Is President Cave at it again?
The Grand Bargain We Don't Need
Robert Kuttner, HuffPost, Posted: 03/10/2013 10:19 pm
President Obama has been meeting with small groups of Republican senators and representatives in an effort to reduce the damage of the so-called sequester -- the $85 billion in automatic budget cuts that took effect March 1. But these meetings, if successful, are likely to lead to greater economic and political damage, in the form of a "grand bargain" to cut Social Security and Medicare in exchange for some reductions in tax preferences.
This is a bad idea for several reasons.
First, in these deals, it's usually Democrats who get taken to the cleaners. Republican leaders insist that their rank and file members will never vote for progressive tax increases, so the tax part of the bargain tends to focus on closing minor loopholes while Republicans demand major spending cuts in return.
Secondly, the sequester is a grave problem not just because the cuts are automatic, but because they are a down payment on a decade of budget cuts that both President Obama and the Republicans have embraced. If we trade the $85 billion of automatic cuts in the sequester for $85 billion of some other cuts, the impact on the economy is just as depressive.
President Obama's own proposals support $4 trillion of deficit cuts over a decade, only slightly less than what Republicans demand. The deal that he made over New Years weekend to spare the economy the "fiscal cliff" cut taxes by over $3 billion. Some of this extended the Bush tax cuts for 99 percent of taxpayers, but a lot if it was in the continuation of tax loopholes for the well-off. Massive spending cuts are already baked into the cake for the next decade.
(More here.)
Robert Kuttner, HuffPost, Posted: 03/10/2013 10:19 pm
President Obama has been meeting with small groups of Republican senators and representatives in an effort to reduce the damage of the so-called sequester -- the $85 billion in automatic budget cuts that took effect March 1. But these meetings, if successful, are likely to lead to greater economic and political damage, in the form of a "grand bargain" to cut Social Security and Medicare in exchange for some reductions in tax preferences.
This is a bad idea for several reasons.
First, in these deals, it's usually Democrats who get taken to the cleaners. Republican leaders insist that their rank and file members will never vote for progressive tax increases, so the tax part of the bargain tends to focus on closing minor loopholes while Republicans demand major spending cuts in return.
Secondly, the sequester is a grave problem not just because the cuts are automatic, but because they are a down payment on a decade of budget cuts that both President Obama and the Republicans have embraced. If we trade the $85 billion of automatic cuts in the sequester for $85 billion of some other cuts, the impact on the economy is just as depressive.
President Obama's own proposals support $4 trillion of deficit cuts over a decade, only slightly less than what Republicans demand. The deal that he made over New Years weekend to spare the economy the "fiscal cliff" cut taxes by over $3 billion. Some of this extended the Bush tax cuts for 99 percent of taxpayers, but a lot if it was in the continuation of tax loopholes for the well-off. Massive spending cuts are already baked into the cake for the next decade.
(More here.)
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