The Hard Truth About the Tax Deal

From Krugman last week (Jan. 2):

The deficit is no problem now, but eventually we will emerge from the liquidity trap, and at that point you do want to start stabilizing debt. How big a deal is that? If you look at the CBO numbers, under their “alternative fiscal scenario” (Bush tax cuts extended and realistic spending), in 2022 the deficit would be 5.5 percent of GDP, about 2 percentage points higher than would be required to stabilize debt at 90 percent of GDP.

So what we eventually need is something like 2 or more points — probably more, because aging and the rise in health care costs won’t stop in 2022. Now, that’s nothing like the catastrophic sense about the budget you get from the usual suspects, but it is big compared with anything we’ve seen so far.

As I pointed out in the last post, nominal GDP over the next decade should be around $200 trillion. An $800 billion revenue take would be 0.4 percent of GDP; the $600 billion Obama got is 0.3 percent. Not big stuff, and either way the big fight over taxes versus benefit cuts is still to come. [Emphasis mine]

Krugman is only partially right here. The fight will likely be solely over benefits cuts, precisely because of the tax deal. The tax rates are now “permanent.” They can be changed, but that would require an affirmative act. Politically, it would require taking back the House and building a filibuster-proof majority in the Senate. And indeed, this is not impossible — this was the case as recently as 2009, although even then there was a lot of softness in the Dem caucus on things like the Estate Tax. As a practical matter, I think we need to strategize based on the strong likelihood that our current federal government tax level represents a structural ceiling to revenue. Yes, revenue will rise and fall with economic cycles, but within a band constrained by current law.

This gets us to the CBO numbers he cites. To stabilize debt at 90% of GDP — by the way, a high level at which to stabilize. It leaves little room for major stimulus efforts when the next recession strikes — we’re going to need at least 2% worth of GDP cuts in federal government spending since taxes are, practically, capped. 2% of GDP is roughly $300 billion. But as Krugman points out, that low-balls the problem. Program costs are rising, particularly in health care. And also, our debt burden is now roughly twice what is was in 2008. In 2008, we spent $261 servicing the debt. Assuming interest rates rise to normal levels with full economic recovery, we need to think in terms of doubling that debt service number. If you still want to stabilize debt/GDP at 90% you need to account for that.

$300 billion + $261 billion + $x billion in increased health care costs = a lot of money. Probably the equivalent of $700 billion worth of cuts in today’s dollars. Even if you cut defense in half (which likely won’t happen), you’re still looking at likely cuts in benefits and programs that will absolutely devastate the safety net, infrastructure spending, and so on. If you wanted to bring debt/GDP down to 50%, it would be $800 billion in annual cuts in non-debt service expenditures relative to the 2008 baseline. Just a huge, huge number.

The debt ceiling issue is a total distraction. The real issue is that the fiscal cliff deal locked in the vast majority of the Bush tax cuts, and the Bush tax cuts were the most effective element in the GOP starve the beast strategy in a generation.

We can, indeed, avoid this by getting new revenues passed in the medium term, but I’d really love to hear a plausible political dynamic for that to occur because I just don’t see it.

—–

A programming note: I apologize for my sporadic (and somewhat erratic) posts of late. I’ve been working on some longer writing projects, and between that and the holidays and some personal issues, I’ve been having a hard time getting motivated to blog. I’ll try to do better, both in terms of quantity and quality.

 

 

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121 replies
  1. 1
    Jeremy says:

    Yeah but the Democrats and Obama wanted tax cuts for the middle class to remain permanent. It seems like some liberals assumed once again that they were not serious and wanted all of the tax rates to go up. Also revenues can still be taken through the tax code and the dems are demanding that more revenues be on the table in terms of any discussions on cuts.

  2. 2
    jibeaux says:

    I think you’re going to see increasing stratification of states. The “turn it back over to the states” cheer that Romney tried to get the crowd to do is eventually where this is going to fall — increasingly the burden of Medicare, Medicaid, and general social safety net stuff will fall back to the states, which will provide for their citizens in a gamut that will run from mediocre to shockingly bad.
    My parents are Boomers and I love them, but rising medical costs + Boomers retiring + resistance to taxation means that if you’re young, you should sock away as much as you can or at least be as nice as possible to your kids.

  3. 3
    David Brooks says:

    Our weaknesses and problems, no less than our strengths and advantages, are reflections of the society we are, and so to understand them we would do well to reflect upon the question of just what sort of society that is.

    Our regard for health, it seems, can easily coexist with a society that we would not otherwise be proud of. Unbalanced and unmoored from other goods, such regard can become a vessel for self-absorption and for decadence. It can cause us to abandon our commitment to our highest principles, and to mortgage the future to avert present pain.

    It can, but it does not have to. It is not inevitable. If we do the work of coming to know ourselves and our society, and if we seek consciously to push back against our excesses and to balance our pursuit of safety, health, and comfort with our desires for justice, excellence, and responsibility, we can sustain a thriving and self-governing republic, committed to the preservation of life and of health as two among many important goods it pursues.

    What we require, in other words, is the kind of balanced public life that comes from self-awareness and self-knowledge. Such a balance would help us make the most of the abundant strengths of our society while combating its weaknesses. The ancients had a word for such an edifying balance: They called it health, and so should we.

  4. 4
    Napoleon says:

    Great post Bernard but that doesn’t stop some people from thinking Obama was a great negotiator and “won”. All I saw was him acting as the gravedigger for the New Deal and Great Society.

  5. 5
    Jeremy says:

    http://online.wsj.com/article/.....03934.html

    Also I would read this article which shows that the dems got more out of that tax deal. People in the 250 + bracket will be paying a higher tax bill due to PEP and Pease provisions in the tax bill. Add the ACA investment and interest taxes, higher medicare taxes on the wealthy, the tax increases in the Cliff deal, along with the phaseout of deductions and exemptions the wealthy in America will be paying more in taxes then they did during the Clinton years. While people on the lower end will be paying less.

  6. 6
    jibeaux says:

    The one possibility for increased revenue that I see is not for more income taxes but for increased taxes on investment income, if properly managed to exempt retirees, etc. Even wealthy people, if they work for their money, should resent the tax rates people like Romney pay.

  7. 7
    Bernard Finel says:

    @Jeremy: Yes, but all this is already figured into the CBO “alternate fiscal scenario.” All that tax revenue is baked into the cake, and the cake just isn’t big enough at this point to support that programs that we have.

  8. 8
    RP says:

    @Jeremy: Yes, I find this issue very confusing. Obama and most Democrats said all along that that wanted to keep the tax cuts for people making under $250K because raising taxes on the middle class right now would be bad for the economy. They got almost exactly what they wanted. Yet it seems like many think that the goal was to get rid of all of the Bush tax cuts. (and that that would have been possible.)

