With all of the nonsense that is being kicked around out there in the media and with all of the blogs (left and right) you might actually think that this “debt ceiling agreement” amounted to something. One of the biggest political hoaxes perpetrated on folks since the last debt deal between Congress and the Administration. Both parties are talking about sending the no-compromise types onto the special Congressional Committee. Hilarious. Does anybody really expect that defense cuts and medicare cuts, put together without a thought to impacts on either, will be allowed to go forward? That is even more hilarious. Spare us the drama. The deal coming down the pike will center on the extension of the Bush tax cuts, which the President can stop on his own. The Republicans may just find out that hostage taking is a two way street.
The upcoming deal will include tax revenues that have been taken, up to this point, off the table by Republicans. The deal on revenues will be well north of $1 trillion, and will include major changes sought by Democrats. The deal will also make changes in entitlements that will save real money, and possibly the reduction of some tax rates, as well as the abolition of the Alternative Minimum Tax. Repatriation of overseas corporate money at greatly reduced tax rates will also be included, if it has not already occurred by next year. The Republicans will be faced with a President who will simply let the entire array of the Bush tax cuts expire for all in the absence of such an agreement. That is worth $4 trillion over ten years. As the attached clip from Steve Rattner shows the prescriptions advocated by both parties, as far as deficit reduction goes, are nowhere near what is needed. Ezra Klein talked about the President’s leverage in today’s column. We will now find out how good of a negotiator the President really is.
That column had the take given by noted deficit hawk Alice Rivlin, who was on the Simpson/Bowles Committee, and co-chaired her own deficit panel with Republican Pete Domenici
“We always started by asking how to slow the growth of entitlements, because that’s what’s driving the budget deficits,” she says. “But then we would find there’s nothing you can do that gets you much money in the near term. Then we would go after discretionary spending, and cap or freeze that. But after we did all that, we would realize we hadn’t closed the gap. This happened on both commissions. And that’s when everyone would realize you need more revenue and turn to improving the tax code.”
That is just what Paul Ryan realized as well, but he just has not admitted it yet. Despondent Democrats should stop whining, and realize that the major engagement has yet to be fought.