The GOP’s idea of a debt deal

[ProSense]

The GOP’s idea of a debt deal

By Steve Benen

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Here’s how the Republican plan would work: they would accept some new revenue by agreeing to eliminate some tax expenditures, including, by some accounts, mortgage-interest deductions on second homes. Exactly how much revenue would the GOP be prepared to accept? That’s still unclear, but all of it would come from limiting tax deductions, and none of it would come from actually increasing anyone’s taxes.

In exchange some undetermined amount of revenue, Democrats on the super-committee would be expected to accept massive spending cuts, including cuts to entitlements, and Dems would have to agree to make all of the Bush tax cuts permanent.

That’s just crazy. The Bush-era tax rates are due to expire at the end of next year; why in the world would Democrats give up their only leverage, in exchange for a few eliminated deductions? As Jon Chait explained yesterday:

The Bush tax cuts are scheduled to expire at the end of next year. This is a huge amount of leverage for Democrats — unless the House, Senate, and president can agree, taxes will return to Clinton-era levels at the beginning of 2013. The Republicans want to stop that from happening. The deal leaked (by Republicans) is that they will agree to reduce some tax deductions, in return for which Democrats will agree to make the tax cuts permanent, in return for which Democrats will also agree to reduce entitlement spending.

Anybody see a problem with this deal? Yes: Democrats would be giving away an enormous amount of future leverage. Passing a bill to raise revenue is extremely hard. Passing any bill is extremely hard. When you stand to gain from nothing happening, you’re in a very strong position. Republicans used that leverage during the debt-ceiling fight — doing nothing meant the credit markets imploded, the economy melted down, and everybody started hating President Obama even more. That’s why Obama made a deal. Now “doing nothing” means the Bush tax cuts disappear. Democrats have no reason to give that away.

And while this is probably obvious, I’d also ask why any sane person would believe it makes sense to work on a debt-reduction deal by approving massive tax breaks that make the debt much worse, not better? It’s almost as if GOP leaders aren’t really concerned at all about the debt, only care about tax breaks. That couldn’t be, could it?

more

Benen forgot one thing: The tax cuts are leverage, but they're not the only leverage. In fact, the reason Republicans are pushing this scam is to prevent the alternative, the trigger. Sure they want to protect the tax cuts for the rich, but they also want to protect defense spending.

[Enrique]

1. bookmarking

in case the dems and Obama accept this "crazy" deal in the end, in which case I predict Benen and others will be explaining to us why there was no other choice.

[ProSense]

2. Yes,

it's a crazy deal. In fact, it's a scam.

[ProSense]

3. Here's the media treating this as

a serious proposal and giving the GOP some PR headlines.

Bloomberg: Debt Supercommittee Said to Weigh Republican Plan on Limiting Tax Breaks

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The plan would limit the use of certain individual tax deductions that are mostly used by those in the upper brackets, including the deduction for mortgage interest for a second home, according to the aide, who wasn’t authorized to speak publicly. The revenue generated would be used partly to lower marginal income tax rates and partly to help lower deficits.

The lawmakers are seeking to break a logjam and reach a debt-cutting deal of as much as the supercommittee’s goal of $1.2 trillion, said the aide. Other aspects under discussion include cuts in spending on Medicare and other programs, and a change in the way the government measures inflation. A change in the inflation measure would result in smaller cost of living increases for government beneficiaries and some tax increases.

Senator John Kerry of Massachusetts, a Democrat on the supercommittee, criticized the proposal.

“Whatever they put there doesn’t get the job done,” he told reporters in Washington. “I would not characterize it as substantial but it is a change,” he said, adding that “we have some distance to travel.”

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CBS: Republicans signal willingness to move on taxes to cut deficit

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One Democratic aide with knowledge of the Republican offer called it a "joke" and said that "Democrats have summarily rejected the proposal as fundamentally unserious."

The aide said "only Republican math would spend trillions in tax breaks for the wealthy and others and not actually save any money."

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National Journal: Senate GOP: Willing to Accept Up to $300 Billion in Net Tax Increases

[politicasista]

4. What did

Senator Kerry do to DU today? :shrug:

http://www.democraticunderground.com/discuss/duboard.php?az=show_topic&forum=439&topic_id=2263087#2264192


Have not been following because of other things, but do agree with your posts, though it has not been seen that way.