  9. 9
    Bernard Finel says:

    @RP: Well, of course, it would have been possible to get rid of all the Bush tax cuts. That was the default if they had done nothing.

    The problem is that we Dems have become almost as enamored of tax cuts as the Republicans. Well, there are consequences to that.

  10. 10
    Punchy says:

    When the military is getting north of half a trill a year, something’s way, waaaaaaay fucked up. More graft than a dermatologist’s office. More failed projects than a 8th grade science fair.

    But trim the fat? Not a gay guy’s chance in Tulsa.

  11. 11
    Belafon (formerly anonevent) says:

    The real issue is that the fiscal cliff deal Republican control of the House and the weak economy locked in the vast majority of the Bush tax cuts

    FTFY

    I can tell you that there are still plenty of people who cannot afford to go back to Clinton tax rates right now, and will be hurt by the end of the payroll tax cut. There is a time to raise them on everyone.

    So, there was this guy, back in 94, who, during a booming economy, managed to get taxes raised. Lots could argue it cost the Democrats Congress for 10 years. But taxes can be raised, and we get the government we decide we want, not the best one.

    If you want the best government, Bernard, then you, like the rest of us, will have to convince people that we shouldn’t be following the Republican philosophy of government.

  12. 12
    Face says:

    @David Brooks: You must be a chef on yer off hours, cuz that’s one hell of a word salad you just constructed.

  13. 13
    Belafon (formerly anonevent) says:

    @Bernard Finel:

    enamored of tax cuts

    How about knowing that some people are still struggling and need the money?

  14. 14
    Scott de B. says:

    So as a result of Obama’s actions, we have a much more progressive tax code than we used to have. Bernard says no, we ought to have a much more regressive code than we currently have. Who is the liberal here?

  15. 15
    Emma says:

    @Bernard Finel: The problem is that we Dems have become almost as enamored of tax cuts as the Republicans. Well, there are consequences to that.

    Perhaps it’s because ‘we Dems’ know how much difference a few hundred dollars a year can mean to a struggling family? Or perhaps it is because ‘we Dems’ know that a lot of people are paying considerably less than their own freight and prefer to have their taxes go up instead?

  16. 16
    Linda Featheringill says:

    We could also increase the GDP. Just saying.

  17. 17
    Amir Khalid says:

    @David Brooks:
    An excellent pastiche! For a moment, I almost believed you really were Bobo himself.

  18. 18
    RP says:

    @Bernard Finel: Fair point. But doing nothing and letting all of the cuts expire was hardly an ideal approach. Aren’t you concerned about the potential impact on the economy in the near term?

  19. 19
    artem1s says:

    you’re forgetting the bill on whatever gratuitous war/s the GOP manages to get us into before 2020 just because Halliburton wants to make it so. You can tack about $1-2T onto your budget for that.

  20. 20
    Jeremy says:

    @Emma: Exactly ! The tax burden on the working poor and the middle class was high back in the 70’s but during that period Congress cut taxes for the wealthy along with the lower end. Basically Democrats support tax cuts for working class people but support higher taxes for the wealthy. I don’t see a problem with that positions.

  21. 21
    Face says:

    @Punchy: Speaking of Tulsa

    But guns dont kill people, fingers do.

  22. 22
    Rex Everything says:

    @Scott de B.: Huh? Where did Bernard argue for a more regressive tax code?

    Unless … in your view, the middle class is the same thing as the working class?

  23. 23
    Jeremy says:

    @RP: I don’t get it either. They assume things instead of listening to what the person is saying. Obama has pretty much stuck to his platform from 2008 and 2012.

    Also because of that cliff deal and affordable care act taxes on the wealthy will be more than the Clinton years. While some were saying Obama was “selling us out” he got McConnell to agree to re-instate PEP and Pease which will increase taxes on those making 250,000 +. The NY times even said that because of these actions the tax code might be the most progressive it’s been since 1979.

  24. 24
    Bernard Finel says:

    @Emma: I’m not debating the fact that tax cuts help a lot of poor and middle class people. Of course they do. I’m just saying we need to face the consequences of that.

    As a practical matter, keeping Bush tax cuts in place for the middle class means we’re going to have to gut a lot of other programs. Maybe that’s good, maybe that’s bad, but focusing on the benefits of the cuts in the short run and ignoring the long-term consequences is not healthy.

    I would like to see taxes raised on the wealthy even more. I am just not sure I see how that happens given our current (and foreseeable) political structure. Slicing and dicing benefits is, I think, going to be more politically plausible. A chained CPI adjustment here, a raised eligibility age there, means testing, etc. Before you know it, the safety net is going to be a memory and the tax cuts will be cold comfort.

  25. 25
    Marc says:

    Democrats did raise taxes in 1993. When we’re faced with the reality of the benefit cuts that you mention we will then have to make a choice, and tax increases are entirely possible.

    Right now – in a weak economy – the Democrats did not raise taxes to attack an abstract deficit problem. There were no spending cuts to fend off. The political logic will be very different if the alternative is reducing incredibly popular spending programs.

  26. 26
    Bernard Finel says:

    @Emma: Also too… since when did ‘middle class’ come to including people making well into the six figures? We didn’t just keep the tax cuts in place on the poor and middle class. We broadened the definition to include people making 10x median income and 20x as much as minimum wage earners.

    Believe me, I wouldn’t be complaining had the Bush cuts lapsed for even everyone making over 100k, but Obama’s going in position was way, way above that and then he compromised from there. So, while I fully agree that folks making 40k a year need every bit of help they can get these days, the deal included a lot more cuts than that.

  27. 27
    Bernard Finel says:

    @Marc: I’m not sure about that. The politics are different. Dems have adopted a lot the anti-tax rhetoric. Just look at this comment thread for instance. I think this makes the issue more difficult than in 1993. Also too, Republicans have fully purged all “deficit hawks” in favor of pure anti-tax zealots. We’ve moved far, far to the right on the tax issue in a generation. The gerrymandering of 2010 has locked in a structural advantage for the GOP in the House meaning we may not even be able to even contemplate addressing the revenue side for a decade.

    I think that slicing and dicing benefits will be the path of least resistance given these political dynamics. Why do you think the early 1990s provides a better analogy given the changes in American politics since?

  28. 28
    schrodinger's cat says:

    Shorter Bernard, Obama is worse than Bush, Obama sold us out.
    Obama got a tax increase through the Congress, first time in more than ten years. This deal does not exclude tax increases further down the road.

  29. 29
    Belafon (formerly anonevent) says:

    @Bernard Finel:

    I would like to see taxes raised on the wealthy even more. I am just not sure I see how that happens given our current (and foreseeable) political structure. Slicing and dicing benefits is, I think, going to be more politically plausible. A chained CPI adjustment here, a raised eligibility age there, means testing, etc. Before you know it, the safety net is going to be a memory and the tax cuts will be cold comfort.

