Posted by AzBlueMeanie:
Old habits die hard. Despite winning a decisive mandate in November for the tax and spending policies that he campaigned on, if the Beltway media villagers are to be believed with their insider gossip, President Obama is trading away the very things he campaigned on in the so-called "fiscal cliff" austerity crisis negotiations. Why?
Keep in mind that no media villager really knows what is in the package under discussion, but this is the description of the "deal" according to Ezra Klein, A rough 24 hours for the White House:
On Monday, they delivered an offer to House Speaker John Boehner that
included genuine concessions. They brought their revenue request down
from $1.6 trillion to $1.3 trillion. They dropped their demand that the
Bush tax rates expire for all income over $250,000 a year, offering a
new threshold of $400,000 a year. They brought their debt-ceiling demand
down from no more debt ceiling crises ever to no debt ceiling crises
for two years. They agreed to some form of chained CPI as a way to cut Social Security benefits.
On Monday night, Boehner rejected their offer, and on Tuesday, Boehner
unveiled “Plan B” — a proposal to walk away from the talks, vote on a
plan to make the Bush tax rates permanent for all households with income
under $1 million, and then go home for the holidays.
* * *
The question inside the White House now is what’s behind Boehner’s “Plan
B”? Is he trying to show nervous conservatives that he’s playing
hardball? Or is Boehner signaling that he can’t go any further and is
now preparing to bolt the talks if the White House doesn’t make further
There are also some who think that Boehner — and, more to the point,
Boehner’s House members — increasingly see weakness in the White House’s
A few weeks ago, the Obama administration was firm that they wouldn’t
budge on tax rates for income above $250,000 and that they wouldn’t
budge on the debt ceiling. They’ve since budged on both. Republicans
increasingly think the White House will concede more now, and that if
they don’t concede more now they’ll definitely give Republicans a better
deal if threatened with debt default. Whether or not that’s true, it
pulls Republicans — and Boehner — to the right, as it makes it harder
for Boehner to argue for a compromise now.
Meanwhile, the White House has problems within their coalition, too.
Their allies are disappointed to see an old dynamic reasserting itself:
The president makes concessions, thinking he’s close to a deal, and then
the Republicans pocket those concessions, offering nothing but renewed
threats to blow up the talks in return.
* * *
They also feel that the White House is weakening their hand if the
negotiations fall apart and the president needs to win a battle for
public support. “They ought to be in a position where they say to
Boehner, ‘You’re the guy demanding benefit cuts and you’re using them to
fund tax cuts on the rich,’” Silvers says. Cutting Social Security’s
cost-of-living adjustment by chaining CPI, he says, “muddies that
position. It shouldn’t be muddied. It should be clear.”
Worse, the pushback from congressional Democrats over chained CPI is stronger than the administration expected — note the outspoken opposition from Sen. Dick Durbin, an Obama ally who’s often considered a barometer for pragmatic liberals.
The talks haven’t blown up. Optimists note that the two sides remain
fairly close to each other: In principle, Obama and Boehner seem to have
agreed on a roughly 1:1 ratio of tax increases to spending cuts. Now,
they’re mainly arguing over what counts in that ratio.
Mr. President, you campaigned on a tax hike for those making $250,000 income a year. You and Joe Biden specifically promised that social security was off the table (social security has nothing to do with the federal debt), and Medicare benefits were off the table (as opposed to reimbursements to providers).This is why people voted for you. "Promises kept" — remember that?
You were so confident after your win that you wanted to resolve once and for all the GOP's use of the federal debt ceiling to engage in economic terrorism by holding this country hostage to their extortionary demands. And yet, apparently here we are…again. Are we observing a case of Stockholm syndrome?
If this is in fact the "deal," then no deal is better than this deal. I would prefer to go cliff diving on the first of the year to reset the basis for discussions.
America does not negotiate with terrorists, Mr. President. You cannot encourage further acts of economic terrorism by conceding to Tea-Publicans' extortionary demands.
UPDATE: Samuel Knight at the Political Animal blog notes The Unchained Gang:
If criticism from Congressional Progressive Caucus co-chairs Raul
Grijalva and Keith Ellison is any indication, the President’s plan to
cut Social Security might be without at least 70 votes or so.
Grijavla — who, by the way, progressive activists want to see named next Secretary of the Interior should Ken Salazar steps down — told CNBC that he’d rather go over the fiscal cliff than accept a deal that reduces Social Security benefits.
Ellison issued a statement
saying that he is “committed to standing against any benefit cuts to
programs Americans rely on and tying Social Security benefits to chained
CPI is a benefit cut.”
The Progressive Caucus’ rank-and-file and other leftish Dems don’t seem too amused by the proposal, either. POLITICO
quoted Sherrod Brown, Jan Schakowsky, Ben Cardin, Jim McGovern, and
Charles Rangel expressing fierce opposition to the plan, and co-founder
of the Progressive Change Campaign Committee Adam Green warning Dems
that they could face a tougher primary challenge if they support the
President on this.
UPDATE: Tax Expert David Cay Johnston explains why Chained CPI will harm seniors by degrading their income over time and argues in favor of his proposal to use the experimental Consumer Price Index for the elderly – Bureau of Labor Statistics (CPI-E) which would give seniors a little more money to spend in this segment of the Ed Show.
The Bureau of Labor Statistics calculates an experimental CPI for the elderly, or CPI-E, by using
households whose reference person or spouse is 62 years of age or older.
In 2009–2010, approximately 24 percent of all consumer units met the
CPI-E's definition of having a reference person or spouse 62 years of
age or older.
From December 1982 through December 2011, the all-items CPI-E rose at an
annual average rate of 3.1 percent, compared with increases of 2.9
percent for both the CPI-U and CPI-W. There are several reasons that
older Americans faced slightly higher inflation rates over the past 29
years. First, older Americans devote a substantially larger share of
their total budgets to medical care. The share of expenditures on
medical care by the CPI-E population is roughly double that of either
the CPI-U population or the CPI-W population. In addition, over the
1983–2011 period, medical care inflation increased significantly more
than inflation for most other goods and services (5.1 percent annually
for medical care, compared with 2.8 percent for all items less medical
care). Second, older Americans spend relatively more on shelter, and
during the last 29 years shelter costs have modestly outpaced overall
If you really want to get into "wonkery" on the CPI, check out Dylan Matthews at Ezra Klein's Wonkblog, Three cuts to Social Security that are way, way more progressive than chained CPI.