Joined: Sep 2009
How Obama Tried to Sell Oot Liberalism
But according to some crazies he is a Marxist. lol
Last summer, President Obama desperately attempted to forge a long-term deficit reduction deal with Congressional Republicans. The notion that he could get the House GOP to accept any remotely balanced agreement was preposterous and doomed from the start, but Obama responded to the increasingly obvious reality by reducing his demands of the Republicans to virtually nothing.
The Washington Post has a long narrative report about the negotiations between Obama and the House Republicans. The narrative frame of the Post’s account is that Obama blew the potential deal at the last minute. That’s a story that people close to Obama’s fired chief of staff, Bill Daley, have been peddling for a long time. But that conclusion is utterly belied by the facts in the Post’s own account. But let’s put that aside for now, because the facts in the Post’s account support a different and far more disturbing conclusion: Obama was even more desperate to cut a deal than previously believed — dangerously desperate, in fact.
It has previously been reported that Obama had offered to John Boehner to make a series of cuts to Medicare, Social Security, and the domestic budget, to reduce top-end tax rates, and to prevent the expiration of the Bush tax cuts, in return for increasing tax revenue (over current tax levels) by about $800 billion over ten years. That is a pitiful sum of new revenue, less than half as much as recommended by deficit proposals by Bowles-Simpson, the Bipartisan Policy Center, and other bipartisan worthies. The blockbuster fact in the Post’s report, which the story does not in any way grapple with, is that even the $800 billion in tax revenue offered by Boehner was not, in fact, $800 billion in tax revenue:
In Boehner’s offer Friday night, the taxes came with strings attached. The Republicans wanted Obama to give up plans to raise the tax rate paid by the wealthiest Americans, now set at 35 percent. Instead, they wanted that rate to go down. They also wanted to preserve low rates for investment income — one of the biggest perks for the wealthy in the tax code — and establish a blanket exemption from U.S. taxes for corporate profits earned overseas.
Another key caveat: Much of the $800 billion would have to come from overhauling the tax code — not from higher tax rates. The Republicans believed lower rates and a simpler code would generate new revenue by discouraging cheating and spurring economic growth. If the White House would agree to count that money, the Republican leaders said, then they might have a deal.
Okay, so the Republicans were demanding big tax cuts for the rich — lower income tax rates, and keeping in place the tax breaks that most benefit the rich, thereby insuring that the burden of any higher revenue would fall on the non-rich. Obama, incredibly, agreed to that — he agreed to a debt reduction plan that would exempt the wealthy from any sacrifice, and indeed protect them from the possibility that their tax rates would rise when the Bush tax cuts expire.
The incredible thing is that even this offer was not enough. Republicans also demanded that the $800 billion in higher revenue largely come from assuming that lower tax rates would cause the economy to grow. This is a theoretically possible outcome, but a highly dubious assumption in practice (witness the rapid growth that followed Bill Clinton’s tax hike on the rich, and the slow growth that followed George W. Bush tax cuts for the rich.) The Republican position was that its higher revenue, in other words, had to be imaginary, theoretical revenue.
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