    Until voters decide that they’re tired of having their benefits cut, they’re going to keep electing Republicans.

  30. 30
    Bernard Finel says:

    @schrodinger’s cat: Dude, you keep missing the point that Obama didn’t need to get ANYTHING through Congress to get a tax increase. He got a tax CUT through Congress relative to then current law.

    Call me whatever you want, but let’s at least get the facts straight. The fiscal cliff deal CUT taxes by trillions relative to current law.

    Obama’s victory was in passing a slightly smaller tax CUT (by $600 billion) than the GOP wanted.

  31. 31
    Rex Everything says:

    @schrodinger’s cat: Oh christ, would you give it a rest already.

    At this point if someone said the weather in DC sucked today, you’d take it as an attack on Obama.

  32. 32
    Bernard Finel says:

    @Belafon (formerly anonevent): The challenge is that voters won’t be getting “their benefits” cut. At least not all at once.

    Today it’ll be your benefits, and I’ll vote for it because it’ll keep my taxes low. Then next years, it’ll be my benefits, and you’ll vote for it because your benefits already got cut, so you might as well keep your taxes low.

    Divide and conquer + starve the beast is a devastating combo over time, and it requires a sustained, long-term strategy to defeat. We don’t have one.

  33. 33

    @David Brooks:

    You, Mr Brooks, are a dickhead.

    ETA: I hope you continue to channel your thoughts here, so I can continue to throw random abuse at you. It makes me feel happy in a way I haven’t felt since I used to troll your Facebook profile.

  34. 34
    kindness says:

    The one area I wanted handled wasn’t and that was treating ‘carried interest’ just like regular income. This is how Mitt Romney pulled in over $20M in 2010 yet only paid 13.8% tax on it. Mitt made more than 400X what I made yet I ended up paying 24%. That isn’t right.

    Can that change be made? It could but I’m not confident with enough Democratic Senators (Schumer et al) being fiercely against it. Hell Reagan was the President who first made carried interest income taxed the same as wage income yet Clinton changed it back during one of his more delusional acts as president. I want it because it is right. I want it because it is fair.

  35. 35
    Belafon (formerly anonevent) says:

    @Bernard Finel:
    And yes, while we can see that, the problem is not that Obama got almost all of the tax cuts that he wanted. The problem is that a lot of people are willing to sleep under a bridge and eat pigeon on a hanger as long as the people under the next bridge don’t have a hanger.

  36. 36
    Hoodie says:

    You seem to be buying into McConnell’s bluff. One could argue that tax deal only put a nail in the coffin of the notion that taxes can always be cut further with salutary effect, making it harder for the Republicans to argue in favor of cutting taxes on those making over 400k, or to cut rates on cap gains or dividends, all of which was actively being considered for a Romney administration just months ago. It also gives Obama another bite at the apple on things like carried interest and other loopholes.

    Obama wanted to put in progressivity in the tax structure that somewhat mirrored the income inequality in the country. Just letting the Bush tax cuts lapse back to the Clinton rates would not do that. Remember, there was rising income inequality during the Clinton years. The seeds of 2008 were planted back in the late 90’s.

    The tax deal clarifies the tax vs. spending issue by decoupling if from the tax fairness/income inequality issue. This may be beneficial because Republicans used the fiscal issue to obfuscate on tax fairness. Now, the Republicans are predominantly yammering about being willing to shut down the government to get spending cuts, i.e., you don’t hear much supply side nonsense. They really don’t want to talk about specific cuts, however. Poll after poll indicates that Medicare and SS are universally popular. In the absence of a magic supply side fairy, folks may be more open to drastic cuts in defense or measures such as medical cost controls rather than monkeying with SS and Medicare. That should be especially true with an aging electorate with little more than an inadequate 401(k).

    As you point out, that won’t get us all the way there, but we’ll at least be closer. The missing piece of the puzzle is coming up with effective forms of government action to spur job and revenue growth, although reducing the contribution of the tax code to income inequality is a step in the right direction. It’s not just about when and from whom the money will come from to address the debt issues, but also how to structure an economy so that it’s primary thrust is to build real wealth across the population, not merely enrich hedge fund managers and lobbyists.

  37. 37
    kc says:

    @schrodinger’s cat:

    Sure, we can just increase taxes down the road. No prob!

  38. 38
    gene108 says:

    The real issue is that the fiscal cliff deal locked in the vast majority of the Bush tax cuts, and the Bush tax cuts were the most effective element in the GOP starve the beast strategy in a generation.

    Taxes can still be raised. The 1986 tax rates were “permanent”, until 1993 when President Clinton had them changed.

    The only reason the Bush Tax cuts were “temporary” and the Clinton tax hike was “permanent” is because both were passed via reconciliation. The Clinton tax rates didn’t have a disastrous effect on the deficit and debt, so they didn’t phase out. The Bush tax cuts did have a disastrous effect on the deficit and debt, so by law they would phase out.

    The big issue right now is a sluggish economy, which is in large part fueled by stagnant wages for most Americans and rising costs of food and fuel that limit discretionary spending.

    If we can see a rise in wages from a booming economy, we can then think to revisit the tax code or if government is willing to plow money back into the economy via infrastructure spending or some other means to boost employment and wages for most Americans the tax code can be revisited.

  39. 39
    Xantar says:

    @Bernard Finel:

    I would like to see taxes raised on the wealthy even more. I am just not sure I see how that happens given our current (and foreseeable) political structure.

    A few Democrats including Chris Van Hollen are talking about getting rid of the subsidies for oil companies and Puerto Rican rum. In fact, I’m pretty sure such things are already part of Obama’s current proposal. We’ll just have to see if the Democrats stick to it, won’t we.

    Or we could remain convinced that THIS time, Obama’s definitely going to convince the Republicans to let him cut Social Security for sure.

  40. 40
    Pillsy says:

    @Bernard Finel:
    His victory was passing a tax cut that was close to the tax cut that he’s been advocating for five years, through two Presidential campaigns and numerous speeches and statements between the elections.

  41. 41

    @Bernard Finel:

    Dude, you keep missing the point that Obama didn’t need to get ANYTHING through Congress to get a tax increase. He got a tax CUT through Congress relative to then current law.

    OK you are right, about the tax increase part, but was a tax increase on everyone a good thing when the economy is barely recovering? Right now we need a fiscal stimulus and tax cuts and monetary policy are all we have got.
    It would make much more sense to increase taxes later not right now.

    P.S. Is not a dude.
    @Rex Everything:
    Weather in DC is quite nice in the winter, actually. I think Obama gets credit for that don’t you? In my opinion, I do think Obama could be more progressive on economics, but I do think he gets blamed unfairly by both the media and the lefties on the internet. They always ascribe to him the worst possible motives.

  42. 42
    Aaron Morrow says:

    I’m more worried about austerity over the short and medium term. Over the medium and long terms we’ll have more liberals in Congress, and we’ll be able to cut better deals with centrists than we can with moderates.

