And on Wednesday, the president threw down the gauntlet by demanding tax hikes now — with spending cuts to come next year. Meaning, until after Republicans have fallen on their swords, given up the tax issue and forfeited their political leverage.
Republicans need to stop fighting among themselves and present a united front that they will not agree to tax increases unless we get real spending cuts, including entitlement reform.
Obama is claiming an electoral mandate to raise taxes on the top 2 percent. Perhaps, but remember those incessant campaign ads promising a return to the economic nirvana of the Clinton years? Well, George W. Bush cut rates across the board, not just for the top 2 percent. Going back to the Clinton rates means middle-class tax hikes that yield four times the revenue that you get from just the rich.

So give Obama the full Clinton. Let him live with that. And with what also lies on the other side of the cliff: 28 million Americans newly subject to the ruinous alternative minimum tax.

Republicans must stop acting like supplicants. If Obama so loves those Clinton rates, Republicans should say: Then go over the cliff and have them all.

And add: But if you want a grand bargain, then deal. If we give way on taxes, we want, in return, serious discretionary cuts, clearly spelled-out entitlement cuts and real tax reform.
The President is totally unserious in what he has proposed. He wants tax increases now along with more spending increases. Kimberley Strassel summarizes what the Democrats are offering.
According to sources on Capitol Hill, the White House wants Republicans to pony up $960 billion in immediate tax increases, which will come from hiking the top marginal rates and increasing capital gains and dividends taxes. That is just for starters. The administration also wants the GOP to surrender an additional $600 billion in revenue via later tax reforms.

The president's team specified no amounts or details on spending cuts. Rather, the White House wants more spending: at least $50 billion in new stimulus, an extension of unemployment insurance, a one-year deferral of the sequester, new money to refinance underwater mortgages, a Medicare-doctor fix . . . and a partridge in a pear tree.

Oh, the White House also wants Congress to give Mr. Obama the authority to increase the debt limit, whenever he wants, as much as he wants.

What do Republicans get in return? Next year, the White House will agree to talk to the GOP about cutting as much as $400 billion from entitlement programs. Maybe. If Democrats get around to it. Which they won't—because they'll have everything they've wanted.
This is how Obama negotiates. Give me everything I want and nothing that you want and we'll call it a deal.
How to put this tax-and-more-spending offer in perspective? It is far in excess of what the Democrats asked for in last year's debt-limit standoff—when the political configuration in Washington was exactly the same. It is far more than the president's own Democratic Senate has ever been able to pass, even with a filibuster-proof majority. It is far more than the president himself campaigned on this year.
And although this is not the perception of the media and those paying only minimal attention, John Boehner has already met Obama's demand for more revenue from the wealthy.
Within two days of the election, Mr. Boehner had offered an enormous compromise, committing the GOP to provide new tax revenue, through limits on deductions for the wealthy. Mr. Obama campaigned on making "the rich" pay more—and that is exactly what Mr. Boehner agreed to give him.

All that was left for the president to do was accept this peace offering, pair it with necessary spending cuts, and take credit for averting a crisis. Mr. Obama has instead spent the past weeks campaigning for tax-rate hikes. He wants the revenue, but collected only the way he chooses. And on the basis of that ideological insistence alone, the nation is much closer to a crisis.
So why is Obama doing this? Why is he putting forward such an unserious proposal? It seems more and more that he is quite willing for us to go over the cliff. After all, he'd get lots of lovely new revenue into the treasury if all the tax cuts expire.
Then again, the most frightening aspect of the White House proposal is that it wasn't an error. Perhaps the proposal was thoroughly calculated. This suggests a president who doesn't care about the outcome of the cliff negotiations—who thinks that he wins politically no matter what. He's betting that either the GOP will be far more responsible than he is and do anything to avert a crisis, or that the cliff gives him the tax hikes his partisans are demanding. Win-win, save for the enormous pain to average families across the country.

The Republicans will have to contemplate how to deal with such an unserious offer. But in presenting his demands, the president has now made very clear that there is only one side that is working in good faith.
Don't agree to any one-sided proposal that raises taxes now with just a promise to cut spending and entitlement reform some time later. Those cuts and entitlement reform will never, ever appear. We've seen this over and over.

As Michael Tanner points out, all the media want to talk about are tax increases. It's all part of the liberal agenda.
Yet the media still seem obsessed with Republicans and taxes: Will they stick to the Taxpayer Protection Pledge or not? Will tax rates go up or will loopholes be closed? How much new revenue will Republicans agree to?

But there is a profound lack of curiosity when it comes to the other half of this supposed bargain. Remember that hypothetical deal of $1 in tax increases to $10 in spending cuts? Republicans are still being asked about it and criticized for rejecting it. But balancing the budget under that formula would require $9 trillion in spending cuts over the next ten years. When was the last time the president or a Democratic congressman was asked whether or not they would agree to such a deal?

For that matter, it’s worth noting that more than half of Democratic congressmen and eleven senators have signed a pledge to oppose any changes to Social Security or Medicare. If pledges are the root of all evil, couldn’t we pause for just a moment in our attempts to run Grover Norquist out of town to work up the tiniest bit of outrage about this one?

In fact, many Democrats actually want to spend more, at least in the short term. The president’s most recent budget calls for $2.6 in increased spending between now and 2022. That’s $1 trillion more than the $1.6 trillion that the president has called for in new taxes. Therefore, the tax hikes would not be used to reduce the deficit, but to finance new spending. And, according to news reports, the president has already floated the idea of still more stimulus spending as part of the fiscal-cliff talks.

That’s not a “balanced approach.” That’s simply old-fashioned tax-and-spend politics.

The time may someday come to parse the exact meaning of the Taxpayer Protection Pledge. But for now, Republicans are simply negotiating with themselves and with the news media. Democrats haven’t even come to the table.
Even the Washington Post is fed up with the Democrats' refusal to address the true drivers of our federal debt.
Obama ran on a clear platform of increasing taxes on the wealthy. But he was clear on something else, too: Deficit reduction must be “balanced,” including spending cuts as well as tax increases. Since 60 percent of the federal budget goes to entitlement programs such as Medicare, Medicaid and Social Security, there’s no way to achieve balance without slowing the rate of increase of those programs.

This could be accomplished in a progressive manner, shielding the poorest beneficiaries from cuts. But that seems less likely to be achieved if progressives boycott serious negotiations by pretending that Social Security and Medicare are sustainable with no reform at all.

Mr. Obama has understood this since at least 2009, when he told The Post’s editorial board that he would tackle entitlement reform.

“What we have done is kicked this can down the road. We are now at the end of the road and are not in a position to kick it any further,” he said then. “We have to signal seriousness in this by making sure some of the hard decisions are made under my watch, not someone else’s.”
We're now seeing that Obama never met any of those sensible things that he used to say about a balanced approach. When has he ever made any actual policy proposal that demonstrated that he truly wanted real entitlement reform or was willing to cut any spending other than defense spending? Just the opposite. So why should we (or the Washington Post) be at all surprised at the negotiating stance he's taking now?

I still think the best thing would be to propose a version of Simpson-Bowles and try to get some Democratic senators who are up for reelection in 2014 in red states to go along with that. Probably it wouldn't make any difference. It's becoming clearer and clearer that Obama would be quite content to go over that fiscal cliff and get the defense cuts he wants as well as all the increased revenue from taxing everyone that Obama promised to never raise taxes on. And they'll blame it on the Republicans refusal to raise taxes on those earning over $250,000. What could be greater than that for the Democrats? What's a little recession if he can blame the Republicans for it. And you know that the media will be happy to go along. They're already setting the table for that story.