    (Actually, we have more liberals in Congress than we did last week. Go Team Liberal!)

    Current unemployment rate is 7.9%. I’m not willing to share Bernard Finkel’s concern about a more balanced budget yet.

    “I’d really love to hear a plausible political dynamic for that to occur”

    It’s all about Congress. The conservative House majority will not last for 10-20 years. The filibuster will not last in its current form for 10-20 years.

  43. 43
    Suffern ACE says:

    So, you didn’t get your income taxes raised, and you kept your mortgage interest and state and local tax deduction and student loan interest deductions. How much more are you willing to pay into social security and Medicare? I think that’s probably where the middle class taxes should fall.

  44. 44
    Xenos says:

    Checking in from Europe: most countries here would love to stabilize their debt at 90 percent of GDP in ten years’ time, especially since they have nothing like the growth prospects the US economy can expect in the course of the current decade.

    They don’t even have a workable plan to recapitalize the banking system. They have figured out what went wrong, to a degree (Americans have a lot to do with it, it appears) but no clue how to put the system back together as it once was.

  45. 45
    weaselone says:

    Federal debt at 90% of GDP is quite a high ratio from a historical perspective, but I can’t help but question whether their might be some significant unintended consequences to the global economy if we enacted reforms intended to cut the debt to GDP ratio. That debt plays a key role in among other things enabling our trade deficit, providing a stable savings vehicle and serving as backing for various loans/transactions between private entities.

    I consider myself a fiscal conservative in a Keyesian sense. A country should run significant deficits during economic downturns and should pay down the debt during times of economic prosperity. In aggregrate the debt should grow at a rate that maintains a level sufficent to increase the money supply with the economy, to provide suitable amounts for savers seeking a safe place to park money and to support the other functions it serves in the economy. I can’t help but think given the state of the global economy, that this ratio might currently be higher than it has been historically.

  46. 46

    @kc: I don’t have a crystal ball, so I don’t know what will happen in the future, but neither does anyone else.

  47. 47
    RaflW says:

    I don’t quite agree that additional revenues are impossible. Especially over a timeframe of 10 years. That’s relatively short in political terms, but if we have a President Clinton and the GOP in the House is in utter disarray in 5 years? Who’s to say that taxes are capped?

    I also hope that libs and moderates actually fight for real, meaningful cuts in defense spending, though we can’t ignore that these cut will actually cause job losses and displacement. There are a lot of people who work in defense procurement, Dod, military branches, etc.

    That’s not a reason not to end some of the spending and projects. Waste is waste, and redeploying those funds should, hopefully, raise employment elsewhere. Maybe quite a bit, since defense seems to be particularly bloated and profitable (hence the RW bloody murder screams when we propose cuts!).

  48. 48
    Bulworth says:

    This post is probably the most depressing thing I’ve read in months, and unfortunately I think it’s pretty dead-on. I’m not overly fixated on the budget deficit/debt, particularly in the short term in a still struggling, high unemployment economy. But at some point, there will have to be more of a fiscal reckoning, at least by Democrats who care about the safety net. And since 1993, and the awful backlash the tax increase (among other things) led to, Democrats seem to have been scared away from allowing tax rates to rise on anyone but the very wealthy.

    Of course, the fact that the 1993 tax increases helped balance the budget later in the decade, only to have the W Admin come in and wipe that surplus all out hasn’t encouraged Democrats to be deficit-conscious. Maybe that’s the wrong term–not so much deficit-conscious as aware of the revenue needs the country will require to support Social Security, Medicare, and other income support programs as the country ages.

  49. 49
    Forum Transmitted Disease says:

    I’ve read this post about six times now and I still don’t get your point. It appears to be a vague argument for austerity couched within an argument to raise taxes on everyone, but I can’t really tell and I’m over trying to puzzle it out.

  50. 50
    FlipYrWhig says:

    So now it’s bad to have a deficit and we desperately need to address that serious problem?

  51. 51
    Jeremy says:

    The safety net is not going to be a memory. Can we please stop will the sky is falling. Obama said he wanted tax cuts for the middle class and he got that. The Affordable care act and the tax increases will raise taxes on those making 250 + if you include the phasing out of deductions and exemptions.

    He got what the American people wanted and what he campaigned on. Now in terms of entitlements Medicare health care spending does need to be contained.

  52. 52
    FormerSwingVoter says:

    Y’know… he’s got a point. Check out the “Choose Your Own Fiscal Cliff Adventure”:

    http://www.washingtonpost.com/.....adventure/

    Now select “Extend Bush Tax Cuts (lower/middle income)”, and watch what it does to the deficit graph. The primary driving force behind our deficits are the Bush tax cuts – including all the ones we just extended. There are lots of people in the middle and working classes, so even 1 or 2 percent among them adds up to a lot.

  53. 53
    FlipYrWhig says:

    @Forum Transmitted Disease: I think it’s an argument that austerity is coming down the pike whether we like it or not, because we just can’t afford anything else. But that sounds super anti-Keynesian and not really in synch with current circumstances, to wit, people got no money.

  54. 54
    Or something like that.Suffern Ace says:

    @FormerSwingVoter: Yep. I got nuttin. Although ill rail against the next progressive who talks about the Bush Tax Cuts in ways that imply that they were only for “the rich”.

  55. 55
    FlipYrWhig says:

    @FormerSwingVoter: Am I just simple-minded, or is the answer simply “raise taxes later”? The big issue from a progressive perspective is people being out of work. Let’s worry about that a while longer.

  56. 56
    Omnes Omnibus says:

    @weaselone: Yes, in my view, we need to be stimulating the fuck out of the economy right now. Build infrastructure. Lots of it. We can work on the deficit down the road. Then again, my economic thinking is pretty orthodox Keynsian.

  57. 57
    FlipYrWhig says:

    @Forum Transmitted Disease: I think it’s an argument that austerity is coming down the pike whether we like it or not, because we just can’t afford anything else. But that sounds super anti-Keynesian and not really in line with current circumstances, to wit, people got no money.

  58. 58
    Jeremy says:

    @schrodinger’s cat: Because nothing is ever good enough for them. Obama is always wrong and they are always right even when he does what they want. Like the payroll tax holiday for instance. Some on the left hated it because they said it would ruin SS, then when the Dems let it lapse we hear complaints about how they are raising the SS payroll tax. The Democrats get republicans to agree to tax increases, PEP,Pease, on those making 250 + like he said he would do and they call it a sell out.

  59. 59
    RP says:

    @Bernard Finel: I don’t understand your position. Are you saying the best outcome would have been to do nothing and let all of the Bush tax cuts expire? If it is, you should state that clearly and defend it.

  60. 60
    Jeremy says:

    @FlipYrWhig: You have a point. If you want to raise taxes on the middle class it would be better to wait till the economy is stronger. But telling middle class Americans that we are going to raise your taxes will not sell well with the majority of Americans.

  61. 61

    @David Brooks:
    Did you use perl, or python for that generative script?

  62. 62
    FormerSwingVoter says:

    @FlipYrWhig:

    Yes! That is the exactly, 100% correct answer. But we need to be aware that we’re going to need higher taxes on regular folks eventually.

    I’m 100% in favor of this deal. But down the road, we’ll either need to bump middle-class taxes or trim entitlements.

    ETA: The thing I was saying “yes” to was “tax people later” not you being simple-minded. Sorry if there were any confusion ;)

  63. 63
    Rex Everything says:

    @schrodinger’s cat:

    In my opinion, I do think Obama could be more progressive on economics, but I do think he gets blamed unfairly by both the media and the lefties on the internet. They always ascribe to him the worst possible motives.

    OK, where does Bernard Finel do that in the above post? Where does he ascribe “the worst possible motives,” or any motives at all, to the president? Where does he “blame,” either fairly or unfairly? Where does he even begin to imply, as you said in your earlier post, that “Obama is worse than Bush”?

    I have concluded that you Obots, most of you anyway, are good & sincere people. But it needs to be said again and again: This is a discussion of policy, not an assessment of Obama’s moral stature.

  64. 64
    FlipYrWhig says:

    @RP: That may have been the best fiscal outcome, but I don’t remember anyone saying it would be anything better than a terrible _economic_outcome. That’s why I feel like the emphasis here is loopy. It’s a liberal-leaning “get our house in order” argument that, frankly, if someone like Geithner had made publicly, it would be scoffed at around here.

  65. 65
    xian says:

    @Napoleon: yes, surely next time he will destroy the welfare state

    in fact, you won’t be happy until he does. then you’ll be so right!

  66. 66
    Maude says:

    @schrodinger’s cat:
    #46
    We know that Tunch will still be floofy.

  67. 67
    xian says:

    @RP: once again, people think Obama secretly wants to enact a different policy than the one he professes. Either they think he secretly wants to enact a more progressive policy and then are disappointed when he enacts one as close to his professed policy as possible… or they think he secretly wants to gut the welfare state.

  68. 68

    @Omnes Omnibus:
    Years from now, we’ll look back and realize that the biggest sin of the 112th and 113rd Congress was the failure to take advantage of 2% rates for infrastructure development while we had the chance.

    “Gubbmint should be run like a bidness!” say the Tea-Party folks. Fine, then: Let’s do what any forward-thinking business would during a time of low rates, and take on cheap debt now, to be in a better position than our competitors later.

  69. 69
    RP says:

    @FlipYrWhig: Right. I agree that in the long term taxes probably need to go up, but I’m not really sure what that has to do with the current situation. But if Bernard wants to discuss the merits of letting all of the Bush tax cuts lapse, let’s have that conversation.

  70. 70
    xian says:

    @Bernard Finel: you say that as if anything can be done in politics in a vacuum. I assume you were actually paying attention and are aware of myriad other connected issues?

    You ask where additional revenue will come from or how it will happen? Personally, I think Obama and the Dems have laid it out pretty clearly: There is a sequester coming. Half of it hits the pentagon (which is leverage for liberals). Obama offers to replace it with half spending cuts (and he is pressuring the Republicans to propose specific cuts) and half additional revenue (most likely from closing loopholes for wealthier folks, including ideally the carried interest loophole).

  71. 71
    Jeremy says:

    @FormerSwingVoter: Well there is about a Trillion + in waste and loopholes in the tax system and that’s a start for more revenue. I agree with your position but I do think we need to streamline medicare and make it more efficient. And it should be on the provider side not the benefit side.

  72. 72
    xian says:

    @Bernard Finel: “I think that slicing and dicing benefits will be the path of least resistance given these political dynamics.”

    Are you serious?

    Have you ever looked at the popularity of cutting social security, medicare, or medicaid?

    You are making a ton of procedural inferences that I don’t think follow at all. Almost as if you have a conclusion and then are grasping at justifications for it.

  73. 73
    Hoodie says:

    The underlying fallacy in the post is that the current distribution of incomes is hunky dory, and so we have no choice but to tax according to the current income distribution to get the revenue needed. But everyone agrees that the current income distribution is a problem, so why lock that in with the tax structure? Isn’t income inequality just as big a problem as future debt issues? Obama got a more progressive tax rate structure than he would have gotten if he had let the Bush tax cuts under 450k expire. If you had done the latter, all you would be doing is teeing up a campaign issue for Republicans. Obama is trying to build an economy, not fixate on narrow ledger issues.

  74. 74
    Hill Dweller says:

    For the record, reconciliation(51 votes) can be used to pass a tax increase in the Senate. The House is and will continue to be the problem.

  75. 75
    paulj says:

    The deficit is not a budget item, so it can’t be reduced in the way that most people think.

    Spending occurs first…future tax revenue is a forecast so the deficit is a calculation of what will happen based on a real-world number (the budget) and a forecast.

    By the time we know what the deficit number is it has already happened…it’s like looking in the rear-view mirror to see what’s behind you.

    We can’t go back in time and cut the deficit. So we respond by cutting current spending or raising taxes (although it matters who we tax…taxing excess wealth has zero effect on the economy, taxing wage-earners kills aggregate demand).

    Once spending is cut, incomes decline leading to decreased tax revenues leading to a further increasing deficit number. Rinse and repeat, it will always happen this way.

    Don’t believe me? look at the Eurozone where this dynamic has been playing out for the past 4 years. No deficit reduction has occurred as a result of spending cuts. NADA.

    The only thing that will reduce deficits is growth, and growth requires more spending.

    As long as we are sending $500B/year out of the country to finance our consumption of foreign goods, continue paying down $12T in household debt, and continue to have both population and economic growth, the deficit can never be lowered below what we are running now without decimating the economy (read increasing unemployment) which will lead to a deflationary spiral and massive depression.

  76. 76
    xian says:

    @RP: nah, he wants the magic part of saying it but not the realistic part of tracing the consequences

  77. 77

    @Maude: You mean big boned, right?

  78. 78

    @Rex Everything: He is doing that by implication by stating that Obama got a much worse deal than he could have gotten. I tried to answer your question without invective or name calling but you can’t resist calling me names to further your argument, which tells me that you really have no argument to make.

  79. 79
    Rex Everything says:

    @schrodinger’s cat:

    He is doing that by implication by stating that Obama got a much worse deal than he could have gotten.

    No. He isn’t. Not by implication or otherwise. Saying “Obama got a worse deal” is not speculating about his motives. It does not imply speculation about his motives. It’s an assessment of policy. NOTHING MORE.

    you can’t resist calling me names to further your argument, which tells me that you really have no argument to make.

    ?? I haven’t once called you names. What are you talking about?

  80. 80

    @Rex Everything: You called me an Obot twice. i.e. mindless follower of Obama.

  81. 81
    Emma says:

    @Bernard Finel: Slicing and dicing benefits is, I think, going to be more politically plausible. A chained CPI adjustment here, a raised eligibility age there, means testing, etc. Before you know it, the safety net is going to be a memory and the tax cuts will be cold comfort.

    And you know this is going to happen because?

    This is my objection to Krugman and his acolytes. They are convinced they know what Obama is going to do because… because…. he hasn’t done it before. OR he did it differently than they would have.

    Don’t misunderstand, I don’t have any objections to keeping Obama’s feet really, really hot on the issues. But let’s stop making believe we can read his mind.

  82. 82
    Rex Everything says:

    @schrodinger’s cat: I think of “Obot” and “Firebagger” as merely position-identifying terms at this point. I say them with affection at least. No offense intended, but I apologize for offense given.

    So here’s the argument I have to make: I think of you zealous supporters of Obama as good & sincere people, most of you anyway, but it needs to be said again and again: This is a discussion of policy, not an assessment of Obama’s moral stature.

  83. 83
    paulj says:

    “”Isn’t income inequality just as big a problem as future debt issues?”

    Income inequality is THE problem.

    We have no future debt issues…every dollar in existence was printed, including the interest the government pays, and will always be able to pay because it prints the interest.

    BTW, the interest on bonds has been steadily declining for over 30 years and is heading towards zero even though the National Debt™ has increased 1200% over the same period.

    See here: https://dl.dropbox.com/u/33741/10-yr%20bond%20yield.png

  84. 84
    Hoodie says:

    @paulj: The question was rhetorical, although you can’t totally ignore the debt issue. It’s just that the way to fix it is by raising incomes at the bottom and middle (you know, reward people who actually work for a living and don’t live off of rents), not by starving granny.

  85. 85
    Rex Everything says:

    @Emma:

    I don’t have any objections to keeping Obama’s feet really, really hot on the issues. But let’s stop making believe we can read his mind.

    Speculation about the de facto political climate of the near future is in no way an attempt to read the President’s mind.

  86. 86
    burnspbesq says:

    @Napoleon:

    All I saw was him acting as the gravedigger for the New Deal and Great Society.

    At least he’s being honest about it. The hard truth is that unless the American people suddenly do a 180 and embrace a tax burden previously only seen in Northern European social-democratic countries, the New Deal and the Great Society are dead, dead, dead.

    Until the conversation about a VAT turns from “unpossible!” To “18 percent or 21?’, the whole fiscal-policy debate is nothing but a cruel joke.

  87. 87
    Mnemosyne says:

    I have to join the chorus of people who are astounded that Bernard can advocate for higher taxes for everyone (which is what simply letting the Bush tax cuts expire would have done) when unemployment is still at 8%.

    If his argument is that 8% unemployment is the “new normal” and we can’t expect it to improve, then he needs to make that argument, because his claims fly apart if we get back to 5% or 6% unemployment and the increased tax revenue that brings in.

    The revenue problems we have right now is that millions of employable people don’t have jobs. Period.

  88. 88

    @Rex Everything: Ok then as a matter of policy major tax increases right now would not have been good for the economy. We cannot worry about the deficit right now when the recovery is so fragile. Deficit hawks need to pipe down. Yes it would have been better if taxes on everyone making about 200,000 had been raised. However most of the benefits over the last 30 years have gone to the extremely wealthy, the Romneys of the world not your doctors and lawyers, but hedge fund managers and the people with inherited wealth like the Waltons. Their net worth has gone up by 250%, may be we should have taxed them at the Eisenhower era tax rates.

  89. 89
    Xenos says:

    @Judas Escargot, Bringer of Loaves and Fish Sandwiches: ‘Brooks’ copy-und-pasted that from some cat at an outfit called ‘The New Atlantis‘.

    I had assumed it was some old wankery of Brooks hisself, but, alas, no.

  90. 90
    Xenos says:

    @Mnemosyne:

    If his argument is that 8% unemployment is the “new normal” and we can’t expect it to improve, then he needs to make that argument, because his claims fly apart if we get back to 5% or 6% unemployment and the increased tax revenue that brings in.

    To risk completing Finel’s analysis for him, if you cut the military budget by 50 percent (which we desperately need to do) you are probably going to wind up with structural, permanent unemployment close to 10 percent, something like ongoing European conditions. They have not figured out how to get anything near full employment in a low-growth economy, and we don’t have any good ideas, either.

  91. 91
    Emma says:

    @Rex Everything: Most of the speculation begins with “we know Obama will negotiate away…” or “we know Obama wants to….” or “Obama will have no choice but to….” or “the political climate is such that Obama will not be able to oppose….”

    It’s all mind-reading. And each time he manages to get exactly what he wanted it’s “well, this time it went well, but next time….” or “well, he didn’t get as much as he could have…”

  92. 92
    Rex Everything says:

    @schrodinger’s cat: Well, that’s more like it.

    But the fact is the OVERWHELMING lion’s share of the Bush tax cuts are to the rich. http://www.washingtonpost.com/.....s/image-3/ Making them permanent will simply necessitate more regressive taxes from here on out.

    Already, the fiscal cliff deal allows Obama’s payroll tax cut to expire, raising wage-earners’ taxes by 40%: how much does that help working people?

  93. 93
    Rex Everything says:

    @Emma:

    I don’t think Bernard has been using that language, at least not predominately. But in any case it’s not mind reading, it’s just shorthand. People have always said about all politicians “he wants to,” when they mean “his negotiating position makes it most advisable for him, acting as agent of various constituencies, with weighted consideration for countless interested parties, to push for such & such.”

    Johnson “wanted” escalation in Vietnam; Carter “wanted” fighting in Afghanistan; Clinton “wanted” NAFTA. None of this is “mindreading,” i.e. speculation into their inner hearts and what they really wanted when they were off the clock.

  94. 94
    Emma says:

    @Rex Everything: It may be shorthand about other presidents; but this one has suffered form a surfeit of mind-readers. If I hear one more person say “but Obama really wants to gut Social Security” I will bitchslap them into next week.

    And, as shorthand goes, it’s really quite an inaccurate way to describe anything, which will, inevitably, skew the discussion.

  95. 95

    @burnspbesq:

    Until the conversation about a VAT turns from “unpossible!” To “18 percent or 21?’, the whole fiscal-policy debate is nothing but a cruel joke.

    Why a VAT, instead of a national sales tax?

    Serious question– I have no opinion of one over the other. I’m open to either (as long as the sales tax exempts food, clothing, housing and medicine).

  96. 96
    ThatLeftTurnInABQ says:

    @Mnemosyne:

    If his argument is that 8% unemployment is the “new normal” and we can’t expect it to improve, then he needs to make that argument, because his claims fly apart if we get back to 5% or 6% unemployment and the increased tax revenue that brings in.

    Additionally, I find the idea of projecting our current employment and economic growth levels and the current political climate (including the demographic components thereof) 10 years forward in a static fashion more than a little bit silly.

    10 years ago, in early 2003 we were just coming off the 2002 midterms in which Dems were shellacked by the GOP on the basis of post-911 fearmongering, and the GOP controlled all 3 branches of govt and dominated the news media. 10 years before that, in early 1993 Clinton and the DLC dominated the Democratic party but were struggling to get anything passed by a putatively friendly Democratic Congress that had not yet been taken over by Newt, et. al. 10 years before that in early 1983 Reagan was struggling with the effects of the 1982 recession, was unpopular. and his re-election prosects were looking iffy.

    The lesson here? 10 years is an eternity in politics. I understand why budget analysts have to make long term projections but to extend the same practice to politics is folly.

  97. 97
    NR says:

    @Rex Everything:

    Speculation about the de facto political climate of the near future is in no way an attempt to read the President’s mind.

    Neither is pointing out what the president himself has publicly proposed in the past.

  98. 98
    NR says:

    @Emma:

    It may be shorthand about other presidents; but this one has suffered form a surfeit of mind-readers.

    You’re right. Obama’s defenders rely on mind-reading all the time. When people point out that he publicly proposed Social Security and Medicare cuts, his defenders respond with “Well he didn’t really want the cuts, he just proposed them so he could look ‘reasonable’ because he knew the GOP wouldn’t accept.”

    I agree; Obama’s defenders need to stop with the mind-reading. It’s ridiculous.

  99. 99
    Emma says:

    @NR: When one is faced with the irrational one walks away. So I am going to. You lie, and misconstrue, and do whatever you need to do to make yourself comfortable in your belief that your hatred of Obama is rational. Be well in your own little Universe.

  100. 100
    NR says:

    @Emma:

    You lie, and misconstrue, and do whatever you need to do to make yourself comfortable in your belief that your hatred of Obama is rational.

    Post one instance where I have lied. Just one.

    Oh, that’s right. You can’t. Because you’re full of shit. See, I engage in the perfectly reasonable and rational practice of analyzing Obama’s own public statements. You engage in mind-reading so you can believe that Obama doesn’t want the things he publicly proposes. It’s irrational and you need to stop doing it. You can’t read Obama’s mind. Stop trying.

  101. 101
    xian says:

    @NR: “You engage in mind-reading so you can believe that Obama doesn’t want the things he publicly proposes.”

    so tactical leaks from a negotiation are public proposals?

    how… interesting

  102. 102
    xian says:

    @Rex Everything: “Already, the fiscal cliff deal allows Obama’s payroll tax cut to expire, raising wage-earners’ taxes by 40%: how much does that help working people?”

    40%? nice use of damned lies statistics.

  103. 103
    Mnemosyne says:

    @NR:

    When people point out that he publicly proposed Social Security and Medicare cuts, his defenders respond with “Well he didn’t really want the cuts, he just proposed them so he could look ‘reasonable’ because he knew the GOP wouldn’t accept.”

    Yeah, about those Social Security cuts that were totally going to be in this last round of negotiations but somehow mysteriously were not actually in the deal — have you been given your new date for when the apocalypse arrives yet, or are you still reading the chicken entrails for that one? After all, you’ve been wrong at least five times so far, so I’m really looking forward to the excuse-making you’ll be doing when your next predicted date for when cuts are totally going to happen passes — again — with no cuts.

  104. 104
    NR says:

    @xian: How is it a “leak” when Obama himself announces something in a press conference?

  105. 105
    NR says:

    @Mnemosyne: There you go again with the mind-reading. Obama publicly offers cuts, but you can read his mind and you just know that he didn’t really mean it.

    Well, unlike you, I don’t believe I’m psychic, so I’ll just stick to his public statements.

  106. 106
    Emma says:

    @NR: For as long as I’ve read your posts, you have been telling us what Obama was going to do. And it never happens. Ever. And you do it again, and again, and again.

    Doesn’t it get tiring to be so wrong?

  107. 107
    Mnemosyne says:

    @NR:

    Obama publicly offers cuts, but you can read his mind and you just know that he didn’t really mean it.

    Er, no, I know he didn’t really mean it because the cuts never actually happened. In fact, they haven’t happened on any of the occasions where various people on the left swore to me they were totally going to happen.

    Your prediction track record is about as good as Criswell’s, and yet you persist in claiming that you were right all along because shut up, that’s why.

  108. 108
    Brachiator says:

    @Bernard Finel:

    Krugman is only partially right here. The fight will likely be solely over benefits cuts, precisely because of the tax deal. The tax rates are now “permanent.” They can be changed, but that would require an affirmative act.

    Not a big deal. It’s happened before. It can happen again.

    Although your post talks about “full economic recovery,” this doesn’t really say or mean very much. Not even Krugman can do more than guess what future employment or wage levels might be.

    And although Krugman is obviously a guru on economics, he is no more informed than most other Villagers about the nitty gritty of tax policy.

    A lot has been thrown at stimulus by means of enhanced bonus depreciation allowances. These are not permanent, and are set to expire. Congress could get a boatload of extra revenues by significantly clawing back Roth IRAs, raising the cap on Social Security deductions, more means testing of social security benefits, etc.

    The elimination of the zero percent tax bracket for capital gains for taxpayers in the 15 percent bracket is another obvious adjustment that could be made, even though the tax break is supposedly “permanent.”

    You keep going on about what might devastate the safety net, but if under-employment continues to be the norm and middle class wages remain stagnant, any safety net becomes unsustainable, meaningless.

    Dude, you keep missing the point that Obama didn’t need to get ANYTHING through Congress to get a tax increase.

    Absolutely, totally wrong. You continue to ignore the 2012 tax year issues that had to be addressed, and also the fact that had not some deal been made, tons of tax credits that benefit lower income and middle class Americans, some going back to the Clinton era, would have expired.

    @Rex Everything:

    Already, the fiscal cliff deal allows Obama’s payroll tax cut to expire, raising wage-earners’ taxes by 40%: how much does that help working people?

    This was always designed to be a temporary measure. And it was a crappier deal than the Making Work Pay Credit. It was also a bit of a Trojan Horse. Grampa McCain had suggested the payroll tax holiday, and Republicans loved it because it reduced money paid into Social Security.

  109. 109
    FlipYrWhig says:

    @Mnemosyne: The fact that those things haven’t happened is just proof that they eventually will. Expect the worst and reap the benefits of disappointment both when your expectations are fulfilled AND when they aren’t!

  110. 110
    FlipYrWhig says:

    @Brachiator:

    You continue to ignore the 2012 tax year issues that had to be addressed, and also the fact that had not some deal been made, tons of tax credits that benefit lower income and middle class Americans, some going back to the Clinton era, would have expired.

    The gist of Bernard’s post seems to be that those tax credits _should_ go away, because the government needs the money to afford a robust set of social welfare programs. Lower income and middle class people need to be hurt so that they can be helped. Also the beatings will continue until morale improves.

  111. 111
    NR says:

    @Emma: I don’t even know what you’re talking about. Is this more of your mind-reading?

  112. 112
    FlipYrWhig says:

    @Brachiator: Robert Reich was a vocal advocate for a payroll tax holiday too.

  113. 113
    Emma says:

    @NR: Oh dear. Old age or Alzheimers? Let me point you to the discussion you’re also having with others on this thread. They seem to remember those predictions too.

  114. 114
    NR says:

    @Mnemosyne:

    Er, no, I know he didn’t really mean it because the cuts never actually happened.

    The cuts didn’t happen because the Republicans said no. That doesn’t mean that Obama “didn’t really mean it,” it means that he made an offer and the Republicans rejected it. But of course, you can read Obama’s mind, so you just know that he didn’t really mean it.

    Or do you think that in every single negotiation ever, when one side rejects an offer from the other side, that means that the side that made the offer didn’t really mean it? Because that would be every bit as irrational as thinking you can read Obama’s mind.

  115. 115
    NR says:

    @Emma: I’m talking about statements that Obama has made publicly and on the record. How you get from there to “predictions” is something I don’t understand, but since you believe that you can read Obama’s mind, I’m clearly not dealing with a rational person here, so.

  116. 116
    Brachiator says:

    @FlipYrWhig:

    The gist of Bernard’s post seems to be that those tax credits _should_ go away, because the government needs the money to afford a robust set of social welfare programs. Lower income and middle class people need to be hurt so that they can be helped. Also the beatings will continue until morale improves.

    Interesting conundrum. Bernard wants see tax credits go away so that a new set of magical social welfare programs can be enacted. As though the Republicans would approve these mystical new programs. And despite the fact that no one, not Democrats, not progressive purists, have any idea as to what these programs might be, how they would work, who they would help.

    Robert Reich was a vocal advocate for a payroll tax holiday too.

    As was, I believe, Hillary Clinton, during the 2008 presidential campaign. They were both wrong.

    BTW, there is a strong possibility that the IRS will announce some significant delays to the 2012 tax filing season, a direct result of the asinine battles between Obama and the GOP nitwits. It still amazes me that most of the supposed knowledgeable pundits kept overlooking the near term damage that might be caused by the fiscal cliff battles.

    Good thing that most Americans don’t need their tax refunds.

    Ah, here it is.

    IRS delays start of tax filing season to Jan. 30

    The U.S. Internal Revenue Service said on Tuesday it will begin accepting 2012 tax filings on Jan. 30, eight days later than originally planned due to last-minute changes to tax law made in Congress’ legislation to avoid the ‘fiscal cliff’.
    __
    “This date ensures we have the time we need to update and test our processing systems,” said IRS Acting Commissioner Steven Miller in a statement….
    __
    Some households, such as those claiming residential energy credits or making certain other claims, will not be able to file until late February or early March, IRS said.

  117. 117
    Jeremy says:

    The predictions by some are always wrong because they don’t understand playing politics and negotiating. Obama did not call for a chained cpi (as the whitehouse said) it was the republicans after they gave concessions on the debt ceiling and stimulus spending, and taxes. Then the president said that protections for seniors and the disabled need to be included if there is a chained cpi and an increase in the benefit base. (something by the way that is supported by liberal think tanks and the late bob ball- a former Social Security advocate)

    Even though the president demanded it he knew the deal had no chance of passing so it made him look like he was compromising and being reasonable while Obama and Boehner knew the plan was dead from the start(as the WSJ reported). Which lead Boehner to run out with plan B which also failed.

  118. 118
    Mnemosyne says:

    @NR:

    The cuts didn’t happen because the Republicans said no. That doesn’t mean that Obama “didn’t really mean it,” it means that he made an offer and the Republicans rejected it.

    I see you are continuing to ignore the fact that Republicans were the ones who proposed the switch to chained CPI, but you’ve never let facts bother your beautiful mind before, so why start now?

  119. 119
    NR says:

    @Mnemosyne: Actually, I’m talking about Obama stating publicly and on the record that he offered to cut Social Security, Medicare, and Medicaid. I know that you and reality aren’t on speaking terms, but you should at least make an effort to acknowledge the plain and established facts.

  120. 120
    mclaren says:

    Yes, the crucial point is that once again Obama betrayed us. Moreover, in addition to accepting and locking in most of the Bush tax cuts for the rich, the new fiscal deal also lowers estate taxes. This has been a holy grail for billionaires in America because reducing/eliminating estates taxes will at last allow America’s rich people to create an hereditary aristocracy, like the old European barons and dukes.

    Once we get a locked-in hereditary aristocracy, the only way to change it will be full-on revolution: we’ll have to storm the Bastille, or, in our case, the DHS headquarters. That will be bloody because the troops will be using military weapons on civilians…just as they did at the G20 demonstrations at Chicago, under Obama’s direction.

    Barack Obama is not your friend. He’s not working in the interest of the middle class. Barack Obama has been paid to destroy the middle class, and he’s doing his job with a dedicated, creative and industrious single-mindedness.

  121. 121
    mclaren says:

    The ignorant sociopath Mneomsyne once again conveniently ignores the documented fact that the entire annual deficits of the United States only exists because of our bloated insane ever-increasing and totally self-destructive spending on national security.

    Want to eliminate the deficit?

    No problemo. End all our wasteful pointless counterproductive “national security” spending, including crazy spending like the TSA, the DHS (which now has an HQ in Washington bigger than the fucking Pentagon!), the $20,000-per-dog titanium teeth and $21,500-per-dog “canine battle suits” for SEAL team dogs, the laserbeam death rays on battleships (so costly the Navy can only afford three of ’em), the goofy schemes like the Navy’s new littoral ship (which tends to leak, and which not even naval planners can concoct a good use for) and the worthless unworkable giant white elephant F-35 fighter (I don’t need to go into all the problems with that disastrous weapons system). The ballistic missile submarines we need to return a massive nuclear missile barrage against…whom? The nuclear powered aircraft carriers we need to defeat the terrifying carrier battle groups of…which enemy navy?

    America now spends 1.2 trillion dollars per year on “national security” spending, so-called. And it’s all wasted. It’s all worthless. It’s all pointless.

    Shut it down. Get rid of it. That’s how you solve the deficit problem.

    But Mnemosyne can’t mention this, because her clay-footed idol Obama is deep-throating the insanely self-destructive and spendthrift military/national-security policies of the Bush administration so hard, the back of his head is about to cave in.

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